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TMI Blog2021 (10) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... received texturized yarn or draw twisted yarn which was purchased either from manufacturers under Central Excise invoices or from the open market from various dealers under Commercial Invoices. The appellant then subjected such yarn purchased by it to the process of twisting. In respect of such twisting yarn, the appellant availed the benefit of duty exemption under the following Notifications issued from time to time. NOTIFICATION NO. DATE SERIAL NO. 5/1998-CE 02.06.1998 121 5/1999-CE 28.02.1999 115 6/2000-CE 01.03.2000 115 3/2001-CE 01.03.2001 128 6/2002-CE 01.03.2001 123 The aforesaid notifications granted exemption to twisted polyster filament yarn manufactured out of textured or draw polyster filament yarn falling within Chapter 54 of the First Schedule to the Central Excise Tariff Act on which the appropriate duty of excise under the first schedule, special duty of excise under the second schedule or as the case may be, the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975) has already been paid. The appellant availed the aforesaid notifications on the twisting yarn made out of the textured yarn purchased by them fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows:- a) In respect of twisted yarn, it is contended that in respect of the yarn purchased by the appellant from the open market and subjected to twisting, there is no evidence of duty paid on such yarn procured from the open market therefore, it cannot be said that the entire quantity of twisted yarn was made out of duty paid yarn. On that basis duty is demanded in respect of twisted yarn. b) In respect of the dyed yarn, it is contended that though duty paid textured yarn was used to make twisted yarn which in turn was dyed. Since exemption from duty was availed on twisted yarn, it cannot be said that dyed yarn was made out of duty paid yarn. On that basis duty is demanded on dyed yarn. c) In respect of dyed yarn which was made out of textured or twisted yarn purchased from the open market. It is contended that since such yarn purchased from the open market was not supported by evidence or duty payment. It cannot be said that dyed yarn was made out of duty paid yarn on that basis duty is demanded on dyed yarn. 1.5 The said Show Cause Notice invoked the larger period of limitation. The appellant contested the Show Cause Notice both on merits and on limitation. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 1(2) in Show Cause Notice at Page 97 of the Appeal there is no duty demand in Worksheet No.2 on page 100 of the Appeal. 2.3 Since admittedly duty was paid on Yarn Textured in the Twisting unit and captively used in the manufacture of Twisted Yarn, the Appellant had correctly availed the exemption on such Twisted Yarn under the said Notifications, since the said Notifications grant exemption to Twisted yarn manufactured out of duty paid Textured Yarn. 2.4 As regards the Twisted Yarn manufactured out of Texturized or draw-Twisted Yarn purchased from manufacturers under Central Excise Invoices showing payment of duty, there can be no dispute about such Twisted Yarn being eligible for exemption under the said Notifications. However, the Show Cause Notice contends (Para 7.1-Page 89 of the Appeal) that in respect of the yarn purchased by the Appellant from the open market and subjected to Twisting, there is no evidence of duty paid on such yarn procured from the open market and therefore it cannot be said that the entire quantity of Twisted yarn was made out of duty paid yarn. On that basis, duty is demanded in respect of the Twisted Yarn. 2.5 It is submitted that the aforesaid basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emanded duty for the period June, 1998 to February, 2003 which invokes the extended period of limitation more than one year as specified in Section 11A (1) of the Central Excise Act, 1944 it is to that extent barred by time. He submits that in the present case there is no fraud, wilful mis-statement or suppression of facts or contravention with the evidence to evade duty. The appellant had a bona fide belief in view of the various judgments of Supreme Court and the Tribunal that it is settled legal position that the yarn purchased from the open market is deemed to be duty paid and after that dyed yarn is made out of twisted yarn which in turn is made out of duty paid yarn. The dyed yarn is to be considered to have been made out of duty paid yarn, the said belief of the appellant is well supported by the decision referred to hereinabove therefore, claiming an exemption based on the said bona fide belief cannot and does not justify invoking of larger period of limitation as laid down in the following decisions which are on similar facts. * USHA UDHYOG V/s. C.C.E.-2001 (136) ELT 1031 upheld in CCE V/s. USHA UDHYOG- 2002 (144) ELT A298 (S.C.) * KEJRIWAL YARNS PVT. LTD.V/s. CCE 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants involved in this case, whether only one appeal is sufficient or one more appeal is required to be filed. We find that this is third round of appeal. This issue was not disputed by the revenue in earlier two round of appeals, which attained finality, therefore at this stage the objection of the revenue is not tenable. Moreover, even though there are two units i.e. Twisting unit and other is Dyeing unit but both the units belongs to one company, hence only one consolidated appeal is sufficient, particularly when Order-In-Original is one common order in respect of both the units. Hence, the revenue's objection on this point is not sustained. The issue on merit to be decided by us is that: a) Whether the appellant is entitle for exemption notifications in respect of twisted yarn and dyed yarn under various exemption notifications & b) Whether the appellant have fulfilled the conditions of manufacture of exempted goods from the duty paid inputs. c) Whether the inputs procured from open market on commercial invoices can be treated as duty paid goods or otherwise. d) Whether the condition of use of duty paid goods stands satisfied in a case where the duty was paid on the tex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Supreme Court held that the burden to prove the duty paid character of the base yarn is not the manufacturer of the textured yarn who has purchased the base yarn. The Supreme Court held that the base yarn purchased is deemed to be duty paid since no goods can be removed from the place of manufacture without payment of duty. The purchaser of the base yarn can presume that the same is duty paid. The Supreme Court in Para 5 held that it would be intolerable if the purchaser were required to ascertain that whether the duty had already been paid on the base yarn purchased as the purchaser would have no means of knowing it. * Nagpur Re-Rolling Mills v CCE- 2001 (136) ELT 423:In this case MS Flats and Bars were exempt from duty if manufactured out of duty paid inputs/ingots. The Hon'ble Tribunal held that the inputs purchased from open market are deemed to be duty paid and the exemption cannot be denied unless the department establishes by evidence that such inputs were non-duty paid. * Usha Udyog v CCE - 2001 (136) ELT 1031: In this case, Iron and steel bars, rods, angles, etc were exempt from duty if made out of duty paid raw materials. It was held that the re-rollable mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn twisted yarn therefore, they are eligible for the benefit of the said notifications. This particular issue has been considered in the following judgments:- * Kejriwal Yarns P. Ltd v CCE -2010 (261) ELT 513: In this case it is held that where the duty paid texturized yarn is made in to Twisted Yarn which is exempted from duty and such exempted Twisted Yarn is then used to make Dyed Yarn, the Dyed Yarn is to be considered to have been made out of duty paid Texturized yarn and therefore the Dye Yarn will be eligible for the concessional rate of duty under the said Notifications. * Precot Mills Ltd v CCE - 2005 (183) ELT 407: This decision was followed in the aforesaid decision in Kejriwal Yarns P. Ltd. It is held in this decision that if Dyed yarn is made out of Exempted double yarn which was made from duty paid Single yarn, the Dyed yarn is to be considered as having been made from duty paid yarn and therefore eligible for the exemption. * CCE v Atul Drug House-1996 (84) ELT 495: In this case, Notification granted exemption to Plastic Articles made out of duty paid plastic material falling under Headings 39.01 to 39.15. The assessee manufactured PVC Containers out of PVC La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated 15-5-1995, we find that the said judgment is not directly applicable, in the facts of the present case for the reason that in the said judgment the Hon'ble Supreme Court has held that where the goods is exempted or attract nil rate of duty used in such goods shall not entitle the manufacture to avail exemption which contains the condition that goods should be used out of the other goods on which duty was paid. In the present case, the department has not established that the goods which was procured from open market either attracts nil rate of duty or some exemption was availed. In the present case also since, the goods purchased directly from the manufacturer and purchased from the open market it cannot be said that, the goods used is either exempted or attracts nil rate of duty. Hence, the ratio of the Hon'ble Supreme Court judgment in the Dhiren Chemical Industries (supra) case is not applicable to the facts of the present case. 05. As per our above discussion and findings the impugned order is not sustainable on merit as well as on limitation. Accordingly, the impugned order is set aside and appeals are allowed with consequential reliefs, if any, in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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