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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 ..... Whether the condition of use of duty paid goods stands satisfied in a case where the duty was paid on the textured or draw twisted yarn by the appellant which was then utilized in the twisted yarn and on the said twisted yarn the exemption was availed? - HELD THAT:- In the present case, the duty demand is on twisted yarn and dyed yarn. The twisted yarn was manufactured out of partially oriented yarn/non-texturized yarn purchased and textured by the appellant and on which textured yarn appellant paid duty and the texturized yarn or draw-twisted yarn which was purchased from the manufacturers under the Central Excise Invoices or from the open market from various dealers under Commercial invoices. Twisted yarn manufactured out of the Yarn textured by the appellant - HELD THAT:- When the yarn is purchased from the open market it is deemed to be duty paid and the appellant does not have to show the purchase on payment of duty. The adjudicating authority simply relied upon the statements of the appellant s representative that the base yarn was purchased from local merchants from open market without duty paid invoice. Only on the basis of these statements, it cannot be established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surat. At the said factory the appellant was also undertaking the texturizing of yarn till about end of 2001. The said unit is hereinafter referred to as the Twisting unit. The appellant had another unit situated at Mota Borsara, Taluka Mangrol, Surat where it was under taking dyeing of twisted yarn. The said unit hereinafter referred to as the dyeing unit. The co-appellant Shri Maheshbhai M. Godiwala, who is the Director of Kiran Industries Ltd. At the twisting unit the appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 9/Kg 6/2002-CE 01.03.2001 126 ₹ 9/Kg The aforesaid notifications granted exemption to dyed yarn manufactured in a factory which did not have the facilities (including plant and equipment) for producing single yarn and subject to the conditions that the dyed yarn is manufactured out of textured or draw twisted yarn falling within Chapter 54 of the first schedule on which the appropriate duty of excise under the first schedule or the 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 and provided, no credit has been availed in the process of dyeing. 1.4 In February 2002, the officers of Directorate General of Central Excise Intelligence (DGCEI) Ahmedabad initiated investigations into the availing of exemptions by the appellant under the aforesaid notifications, in respect of the yarn twisted at the twisting unit and the yarn dyed at the dyeing unit. The Investigations culminated in issuance of Show Cause Notice dated 30.06.2002 demanding d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Shri J.C.Patel, Ms. Shamita Patel and Shri Rahul Gajera, learned counsels appeared on behalf of the appellants. Shri J.C.Patel in his argument made the following submissions:- ON MERITS: In respect of Twisted Yarn: 2.1 The Twisted Yarn was manufactured out of the following: a) Partially Oriented Yarn/ Non-Texturized yarn purchased and Textured by the Appellant and on which Textured Yarn Appellant paid duty, b) 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. 2.2 As regards Twisted Yarn made out of the Yarn Textured by the Appellant, since the Appellant had paid duty on the Textured Yarn so captively consumed, the Appellant had correctly availed the exemption on the Twisted yarn under the aforesaid Notifications. The Show Cause Notice itself accepts in Para 7.1 (Page 89 of the Appeal) that the Appellant was discharging duty on the texturized yarn being manufactured in the twisting unit and further captively consumed for manufacture of twisted yarn. The fact that duty was discharged on the Yarn textured in the Twist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Notice contends that since no duty was paid on Twisted Yarn by the Twisting unit, the Dyed Yarn made out of such non-duty paid Twisted Yarn is not eligible for the aforesaid exemption Notifications. 2.8 The said contention of the department is untenable in law. When the Dyed Yarn is made out of Twisted Yarn and the Twisted Yarn in turn is made out of duty paid Textured or Draw-Twisted yarn, the Dyed Yarn is also to be considered as having been made out of duty paid Textured or Draw-Twisted yarn and therefore eligible for the benefit of the said Notifications. Reliance is placed in this behalf on the following decisions: a) Kejriwal Yarns P. Ltd v CCE 2010 (261) ELT 513: b) Precot Mills Ltd v CCE 2005 (183) ELT 407 c) CCE v Atul Drug House-1996 (84) ELT 495 2.9 Dyed Yarn manufactured out of Textured or draw-Twisted yarn purchased from open market: As submitted herein above, such yarn purchased from open market is to be deemed to be duty paid and there is no evidence to establish that the said yarn purchased by the Appellant was not duty paid. Therefore, the dyed yarn made out of the same is entitled to the said exemption. The Submissions made herein above in P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I PACKAGING INDUSTRY v/S. UNION OF INDIA-2004 (168) ELT 145 (SC) LARSEN TOUBRO LTD. v/S. CCE, CHENNAI-IV-2018 (363) ELT 337 (Tri.-Chennai) CC (IMPORT)MUMBAI v/S. DILIP KUMAR CO.-2018 (361) ELT 577 (SC) BPL LTD. v/S., COCHIN II-2015 (319) ELT 556 (SC) BPL LTD. v/S. COMMISSIONER- 2015 (324) ELT A79 (SC) MOTIRAM TOLARAM v/S. UNION OF INDIA-1999 (112) ELT 749 (SC) VARDHAMAN PLASTOCHEM P.LTD. v/S. CCE, DAMAN-2018 (364) ELT 927 (Tri.-Ahmd) SHRI AJAY S. SINGHAL v/S. CCE, VAPI-2013- TIOL-1916-CESTAT-AHM PHARMACIA v/S. CCE, THANE-II- 2017 (349) ELT 765 (Tri.-Mum) SRI RAMA MACHINERY CORPORATION LTD. v/S. CCE, CHENNAI-I- 2017 (348) ELT 540 (Tri.-Chennai) CCE, KANPUR v/S. P.P. POLYPLAST P. LTD.-2017 (346) ELT 409 (Tri.-Del.) The Authorized Representative also raised an issue that there are two units of the appellants and separate demand was confirmed therefore, they were supposed to file two appeals in terms of rule 6A of Customs, Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982. 3.1 The appellant on the post hearing filed an additional submission dated 04th October, 2021 which is mainly on the counter of the judgments relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be any dispute about such twisted yarn being eligible for exemption under the said notification. The contention of the Show Cause Notice in respect of 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 twisting yarn was made out of duty paid yarn. On that basis, the duty was demanded in respect of twisted yarn. 4.3 In this respect we find that since the appellant have procured the goods from the open market the same being not procured directly from the manufacturer they have not received the duty paid invoices however, the department could not establish that the texturized or draw twisted yarn purchased from the open market is non duty paid. The goods per se indeed dutiable and does not attract nil rate of duty therefore, it cannot be said that merely because the goods were purchased from open market under commercial invoices is non duty paid. This issue has been considered in various judgments cited by the appellant wherein, it was held that the goods which were purchased from the open market are deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid. 4.4 As regard the dyed yarn, the same was manufactured partly from twisted yarn received from the appellant s twisting unit which was made out of duty paid textured or draw twisted yarn and the textured or draw twisted yarn purchased from the open market. 4.5 As regard the twisted yarn received from the appellant s twisting unit, there is no dispute that though the appellant have availed exemption on twisted yarn but the textured or draw twisted yarn used by the appellant themselves for manufacture of twisted yarn the appropriate excise duty was paid. 4.6 In this case since right from the processing of textured or draw twisted yarn up to the manufacture of dyed yarn, the activities were carried out by the appellants themselves. Since the initial raw material i.e. Textured or draw Twisted yarn on which excise duty was paid, the condition of the exemption provided to dyed yarn that the same should be manufactured out of duty paid goods stands satisfied. The contention of the department is that since the dyed yarn was manufactured by the appellant from the twisted yarn on which exemption from duty was availed the condition of exemption of dyed yarn was not complied with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. On the same issue there were number of judgments including the judgment of Supreme Court in favour of the assessee therefore, the appellant had entertained bona fide belief that they are entitle for the exemptions notifications therefore, it cannot be said that there is any fraud, collusion, wilful misstatement or suppression of facts or contravention with intention to evade duty on the part of the appellant. Moreover, in the earlier round of the appeal in the same case before this Tribunal, the Tribunal has given the observation in the order dated 13.05.2011 that the Adjudicating Authority shall decide the issue of the limitation following the decision of the Tribunal, in identical case of KIRAN INDUSTRIES in which on identical facts it was held by the Tribunal that the larger period of limitation does not apply. We find that in the case of KIRAN INDUSTRIES the demand for longer period was set aside. The facts of this case as well as KIRAN INDUSTRIES S case are absolutely identical therefore, following the decision of KIRAN INDUSTRIES particularly when it was directed by this Tribunal, it was incumbent on the Learned Commissioner to drop the demand for the longer period. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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