Exemption for twisted and dyed polyester texturised yarn upheld where duty had already been paid before twisting and dyeing.

Twisted and dyed polyester texturised yarn qualified for exemption under Notification No. 35/95-CE, as amended, because it was manufactured from duty-paid polyester texturised yarn. The accepted factual basis was that duty had already been discharged on the yarn before the subsequent processes of twisting and dyeing. Once that condition was met, the resultant processed yarn fell within the notification, and exemption could not be refused on the ground that duty should have been paid on the value of the processed yarn. The demand was therefore unsustainable.

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Issues: Whether twisted and dyed polyester texturised yarn was eligible for exemption under Notification No. 35/95-CE, as amended, when duty had already been paid on the polyester texturised yarn before it was subjected to twisting and dyeing.

Analysis: The exemption under Notification No. 35/95-CE, as amended by Notification No. 77/95-CE, applied to twisted and dyed polyester texturised yarn manufactured out of duty-paid polyester texturised yarn. The material fact accepted on record was that duty had been discharged on the polyester texturised yarn before it was taken for the subsequent processes of twisting and dyeing. Once that condition was satisfied, the resultant twisted and dyed yarn answered the description in the exemption notification and could not be denied the benefit on the footing that duty ought to have been paid on the value of the processed yarn instead.

Conclusion: The exemption conditions were fulfilled and the demand was unsustainable.

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