Duty-free clearance of yarn waste upheld under the separate exemption where notification conditions were satisfied.

Yarn waste generated in the manufacture of dyed yarn was eligible for duty-free clearance under Notification No. 30/2004-CE when it arose from the exempt stream cleared without CENVAT credit, and it fell within Serial No. 8 of that notification. Revenue's reliance on Notification No. 89/95-CE was rejected because that notification could not override the separate exemption available under Notification No. 30/2004-CE, and ineligibility under one exemption did not defeat entitlement under another where its conditions were met. The duty, interest and penalty demand was therefore unsustainable.

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Issues: Whether yarn waste generated during manufacture of dyed yarn was entitled to duty-free clearance under Notification No. 30/2004-CE dated 09.07.2004, notwithstanding Revenue's reliance on Notification No. 89/95-CE dated 18.05.1995.

Analysis: The yarn waste arose in the course of manufacture of dyed yarn cleared under two distinct streams, one with CENVAT credit and duty payment under Notification No. 29/2004-CE and the other without credit under Notification No. 30/2004-CE. The waste cleared from the exempted stream was covered by Serial No. 8 of Notification No. 30/2004-CE. Notification No. 89/95-CE was held inapplicable because it could not override the separate exemption available under Notification No. 30/2004-CE, and ineligibility under one notification did not affect entitlement under another where the conditions of the latter were satisfied.

Conclusion: The yarn waste was correctly cleared without payment of duty under Notification No. 30/2004-CE, and the demand of duty, interest, and penalty was not sustainable. The Revenue's appeals failed.

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