TaxTMI 
TaxTMI 
2017 (1) TMI 25
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....reafter dyed. The exemption notification was proposed to be denied on the ground that for the manufacture of Dyed Polyester Filament Yarn though the duty paid texturised yarn was purchased but captively the same was twisted and no duty was paid on the twisted yarn therefore the condition No. 31 of the notification stand violated. The adjudicating authority denied exemption Notification and confirmed the demand of duty amounting to Rs. 26,25,454/-. Being aggrieved by the Order-in-Original dated 24.03.2005, the respondent filed appeal before the Commissioner (Appeals) who vide the impugned order set aside the Order-in-Original and allow the appeals with consequential relief. Therefore the Revenue is before us. 2. Shri S.V. Nair, Assistant Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterating the grounds of appeal, submits that since the respondent has violated condition no. 31 of the Notification No. 6/2002-CE in as much as, they purchased texturised yarn, which used for exempted twisted yarn and such exempted twisted yarn was used in the manufacture Dyed Polyester Filament Yarn, therefore they have not used duty paid yarn, accordingly the conditi....
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....) no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 has been availed in the process of dyeing printing, bleaching or mercerising in the manufacture of dyed, printed, bleached or mercerised yarn. From the above condition 31(i), it can be seen that the dyed yarn is concessionally exempted if manufactured out of texturised yarn on which duty of Excise was paid. In the fact of the present case, the Dyed Polyester Filament Yarn was manufactured out of duty paid texturised yarn. Though after purchase the duty paid texturised yarn, it is first used in the process of twisted yarn which in turn used in the manufacture of Dyed Polyester Filament Yarn. There is no dispute the dyed yarn was manufactured out of duty paid texturised yarn, accordingly the condition of notification stand complied with, merely because at the intermediate stage twisted yarn made that does not alter the duty paid character of the principal yarn i.e. texturised yarn. The judgment cited by the Learned Counsel directly covers the issue in favour of the respondent. In the case of Kejariwal Yarns Pvt. Ltd. (supra) this Tribunal has held as under:- "2. We have carefully considered the submissions mad....
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....ontentions. The point to be decided in this case is whether the appellant is entitled to claim exemption under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19(ii) of the Notification No. 6/2002:- "If manufactured out of yarn on which appropriate duty of excise has already been paid." It is true that the dyed yarn was manufactured out of the doubled yarn on which no duty was paid. But it is also true that the dyed yarn was manufactured, out of doubled yarn manufactured out of single yarn on which duty had already been paid. Hence, if a question is asked whether the dyed yarn is manufactured out of the duty paid yarn, answer would be 'YES'. The dyed yarn was manufactured out of single yarn on which, duty was paid even though at the doubling stage, exemption was availed. There is no condition that the yarn should have suffered duty at every stage. In other words there is no condition that if doubled yarn is subject to the process of dyeing, the dyed yarn is entitled for exemption only if at the....
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....if the duty is paid at the doubling stage, they would be eligible for the CENVAT Credit of the same at the dyeing stage and in effect, it would be revenue neutral appears to be correct. 6. We have carefully considered the rival contentions. The point to be decided in this case is whether the appellant is entitled to claim exemption under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19 (ii) of the Notification No. 6/2002 :- "If manufactured out of yarn on which appropriate duty of excise has already been paid." It is true that the dyed yarn was manufactured out of the doubled yarn on which no duty was paid. But it is also true that the dyed yarn was manufactured out of doubled yarn, manufactured out of single yarn on which duty had already been paid. Hence, if a question is asked whether the dyed yarn is manufactured out of the duty paid yarn, answer would be 'YES'. The dyed yarn was manufactured out of single yarn on which, duty was paid even though at the doubling stage, exemption was availed. There....
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....s have manufactured dyed yarn out of duty paid texturised polyester filament yarn without availing input stage cenvat credit and this is not disputed by the department either in the show cause notice or in the order-in-original. The relevant exemption Notifications provides exemption to dyed yarn if manufactured out of duty paid texturised yarn without availing input stage credit. Accordingly, the appellants have satisfied the condition of the Notfn. and availed the exemption. The department has purported to deny the exemption only on the ground that they have manufactured the dyed yarn out of exempted twisted yarn and therefore not entitled for exemption. It is seen from the condition No.3l from the exemption notfn. that the words "appropriate duty of excise has already been paid" is with reference to texturised yarn. Therefore, the appellants have rightly contended that the question of proving duty paid character of twisted yarn does not arise. Further, there is also substantial force in their contention that the twisted yarn also requires to be considered as duty yarn being exempted only if made out or duty paid texturised yarn. 6. In the case of M/s. KR Steel Union Vs. CC - ....