2017 (6) TMI 211

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....f the case are that the appellants were purchasing grey Yarn falling under Chapter sub-heading 5205.11. The part of the yarn used to be sent to other manufacturer for the purpose of dyeing. Dyed yarn was used in the manufacture of Handloom Durries and Rugs which were falling under Chapter sub-heading No. 5702.90 and the same were attracting nil rate of duty. It appeared to Revenue that since dyeing amounts to manufacture, the dyed yarn attracts Central Excise duty. It also appeared to Revenue that since the final product manufactured by the appellant was attracted nil rate of duty, appellants were not eligible to the benefit of Notification No. 67/95-CE dated 16.03.1995 and therefore, Central Excise duty on the intermediate goods, i.e. dyed....

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.... the year 2004 during the course of investigation conducted by the department regarding grant of draw-back in respect of goods manufactured by using grey yarn procured without payment of duty from NHDC. They further stated that on 12.04.2006, Central Excise audit for the relevant period was conducted and therefore, allegation of suppression of facts is invalid. The said show cause notice was adjudicated through the impugned order-in-original dated 18.01.2008. The original authority has held that the issue is not hit by limitation and he confirmed the demand and imposed penalty. Further, it imposed penalty of Rs. 1.50 Crores on Shri Avinash Paliwal, Director of the appellant company, under Rule 26 of the Central Excise Rules, 2002. Aggrieved....