TaxTMI 
TaxTMI 
2021 (10) TMI 639
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....s 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 6/2000-CE 01.03.2000 115 3/2001-CE 01.03.2001 128 6/2002-CE 01.03.2001 123 The aforesaid notifications granted exemption to twisted polyster filament yarn manufactured out of textured or draw polyster filament yarn falling within Chapter 54 of the First Schedule to the Central Excise Tariff Act on which the appropriate duty of excise under the first schedule, 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. The appellant availed the aforesaid notifications on the twis....
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....iod June, 1998 to February, 2003. The case of the department in the Show Cause Notice was as follows:- a) In respect of twisted yarn, it is contended that in respect of the 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 twisted yarn was made out of duty paid yarn. On that basis duty is demanded in respect of twisted yarn. b) In respect of the dyed yarn, it is contended that though duty paid textured yarn was used to make twisted yarn which in turn was dyed. Since exemption from duty was availed on twisted yarn, it cannot be said that dyed yarn was made out of duty paid yarn. On that basis duty is demanded on dyed yarn. c) In respect of dyed yarn which was made out of textured or twisted yarn purchased from the open market. It is contended that since such yarn purchased from the open market was not supported by evidence or duty payment. It cannot be said that dyed yarn was made out of duty paid yarn on that basis duty is demanded on dyed yarn. 1.5 The said Show Cause Notice invoked the lar....
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....Twisting unit and captively used in manufacture of Twisted yarn is also established by the fact on such Textured Yarn mentioned in Work Sheet 1(2) in Show Cause Notice at Page 97 of the Appeal there is no duty demand in Worksheet No.2 on page 100 of the Appeal. 2.3 Since admittedly duty was paid on Yarn Textured in the Twisting unit and captively used in the manufacture of Twisted Yarn, the Appellant had correctly availed the exemption on such Twisted Yarn under the said Notifications, since the said Notifications grant exemption to Twisted yarn manufactured out of duty paid Textured Yarn. 2.4 As regards the Twisted Yarn manufactured out of Texturized or draw-Twisted Yarn purchased from manufacturers under Central Excise Invoices showing payment of duty, there can be no dispute about such Twisted Yarn being eligible for exemption under the said Notifications. However, the Show Cause Notice contends (Para 7.1-Page 89 of the Appeal) that in respect of the 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 and therefore it cannot be said that the entire quantity of Twisted y....
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..... The Submissions made herein above in Para 2.5 and the reliance on the judgments mentioned in the said Para 2.5 are reiterated. ON LIMITATION As regard limitation he submits that the Show Cause Notice dated 30.06.2003 and demanded duty for the period June, 1998 to February, 2003 which invokes the extended period of limitation more than one year as specified in Section 11A (1) of the Central Excise Act, 1944 it is to that extent barred by time. He submits that in the present case there is no fraud, wilful mis-statement or suppression of facts or contravention with the evidence to evade duty. The appellant had a bona fide belief in view of the various judgments of Supreme Court and the Tribunal that it is settled legal position that the yarn purchased from the open market is deemed to be duty paid and after that dyed yarn is made out of twisted yarn which in turn is made out of duty paid yarn. The dyed yarn is to be considered to have been made out of duty paid yarn, the said belief of the appellant is well supported by the decision referred to hereinabove therefore, claiming an exemption based on the said bona fide belief cannot and does not justify invoking of larger period ....
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....bunal (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 revenue. 04. We have carefully considered the submissions made by both the sides and perused the records. As regard preliminary issue raised by the revenue that being two units of the appellants involved in this case, whether only one appeal is sufficient or one more appeal is required to be filed. We find that this is third round of appeal. This issue was not disputed by the revenue in earlier two round of appeals, which attained finality, therefore at this stage the objection of the revenue is not tenable. Moreover, even though there are two units i.e. Twisting unit and other is Dyeing unit but both the units belongs to one company, hence only one consolidated appeal is sufficient, particularly when Order-In-Original is one common order in respect of both the units. Hence, the revenue's objection on this point is not sustained. The issue on merit to be decided by us is that: a) Whether the appellant is entitle for exemption notifications in respect of twisted yarn and....
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....n 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 duty paid. The judgments are reproduced below:- • CCE v Decent Dyeing Co - 1990 (45) ELT 201 (SC): In this case the partial duty exemption was to Textured Yarn if produced out of duty paid base yarn and the Hon'ble Supreme Court held that the burden to prove the duty paid character of the base yarn is not the manufacturer of the textured yarn who has purchased the base yarn. The Supreme Court held that the base yarn purchased is deemed to be duty paid since no goods can be removed from the place of manufacture without payment of duty. The purchaser of the base yarn can presume that the same is duty paid. The Supreme Court in Para 5 held that it would be intolerable if the purchaser were required to ascertain that whether the duty had already been paid on the base yarn purchased as the purchaser would have no means of knowing it. • Nagpur Re-Rolling Mills v CCE- 2001 (136) ELT 423:In this case MS Flats and Bars were exempt from duty if ma....
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....nds 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 is not tenable. When the dyed yarn is made out of twisted yarn and the twisted yarn in turn is made out of duty paid or draw twisted yarn the dyed yarn is also to be considered as having been manufactured out of duty paid textured or drawn twisted yarn therefore, they are eligible for the benefit of the said notifications. This particular issue has been considered in the following judgments:- • Kejriwal Yarns P. Ltd v CCE -2010 (261) ELT 513: In this case it is held that where the duty paid texturized yarn is made in to Twisted Yarn which is exempted from duty and such exempted Twisted Yarn is then used to make Dyed Yarn, the Dyed Yarn is to be considered to have been made out of duty paid Texturized yarn and therefore the Dye Yarn will be eligible for the concessional rate of duty under the said Notifications. • Precot Mills Ltd v CCE - 2005 (183) ELT 407: This decision was followed in the aforesaid decision in Kejriwal Yarn....