2002 (5) TMI 118

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....sition of penalty is involved. 2. The appellant is having a composite mill doing the job of spinning and weaving out of yarns procured. It paid the duty at spindle stage up to 30-6-1998. Thereafter i.e. from 1-7-1998. It was claiming exemption in respect of yarn for the manufacture of grey fabrics for it was sending the same to its own unit at Prabhadevi for further processing. The processed go....

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....tured in a composite mill and cleared as such will be subjected to the applicable rate of excise duty. The credit of duty paid on inputs contained in such yarn is also permissible under the normal Modvat procedure. A composite mill while clearing grey fabrics would be required to discharge duty on yarn used in the manufacture of such fabrics. This should be worked out on the basis of existing proc....