2023 (9) TMI 403 - CESTAT MUMBAI

Recovery of Excise duty alongwith interest - imposition of penalty of ₹. 5000 under rule 27 of Central Excise Rules, 2002 - clearance of ‘dyed yarn’ without complying with condition in N/N. 6/2002-CE dated 1st March 2002 - HELD THAT:- The principle enshrined within the scheme of central excise, intended to tax all – including intermediate goods – manufacture but for convenience is excluded from levy at each of the stages subject to duty being paid at some stage by the manufacturer and subject to procedure as spelt out in rule 16A, rule 16B and rule 16C of Central Excise Act, 1944. In such circumstances, a separate notification by the Central Government, in concord with tax policy formulation, must be presumed to have a separate intent so as not to be superfluous. Hence, subject to condition that yarn emerging therefrom is exempted from duty, it is only required that the finished goods should have been manufactured either out of duty paid ‘textured yarn’ or ‘twisted yarn’ and that CENVAT Credit on such inputs had not been availed. It is not the case of Revenue that credit had been availed.

In identical circumstances, it has been held by the Tribunal in re Shreekar Polyester Pvt Ltd [2017 (1) TMI 25 - CESTAT MUMBAI] that 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 doubling stage duty had been discharged. Moreover, the appellants contended that even if the duty is paid at the doubling stage, Cenvat credit can be availed for clearance of dyed yarn and in effect there would be revenue neutrality. In these circumstances, the appellant’s interpretation of condition 19(ii) appears to be correct.

Thus, nothing further remains to be decided in the dispute - the appeal allowed by setting aside the impugned order.