TMI Blog2008 (7) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from duty under S.No.16B of Notification No. 4/97 which exempts dyeing, printing or mercerizing yarn from duty, if dyeing, printing, bleaching or mercerizing is done without the aid of power or steam. In the present case, after the dyeing process was completed, the yarn was passed through the steam which, according to the Revenue, was undertaken to impart fast colours to the yarn and, therefore, treatment by steam and heat setting was integral part of dyeing process and the exemption was accordingly unavailable. Demand amounting to Rs. 6,25,497/- was accordingly confirmed and upheld by the Commissioner (Appeals). 2. Ld. Counsel for the appellants explain the process of dyeing, in which colours are injected into individual cone of yarn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an integral part of the dyeing process. The product i.e. dyes yarn becomes marketable only after heat setting. It was submitted that pad steam process, referred to by Commissioner (Appeals), is applicable to dyeing of cloth and not yarn. In that case, the dye is padded on the cloth and then passed on heated chambers. The appellants do not have machine for cloth dyeing. The steam is used to heat drum i.e. auto clave. In view of this, the reliance placed by the Commissioner (Appeals) on complete Textile Encyclopedia is misplaced. In their case, the dye is not padded but is injected by a syringe. 3. In Fair Child s Dictionary, referred to by Commissioner (Appeals), it is also stated that heat setting is also used to impart dimensional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarns tend to untwist in reverse direction when they form snarls, which lead to breakages during further yarn processing, stabilization is achieved by assembling and twisting two or more pre-twisted yarns in such a way that the second twist is directed opposite to that of the first. An alternative method is to treat the yarn at high temperature with water of steam which eliminates stress in the yarns caused by twisting. In view of the above, it was submitted that the process of heat setting is carried out by them for the purpose of setting of yarn and not for providing fast colours. If heat setting is considered essential for dyeing of yarn then the notification will become redundant, which interpretation has to be avoided. 5. On limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect, where the challans clearly states that it was a second sale of goods, but no findings have been given by Commissioner. Besides this, in five invoices the quantity has been wrongly narrated and as a result of which duty has been demanded in respect of 2666.560 kg of yarn. 7. As regards penalty, it was submitted that the appellant was under bona fide belief that the steam is used for the purpose of setting up of twisted yarn and not for improvement of colour fixation. In view of this penalty under Sec. 11AC cannot be imposed. For the same reason, penalty under Rule 209A cannot be imposed on Shri Bharat Bhushan Talsian, Director of the appellant. 8. We have considered the submissions. We find that the basic issue to be decided is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the quantities in the five invoices referred to by the appellants and this aspect will also be looked into by the Commissioner in the remand proceedings. 10. As regards limitation, we find that the declaration given by them only mentions about printing and twisting by hand processing and does not even declare the activity of dyeing and therefore the declaration does not come to their rescue. Once the appellant is undertaking dyeing of yarn and using steam for making product marketable, it cannot be said that he was under bona fide belief such use of steam will not amount to dyeing without steam. In case of doubt, he should have approached the departmental authorities for clarification which he did not do so. In view of this, the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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