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TMI Blog2012 (9) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... m cotton yarn. For manufacture of cotton rugs, the cotton yarn is subjected to dyeing and the dyed yarn is used in the manufacture of cotton handloom rugs which are fully exempt from duty. The dyed cotton yarn is an excisable item. The Department was of the view that since the cotton handloom rugs are fully exempted from duty, the dyed cotton yarn used captively in the manufacture of cotton rugs would not be exempt from duty under Notification No. 67/95-C.E. and therefore the appellants should have paid duty on the dyed cotton yarn manufactured by them and cleared of captive consumption within their factory. On this basis the Show Cause Notices were issued to both the appellants for demand of duty in respect of clearances of dyed cotton yar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the proviso to the Notification No. 67/95-C.E. would not be applicable and no duty would be chargeable on the clearances of dyed cotton yarn for captive consumption, that the goods exported out of India without payment of duty cannot be treated as the goods exempted from the duty, that in any case, even if the duty had been paid on the dyed cotton yarn, since the same has been used as input in the manufacture of cotton rugs which had been exported out of India, the Cenvat credit of the duty paid on dyed cotton yarn would be admissible, which would be refundable in cash, in terms of the provisions of Rule 5 of Cenvat Credit Rules, 2004, that in this regard he relies upon Hon'ble Bombay High Court's judgment in the case of Repro India Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nil rate of duty, other than those goods which are cleared :- (i) to a unit in a Free Trade Zone, or (ii) to a hundred percent Export Oriented Undertaking or (iii) to a unit in an Electronic Hardware Technology Park, or (iv) to a unit in a Software Technology Park, or (v) under notification No. 108/95-Central Excise dated the 28th August, 1995 or (vi) by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in rule 6 of the CENVAT Credit Rules, 2001. From a plain reading of the Proviso to the Notification No. 67/95-C.E. it would be clear that :- (i) the exemption under this notification to intermediate products used captively for the manufacture of some final product is not available when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omestic Tariff area by availing full duty exemption and it is not the claim of the Appellants that the same had been exported under bond directly from the factory. The goods initially cleared from the factory for home consumption and thereafter exported out of India cannot be equated with the goods exported directly from the factory under bond in terms of provision of Rule 19 of Central Excise Rules. In view of this, the Appellant's plea that if the duty is charged on dyed cotton yarn its Cenvat credit would be available to the Appellant, which would be refundable to them under Rule 5 of the Cenvat Credit Rules, is not acceptable. In our view the judgment of Hon'ble Bombay High Court, in case of Repro India Limited (supra) cited by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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