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TMI Blog2017 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... was proposed to be denied on the ground that for the manufacture of Dyed Polyester Filament Yarn though the duty paid texturised yarn was purchased but captively the same was twisted and no duty was paid on the twisted yarn therefore the condition No. 31 of the notification stand violated. The adjudicating authority denied exemption Notification and confirmed the demand of duty amounting to Rs. 26,25,454/-. Being aggrieved by the Order-in-Original dated 24.03.2005, the respondent filed appeal before the Commissioner (Appeals) who vide the impugned order set aside the Order-in-Original and allow the appeals with consequential relief. Therefore the Revenue is before us. 2. Shri S.V. Nair, Assistant Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterating the grounds of appeal, submits that since the respondent has violated condition no. 31 of the Notification No. 6/2002-CE in as much as, they purchased texturised yarn, which used for exempted twisted yarn and such exempted twisted yarn was used in the manufacture Dyed Polyester Filament Yarn, therefore they have not used duty paid yarn, accordingly the condition no. 31 stand violated, therefore the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled in the process of dyeing printing, bleaching or mercerising in the manufacture of dyed, printed, bleached or mercerised yarn. From the above condition 31(i), it can be seen that the dyed yarn is concessionally exempted if manufactured out of texturised yarn on which duty of Excise was paid. In the fact of the present case, the Dyed Polyester Filament Yarn was manufactured out of duty paid texturised yarn. Though after purchase the duty paid texturised yarn, it is first used in the process of twisted yarn which in turn used in the manufacture of Dyed Polyester Filament Yarn. There is no dispute the dyed yarn was manufactured out of duty paid texturised yarn, accordingly the condition of notification stand complied with, merely because at the intermediate stage twisted yarn made that does not alter the duty paid character of the principal yarn i.e. texturised yarn. The judgment cited by the Learned Counsel directly covers the issue in favour of the respondent. In the case of Kejariwal Yarns Pvt. Ltd. (supra) this Tribunal has held as under:- "2. We have carefully considered the submissions made by both sides. Admittedly, during the relevant period, the appellant had availed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19(ii) of the Notification No. 6/2002:- "If manufactured out of yarn on which appropriate duty of excise has already been paid." It is true that the dyed yarn was manufactured out of the doubled yarn on which no duty was paid. But it is also true that the dyed yarn was manufactured, out of doubled yarn manufactured out of single yarn on which duty had already been paid. Hence, if a question is asked whether the dyed yarn is manufactured out of the duty paid yarn, answer would be 'YES'. The dyed yarn was manufactured out of single yarn on which, duty was paid even though at the doubling stage, exemption was availed. There is no condition that the yarn should have suffered duty at every stage. In other words 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n effect, it would be revenue neutral appears to be correct. 6. We have carefully considered the rival contentions. The point to be decided in this case is whether the appellant is entitled to claim exemption under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19 (ii) of the Notification No. 6/2002 :- "If manufactured out of yarn on which appropriate duty of excise has already been paid." It is true that the dyed yarn was manufactured out of the doubled yarn on which no duty was paid. But it is also true that the dyed yarn was manufactured out of doubled yarn, manufactured out of single yarn on which duty had already been paid. Hence, if a question is asked whether the dyed yarn is manufactured out of the duty paid yarn, answer would be 'YES'. The dyed yarn was manufactured out of single yarn on which, duty was paid even though at the doubling stage, exemption was availed. There is no condition that the yarn should have suffered duty at every stage. In other words there is no condition that if doubled yarn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disputed by the department either in the show cause notice or in the order-in-original. The relevant exemption Notifications provides exemption to dyed yarn if manufactured out of duty paid texturised yarn without availing input stage credit. Accordingly, the appellants have satisfied the condition of the Notfn. and availed the exemption. The department has purported to deny the exemption only on the ground that they have manufactured the dyed yarn out of exempted twisted yarn and therefore not entitled for exemption. It is seen from the condition No.3l from the exemption notfn. that the words "appropriate duty of excise has already been paid" is with reference to texturised yarn. Therefore, the appellants have rightly contended that the question of proving duty paid character of twisted yarn does not arise. Further, there is also substantial force in their contention that the twisted yarn also requires to be considered as duty yarn being exempted only if made out or duty paid texturised yarn. 6. In the case of M/s. KR Steel Union Vs. CC - [ELT 273 (SC 3 member bench)], it was held that an exemption notification cannot be read in a narrow manner so as to defeat the object of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otfn. requires only to prove the duty paid character or texturised yarn taken as basic raw material for the purpose of dyeing. There is no condition in the Notfn. that twisted yarn cannot undergo further process of twisting before dyeing. In the circumstances, the appellants interpretation of condition No. 31; Sl. No. 126 of Notfn. No. 06/02 dated 01.03.2002 appears to be correct. In view of above facts and circumstances. I find no reason to sustain the said Order-in-Originals. I therefore, hold that the appellants have correctly availed the exemption Notfn. No. 06/2002-CE dated 01.03.02 on dyed yarn (Sr.No. 126 read with condition No.31) as there is no dispute that same was manufactured out or texturised yarn on which appropriate duty of excise has already been paid and manufactured without availing input stage credit in the process of dyeing. 08. I set aside all the impugned Order-in-Original and allow the appeals with consequential relief if any." From the above findings, we observed that the Learned Commissioner (Appeals) has correctly examined the issue and accordingly allowed the appeal of the respondent. As per the above discussion and following the decision in the case o ..... 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