M/S BOMBAY DYEING & MFG CO. LTD. vs COMMISSIONER OF CENTRAL EXCISE

The Supreme Court ruled that the excise duty is not applicable on yarn produced for captive consumption in the manufacture of fabrics, as per Rule 9 read with Rule 49 of the Central Excise Rules, 1944. The Court held that the appellant's claim for exemption from excise duty was valid, thereby quashing the directives of the Central Board of Excise and the notices issued against the appellant. The judgment emphasized the distinction between goods meant for sale and those for captive use, affirming the principles established in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Union of India.