1. Facts giving rise to these two appeals are, in brief, as under :—

1.1 The appellants are manufacturers of yarn. During period from Sept., 2009 to May, 2010, they received capital goods in respect of which they took Cenvat credit. During this period appellants were availing the exemption Notification No. 29/2004-C.E., dated 9-7-2004 as well as Notification No. 30/2004-C.E., dated 9-7-2004. Notification No. 29/2004-C.E., prescribes a concessional rate of duty of 4% for yarn without any condition and as such the appellant could avail input duty Cenvat credit. This exemption Notification was being availed in respect of the yarn manufactured and cleared for export. The yarn meant for export was being cleared on payment of duty at the rate of 4% adv. and was being exported under rebate claim. Notification No. 30/2004-C.E., provides for full duty exemption to the items specified thereunder subject to condition that no input duty credit is availed. This exemption was being availed in respect of clearances of yarn intended for domestic consumption. However during the period of dispute, the appellant had not taken any input duty credit, either in respect of goods cleared at nil rate of duty under Notification No. 30/2004-C.E., or in respect of the goods cleared under Notification No. 29/04-C.E., on payment of duty at 4% and they have availed Cenvat credit only in respect of the capital goods. The Department was of the view that since in respect of clearances of export under rebate claim, where the goods had been cleared under Notification No. 29/04-C.E., on payment of 4% duty, the appellants were eligible for full duty exemption, as they satisfied the condition for Notification No. 30/04-C.E., but they still chose to pay duty under Notification No. 29/2004-C.E., the amount paid towards duty cannot be treated on duty but only a deposit and the goods have to be treated as the exempted goods cleared under Notification No. 30/04-C.E., and since the capital goods, in question have been used exclusively for manufacture of exempted goods, in view of Rule 6(4) of Cenvat Credit Rules, 2004, no Cenvat credit would be admissible in respect of these capital goods. On this basis, the Department issued two show-cause notices both dated 1-10-2010 for recovery of allegedly wrongly availed capital goods amounting to Rs. 4,88,798/- along with interest and also for imposition of penalty. These Show cause Notices were adjudicated by the Deputy Commissioner by two separate orders by which the Cenvat credit demands were upheld along with interest and penalty of equal amount were imposed. On appeals being filed to Commissioner (Appeals) against these orders, the same were upheld vide Order-in-Appeal 92-93/CE/Appeal/CHD-II/2012, dated 8-3-2013, against which these two appeals have been filed.

2. Heard both the sides.

3. Sh. Rupinder Singh, advocate, the ld. counsel for the appellant, pleaded that during the period of dispute, the appellants were availing of Notification No. 29/2004-C.E. under which the rate of duty is 4% adv., without any condition. and also exemption Notification No. 30/04-C.E., which provides for full duty exemption subject to non-availment of input duty credit, that the goods meant for export were cleared on payment of 4% adv. duty and the goods meant for domestic consumption were cleared at nil rate of duty, that in respect of both the type of clearances, input duty Cenvat credit was not availed and only capital goods Cenvat credit was availed for which there is no prohibition in Notification No. 30/04-C.E., that Notification No. 29/04-C.E., prescribing 4% duty is without any condition and therefore, just because no input duty credit was taken, the appellant cannot be forced to avail full duty exemption under Notification No. 30/04-C.E., that the goods cleared under Notification No. 29/04-C.E., cannot be treated as exempted goods covered by Notification No. 30/04-C.E., that since the capital goods were not exclusively used for manufac