As has been stated many time, terminology is critical in IT -- your post is in JCL part of the Forum and you use a term "DUMMY" which has a very specific meaning in the context that this is an IBM Mainframe Forum.
For example, I find it hard to comprehend this text from your post:
shabukumar wrote:Will dummying unused data sets(created but not used for a long time) reduce CPU and DASD Utilization? (I am sure that deleting unused data sets save space but I require without deleting but dummying)
The DUMMY parameter specifies that no device is to be allocated to this DD statement and that no disposition processing or I/O is to be done. All other JCL parameters on a DUMMY DD statement have to be syntactically correct. Use the DUMMY parameter if you know you will not need a file in a job step. So you've not really "removed" the file-in-question from the system, it's still there. And as Dick indicates, if it's needed later -- by removing the file-in-question, are you doing some good or bad is business decision; using DUMMY, as such, does not play any role here.