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TMI Blog2023 (12) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Tribunal should have held that the Respondent had failed to discharge the onus of proving that the two conditions mentioned in the said Notifications, namely, that the goods in question had to be sold to the apex bodies by the respondent and that a certificate should be issued from the said apex bodies to the respondent at the time of the clearance of goods that the said goods were going to be used only on handloom had been satisfied ? (c) Whether the learned Tribunal should have inferred from the facts on record that the role of the apex bodies was in the nature of selling or commission agents and not that of direct purchasers of the said goods from the Respondent ?" Facts : 3. Briefly stated facts of the present case are that the respondent/assessee M/s. Tamralipta Co-operative Spinning Mills Limited is engaged manufacturing of cotton yarn in both plain reel hank form as well as cross-reel hank form and also in cones falling under Chapter Sub-heading 5205.11, 5206.19, 5206.11 and 5206.12 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred as the Tariff Act) having registration No.2/R-VI/MID/92 dated 13.6.1992. 4. The respondent availed benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, whereby he denied exemption to the respondent/assessee and imposed central excise duty amounting to Rs.2,31,81,177/- under Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act, 1944) and also imposed interest under Section 11AB and penalty equal to the amount of duty under Section 11AC of the Act. Penalty of Rs.10,00,000/- on each of the two other assessees were also imposed under Rule 209A of the Rules, 1944. 7. Aggrieved with the adjudication order, the respondent/assessee preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, East Zone Bench at Kolkata. The other noticees have also challenged the levy of penalty. The Tribunal, by the impugned order dated 14.7.2006 allowed the appeal of the respondent/assessee recording a finding of fact that the respondent/assessee has complied with aforequoted conditions of the relevant exemption issued under Section 5A of the Act, 1944. Paragraphs 3 to 10 of the impugned order of the Tribunal are reproduced below: "3. As is apparent from the above condition annexed to the Notification, the yarn manufactured by the Spinning Mills is exempted from the payment of duty, if the same is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct 1.5% Commission for their services and would make payments to the yarn manufacturers by way of cheque. The Commissioner has concluded that though the sales were being shown as having been made to Tantuja or Tantusree, the same were in fact being made to traders, with the connivance of Tantuja and Tantusree. As regards second condition of the Notification requiring production of a certificate from an authorised officer of National or State Handloom Development Corporation at the time of clearance from the factory to the effect that such cleared yarn was going to be used in handloom, the Commissioner has observed that the appellants have not taken sufficient care to see that the traders are selling the yarn to handloom weavers only. The spinning mill have only produced certificate without ensuring that such yarn is actually being used in the handloom and no steps have been taken by them to the above effect. As such, he has concluded that the second condition is also not satisfied. 6. After hearing both sides, we find that admittedly Tantuja and Tantusree are Apex Handloom Co-operative Societies and as per Notification issued by the State Government were required to purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on the part of the revenue to produce any evidence contrary to the certificates cannot be made a ground to hold the certificate to be incorrect. 8. On the contrary the appellants have produced on record the experts opinion in the shape of letters from the members, College of Textile Technology stating that Cotton yarn in cross reel hanks are suitable for handloom industry due to two advantages viz., it can be bleached or dyed in hank form and due to less chance of entanglement during the process. The letter further states that in powerlooms industry the packages normally used are cone and cheese, which are directly wound from the ring bobbins. The quality should be good with adequate strength for use in powerloom industry, for use in powerloom industry. The said certificate has been discarded by the Commissioner on the ground that the same does not specifically say that hank yarn cannot be used in powerloom. We find that it is the revenue, who is alleging the use of yarn in powerloom industry and as such, it is for them to prove so. They have failed to produce any evidence to show that the said yarn has been used in powerloom. 9. The applicants have also strongly contended ..... X X X X Extracts X X X X X X X X Extracts X X X X
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