TMI Blog2023 (12) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... m co-operative societies of the State Government who purchased yarn and also gave certificate that the yarn is going to be used only on handlooms. The respondent/assessee received payments from the aforesaid two purchasers namely Tantuja and Tantusree, by account payee cheques. The inference drawn by the adjudicating authority to deny exemption under the relevant exemption notification, that delivery of yarn was given by the respondent/assessee to persons other than Tantuja and Tantusree, is neither based on any material or evidence nor the inference so drawn can be said to be a valid exercise of power by the adjudicating authority - on admitted facts of the case, it is found that the respondent/assessee has fully complied with the conditions of the relevant exemption notification. Therefore, the Tribunal has correctly and lawfully set aside the adjudication order and allowed the appeal of the respondent/assessee. Undisputedly, the yarn in question has been purchased by the co-noticees namely Tantuja and Tantusree, which both are registered apex handloom co-operative societies, who made payment to the respondent/assessee (yarn manufacturing co-operative society) through cheque d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt/department and Mr. Sagar Bandopadhyay, learned counsel assisted by Mr. Arijit Chakraborty and Mr. S. Nandy, learned Advocates for the respondent/assessee. 2. This appeal was admitted on 2.7.2007 on the following substantial questions of law: (a) Whether the learned Tribunal had failed to appreciate that onus lay on the respondent to prove that the conditions imposed in Notification Nos. 4/97-CE, 5/98-CE, 5/99-CE, 6/00-CE were satisfied in the instant case ? (b) Whether in the facts and circumstances of the case, 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticee No. 3, West Bengal Handloom and Powerloom Development Corporation Limited (Tantusree) were also required to show cause to the Commissioner of Central Excise as to why penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise (No. 2) Rules, 2001 may not be imposed. The aforesaid show cause notice was issued to the respondent/assessee for the period from December, 1997 to March, 2002. The Commissioner of Central Excise, Haldia Commissionerate adjudicated the show cause notice by Adjudication Order dated 29.12.2003, 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite certificates have also been produced to the effect that such yarn would be used in the handloom industry. 5. The Commissioner in his impugned order held that though the payment of the yarn in question has been made by Tantuja and Tantusree by way of cheque but the investigation conducted by the revenue revealed that the appellants were holding sale meeting with the Tantuja and Tantusree officers and traders were also invited. Traders were directed to make payment to Tantuja and Tantusree by way of pay order or bank draft and the said Tantuja and Tantusree, after receiving payment from the traders, deduct 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to other buyers and not to Tantuja and Tantusree. 7. As regards the second condition of the Notification, we find that the Appellants have admittedly produced the certificate from the relevant authorities to show that the goods are to be used in the handloom industry. There is no evidence on records to show that the same have been used elsewhere. In fact the Commissioner has observed in his impugned order that it was not possible for the local jurisdictional Central Excise authorities to ascertain the authenticity of such certificate. If that be so, then the certificates are required to be accepted by the revenue. Failure 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It is also relevant to mention that the appellants herein had also filed appeal against the impugned order of the Tribunal with respect to the co-noticees raising limited question of penalty imposed upon them under Rule 209A of the Rules, 1944. The appeal filed by the Appellant Department was allowed by a co-ordinate Bench of this Court being Central Excise Appeal No. 3 of 2007 decided on 24.2.2023. Against the aforesaid judgment and order passed by a co-ordinate Bench, the concerned noticee filed a Special Leave Petition (Civil), Diary No. 29915/2023 (M/s. The West Bengal State Handloom Weavers Co-operative Society Ltd. (Tantuja) vs. Commissioner of Central Excise, Haldia Commissionerate. Hon ble Supreme Court by an order dated 11.8.2023 stayed the above-referred judgment and order dated 24.2.2023 in Central Excise Appeal No. 3 of 2007 passed by the Co-ordinate Bench of this Court. Submissions :- 10. Learned counsel for the appellant submits that it is not in dispute that the respondent is a manufacturing co-operative spinning mill of the State Government which manufactured the goods in question and showed its sales to other co-noticees namely, West Bengal State H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 35G of the Central Excise Act, 1944. In support of his submissions, learned counsel for the respondent has relied upon the judgments of Hon ble Supreme Court in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise, Customs, Surat Ors. reported in 1968 SCC OnLine SC 50 (paragraphs 4 and 5), Union of India Others v. Wood Papers Limited and Another reported in (1990) 4 SCC 256 (paragraph 4), Commissioner of Customs (Import), Mumbai v. Dilip Kumar Company reported in 2018 (361) ELT 577 (SC) (paragraphs 24, 25 and 44), Shriram Vinyl Chemical Industries v. Commissioner of Customs, Mumbai reported in 2001 (129) ELT 278 (SC) (paragraph 3), Commissioner of Central Excise, Hyderabad v. Sunder Steels Limited (paragraph 5) reported in 2005 (181) ELT 154 (SC) and a judgment of the High Court of Karnataka in Taghar Vasudeva Ambrish v. Appellate Authority for Advance Ruling, Karnataka reported in 2022 (63) GSTL 445 (Karnataka) (paragraph 15). Discussion and Finding:- 12. We have heard learned counsel for the parties and carefully considered their submissions and perused the record of this appeal. 13. It is undisputed that the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that if the manufacturer produces at the time of clearance a certificate from an authorised officer of the Handloom Co-operative Society, National Handloom Development Corporation or State Government Handloom Development Corporation, as the case may be, that the yarn is going to be used only on handlooms . Undisputedly, the yarn in question has been purchased by the co-noticees namely Tantuja and Tantusree, which both are registered apex handloom co-operative societies, who made payment to the respondent/assessee (yarn manufacturing co-operative society) through cheque drawn by them on their own bank accounts. They have also issued a certificate to the effect that the yarn is going to be used only on handlooms. Thus, all the conditions of the exemption notification in question were satisfied by the respondent/assessee. Therefore, the respondent/assessee was entitled for exemption and the Tribunal has lawfully and correctly allowed the appeal of the respondent/assessee holding the transactions in question to be exempt from Central Excise Duty. 16. The law of exemption in indirect taxes is well settled. Literally, exemption is freedom from liability to tax or duty. Fiscally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not provided by the exemption notification. It attempted to add words by drawing its own inference on the basis of presumption that the yarn in question could have been sold by the respondent/assessee not to the aforesaid apex handloom co-operative societies but to some other persons. Therefore, such an inference, which has no basis, could neither be accepted nor could be given any weight. Therefore, the Tribunal has not committed any error of law to set aside the order of the adjudicating authority and to extend the benefit of exemption notification to the respondent/assessee. It is settled law that the notification has to be interpreted on its own wordings. No words, not used in the notification, can be added. Since the respondent/assessee has fulfilled all the conditions, therefore, it became entitled for exemption and the exemption could not have been denied. Reference in this regard may be had to the judgment of Hon ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad v. Sunder Steels Limited (paragraph 5) reported in 2005 (181) ELT 154 (SC). 19. The principle of law on the question of exemption notification as discussed above is also supported by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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