2009 (4) TMI 625 - AT - Central Excise

Tribunal remands case for re-examination of evidence on tea growers' exemption eligibility.

ROUSDONMULLAI TEA ESTATES PVT. LTD. Versus COMMISSIONER OF C. EX., SALEM

The Tribunal allowed the appeal by remanding the case back to the Commissioner for re-examination. The Commissioner was directed to reassess the evidence ... Tea - Exemption - Tea leaves purchased from small growers Issues Involved:1. Eligibility for exemption under Notification No. 41/99-C.E. and Notification No. 17/2002-C.E.2. Compliance with conditions for exemption regarding purchase of green leaf from small tea growers.3. Adequacy of evidence provided by the appellants to prove compliance with exemption conditions.4. Interpretation of the requirement for direct purchase from small tea growers.5. Legitimacy of the demand for duty and penalties imposed by the Commissioner.Detailed Analysis:1. Eligibility for Exemption under Notification No. 41/99-C.E. and Notification No. 17/2002-C.E.:The appellants claimed exemption from duty for the period from 1-4-2001 to 31-3-2002 under Notification No. 41/99-C.E. and Notification No. 17/2002-C.E. They cleared 10,53,085 Kgs of tea without payment of duty, asserting that they met the conditions specified in these notifications.2. Compliance with Conditions for Exemption Regarding Purchase of Green Leaf from Small Tea Growers:The conditions for exemption stipulated that not less than two-thirds of the green leaf used by the factory must be purchased from tea growers each having a holding not exceeding 10 hectares under tea cultivation. The appellants submitted an undertaking to this effect and claimed compliance by purchasing green leaf from small growers through agents.3. Adequacy of Evidence Provided by the Appellants to Prove Compliance with Exemption Conditions:The Commissioner found that the appellants failed to provide acceptable evidence to show that 19,00,452 Kgs of green leaf were actually purchased from small growers. The appellants raised vouchers and made payments to agents, not directly to the small growers, which led to the conclusion that the conditions for exemption were not met.4. Interpretation of the Requirement for Direct Purchase from Small Tea Growers:The Commissioner interpreted the exemption notification to mean that tea leaves must be purchased directly from small tea growers. However, the Tribunal disagreed with this interpretation, stating that the crucial factor is whether the tea leaves were purchased from small tea growers, regardless of whether this was done directly or through agents.5. Legitimacy of the Demand for Duty and Penalties Imposed by the Commissioner:A Show Cause Notice was issued proposing denial of the exemption and recovery of duty amounting to Rs. 20,31,470/-, along with interest and penalties under Sections 11A(1), 11AB, and 11AC of the Central Excise Act, 1944. The Commissioner confirmed the demand and imposed an equal amount of penalty, citing lack of evidence and non-compliance with exemption conditions.Tribunal's Decision:The Tribunal held that the appellants' submission of cash receipts issued by tea growers for payments received through agents could establish the required link between the appellants and the small tea growers. Since these receipts were either not presented or not considered by the Commissioner, the Tribunal decided to remand the case for re-examination. The Commissioner was directed to re-evaluate the evidence and pass a fresh order after providing the appellants with a reasonable opportunity to be heard.Conclusion:The appeal was allowed by way of remand, and the case was sent back to the jurisdictional Commissioner for re-examination of the evidence regarding the purchase of green leaf from small tea growers and determination of eligibility for the exemption under the relevant notifications.