Exemption notification conditions for cotton yarn held satisfied; actual end-use by recipient societies could not be imposed.

Exemption under Notification Nos. 5/98-CE and 5/99-CE for cotton yarn supplied through the National Handloom Development Corporation depended on compliance with the specified supply, certification, and cheque-payment conditions. Those conditions were satisfied, including later production of the prescribed certificate. The notifications did not require the manufacturer to prove actual use of the yarn by recipient societies on handlooms, and no additional end-use obligation could be read into the exemption. The phrase "for use" was treated as referring to intended use, not proof of actual consumption. On that basis, denial of the exemption on alleged non-use was unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 5/98-CE and Notification No. 5/99-CE for cotton yarn supplied through the National Handloom Development Corporation, and whether the revenue could deny the exemption on the ground that the yarn was not proved to have been actually used by the recipient societies on handlooms.

Analysis: The exemption notifications required supply of yarn on the order of the National Handloom Development Corporation, production of the prescribed certificate, and payment by cheque drawn by the cooperative body or corporation from its own bank account. Those conditions were found to have been satisfied, including subsequent production of the certificate. The notifications did not cast any further obligation on the manufacturer to verify the ultimate use of the yarn by the recipient societies. The expression "for use" was construed as referring to intended use, not actual use, and no end-use condition could be added by the adjudicating authority beyond the notification terms.

Conclusion: The appellant satisfied the notification conditions, and denial of exemption on the basis of alleged non-use by the societies was unsustainable.

Final Conclusion: The demand, interest, and penalty were set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where an exemption notification prescribes specific conditions for supply and certification, fulfillment of those conditions entitles the assessee to the benefit, and an actual end-use requirement cannot be read into the notification unless expressly provided.

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