Exemption for yarn sold to apex handloom societies upheld where notification conditions were met; added end-use proof could not be imposed.

The exemption under the central excise notifications applied to yarn sold to a registered apex handloom co-operative society, NHDC, or a State Government handloom development corporation, where payment was made by account payee cheque from the purchaser's own account and a clearance certificate for use on handlooms was produced. On the evidence, those conditions were satisfied, and the record did not support the claim that the goods were sold to traders. The Court reiterated that exemption provisions are construed strictly, but authorities cannot read into the notification a further requirement of proof of actual end use when the text does not impose it. The demand of duty, interest and penalty was therefore unsustainable.

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Issues: Whether the respondent was entitled to exemption under the relevant central excise notifications on the sale of yarn to apex handloom co-operative societies, and whether the demand of duty, interest and penalty could be sustained.

Analysis: The notification granted exemption to specified goods purchased by a registered apex handloom co-operative society, National Handloom Development Corporation, or State Government Handloom Development Corporation, subject to payment by cheque from the purchaser's own bank account and production at clearance of a certificate that the yarn was going to be used only on handlooms. On the evidence, the yarn was purchased by the two apex bodies, payments were made by account payee cheques from their own accounts, and certificates covering the intended use were produced. The inference that the goods were really sold to traders was not supported by material on record. The conditions in the exemption notification did not require proof of actual end use by the ultimate user, and the authorities could not add a condition not found in the notification. In fiscal interpretation, exemption clauses are construed strictly, but once the assessee falls within the language of the notification, the benefit cannot be denied by conjecture or intendment.

Conclusion: The respondent satisfied the conditions of the exemption notifications and was entitled to the benefit of exemption. The demand of duty, interest and penalty was unsustainable.

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