2022 (9) TMI 561

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....st Zone Bench at Kolkata (the Tribunal). The appeal was admitted on the following substantial question of law: "Whether the order of the Tribunal setting aside the order of penalty on the respondent was correct in law ?" The Commissioner of Central Excise, Haldia Commissionerate was the adjudicating authority. The show cause notice was issued to the respondent and two other noticees on 27th December, 2002 on the ground that the yarn have not been actually purchased by the respondent and another similarly placed noticee but were actually purchased from various private traders already intimated directly from the spinning mill who was the first noticee making it appear as if the purchase of yarn was done by the respondent and the n....

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....erested in the matter, we are constrained to hear the learned standing counsel for the appellant and dispose of the appeal on merits. The short question involved in the instant case is whether the benefit of certain notifications issued by the Department were misused and the respondent/assessee being a party to the modus. The order of the adjudicating authority dated 29th December, 2003 is a very elaborate order. After considering the facts as well as the evidence which was available before the authority, it is pointed that the spinning mill used to remove the plan reel hank yarn and cones directly to various traders while the product cotton yarn cross reel which is dutiable but for the said exemption were consigned to the respondent and....

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.............. The following facts clearly revealed from the scrutiny of the documents and also depositions made by the various persons. It has been clarified that in the event of fixing the minimum rate of sale by Noticee No. 1 at Rs. 50/- per unit and quoting of Rs. 70/- per unit by a trader against such minimum rate. Tantuja / Tantusree would have sent authorization for that traders for Rs. 70/- per unit and accordingly the mill (Noticee No. 1) would have issued Central Excise Invoices in the name of trader at the sale rate of Rs. 70/- per unit and Tantuja would get 1.5% commission for such sale. This indicates that Tantuja / Tantusree had no role for negotiation with the traders, since, otherwise. If Tantuja / Tantusree were the real purcha....

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....e system was evolved only to ensure that the sale should look like a sale from the spinning mill, the noticee no.1 to the respondent, the noticee no.2 and this was done in order to avail the benefit of exemption whereas the actual sale took place between the spinning mill and the private traders while the respondent and the other apex society merely acted as a commission/selling agent thereby earning commission at the rate of 1.5% as profit. Thus, the adjudicating authority records that this point could not be controverted by the respondent neither at the time of making written submission nor at the time of personal hearing. With regard to the second contention to be eligible to the benefit of the notification relating to issuance of cer....

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.... outside the State on which the respondent had no control. Therefore, the adjudicating authority held that the certificates declaring that the yarn is going to be used only on handlooms as issued by the respondent and the other apex society are not based on factual verification but only based upon the certificate issued by the spinning mill concerned. Thus, the adjudicating authority held that the conditions stipulated in the notification for the purpose of exemption are not favourable in the case on hand. Accordingly, the proposal in the show cause notice was affirmed and a penalty of Rs.10,00,000/- was imposed against the respondent. The learned tribunal while interfering with the order has not taken note of the notification in its ent....