TaxTMI 
TaxTMI 
2023 (12) TMI 1002
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 from the Respondent ?" Facts:- 3. Briefly stated facts of the present case are that the respondent/assessee M/s. Tamralipta Co-operative Spinning Mills Limited is engaged manufacturing of cotton yarn in both plain reel hank form as well as crossreel hank form and also in cones falling under Chapter Sub-heading 5205.11, 5206.19, 5206.11 and 5206.12 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred as the Tariff Act) having registration No. 2/R-VI/MID/92 dated 13.6.1992. 4. The respondent availed be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 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. The other noticees have also challenged the levy of penalty by filing separate appeals. The Tribunal, by the impugned order dated 14.7.2006 allowed the appeal of the respondent/assessee recording a finding of fact that the respondent/assessee has complied with aforequoted conditions of the relevant exemption notification issued under Section 5A of the Act, 1944. Paragraphs 3 to 10 of the impugned order of the Tribunal are reproduced below: "3. As is apparent from the above condition annexed to the Notification, the yarn manufactured by the Spinning Mills....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 to be used in handloom, the Commissioner has observed that the appellants have not taken sufficient care to see that the traders are selling the yarn to handloom weavers only. The spinning mill have only produced certificate without ensuring that such yarn is actually being used in the handloom and no steps have been taken by them to the above effect. As such, he has concluded that the second condition is also not satisfied. 6. After hearing both sides, we find that admittedly Tantuja and Tantusree are Apex Handloom Co-operative Societies and as per Notification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icates 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 the packages normally used are cone and cheese, which are directly wound from the ring bobbins. The quality should be good with adequate strength for use in powerloom industry, for use in powerloom industry. The said certificate has been discarded by the Commissioner on the ground that the same does not specifically say that hank yarn cannot be used in powerloom. We find that it is the revenue, who is alleging the use of yarn in powerloom industry and as such, it is for them to prove so. They have failed to produce any evidence to show that the said yarn has been used in powe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndloom 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 Handloom Weavers' Cooperative Society Limited (Tantuja) (for short 'Tantuja') and West Bengal Handloom and Powerloom Development Corporation Limited (Tantusree) (for short 'Tantusree') which are apex handloom co-operative societies and payments were received by the respondent/assessee from the aforesaid two co-noticees by account payee cheques. However, the real transaction was that the goods were not sold directly to the aforesaid two apex handloom cooperative societies but, in fact, these were delivered to some traders for sale to weavers. Therefore, the condition specified in the relevant notifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er 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 respondent/assessee is a co-operative spinning mill which manufactured the yarn in question. The two co-noticees namely Tantuja and Tantusree are also apex handloom 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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, it may assume varying shapes, especially in growing economy. An exemption provision is like an exception. On normal principle of construction or interpretation of statutes, it is to be construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach on fiscal provision intended to augment State revenue. Once exception or exemption becomes applicable, no rule or principle requires it to be construed strictly. When the question is whether a subject falls in the notification or in the exemption clause, then, it being in the nature of exception is to be cons....