2004 (7) TMI 515 - AT - Central Excise

Summary

Issues:
Demand of duty and penalty on the appellants, Benefit of Notification No. 41/95-C.E. denial, Purchase of tea leaves from growers through agents, Waiver of pre-deposit and stay of recovery.

Analysis:
The judgment addresses the demand of duty over Rs. 20 lakhs and an equivalent penalty imposed on the appellants. The adjudicating authority confirmed this demand by denying the benefit of Notification No. 41/95-C.E. for the period 2001-02. This notification exempted "tea cleared by a bought leaf factory" from excise duty under specific conditions. The main condition required the manufacturer to file an undertaking with the jurisdictional Assistant Commissioner/Deputy Commissioner of Central Excise, stating that a significant portion of the green leaf used should be purchased directly from growers with small land holdings under tea cultivation. Despite the appellants meeting this condition by purchasing tea leaves from growers with small land holdings, the department objected, claiming the purchases were made through agents and not directly from the growers. However, the notification did not specify the term "directly" in its condition. The records, including receipts issued by the growers, indicated that payments were received by the appellants, showing a strong prima facie case in favor of the appellants. Consequently, the tribunal granted the waiver of pre-deposit and stay of recovery as requested by the appellants.