2004 (12) TMI 502 - AT - Central Excise

Summary

Issues:
Exemption from Central Excise duty for cotton yarn supplied in Cross Reel Hanks under Notification Nos. 4/97-C.E. and 5/98-C.E.; Denial of exemption by the Commissioner; Interpretation of conditions of the exemption notifications; Requirement of End Use Certificate; Barred show cause notice under Section 11A of the Central Excise Act; Financial hardship and request for dispensation of penalty and duty.

Analysis:
The case involved the appellant seeking exemption from Central Excise duty for cotton yarn supplied in Cross Reel Hanks under Notification Nos. 4/97-C.E. and 5/98-C.E. The appellant argued that all conditions of the exemption notifications were met, and the reasons given by the Commissioner for denial were incorrect. They contended that no End Use Certificate was required, and the yarn could only be used in the Handloom Sector, not on Powerlooms. Additionally, they claimed that the goods were sold to Tantuja and Tantusree on a principal-to-principal basis, satisfying the requirements of the notifications.

The appellant further argued that the Commissioner could not impose conditions beyond those specified in the notifications and that any show cause notice relating to the period prior to one year was time-barred under Section 11A of the Central Excise Act. Financial hardship in the financial year 2002-2003 was also highlighted, with the appellant facing significant losses. They requested dispensation of the penalty and duty imposed by the Commissioner based on their strong case.

During the hearing, both sides presented their arguments, with the Revenue representative reiterating the Commissioner's findings. Upon consideration, the Tribunal found merit in the appellant's case and decided to dispense with the duty and penalty imposed. The stay petitions for all appellants were unconditionally allowed, with the matter scheduled for a Final Hearing on 22-2-2005.