2015 (10) TMI 1791 - AT - Central Excise

Waiver of pre deposit - benefit of Notification No. 5/98-C.E. and 5/99-C.E. - Held that - One condition attached to the notification is production of certificate from Apex bodies such as Handloom and Cooperative Societies, National Handloom Development Corpn., as the case may be to the effect that the yarn has to be used on handloom. Admittedly such certificate was placed on record. As per the appellant they are not concerned as to whether such yarn, ordered by the Apex Handloom Cooperative Society, is actually spuned on handloom or not, or is actually delivered to the assessee in question. We prima facie agree with the above contention. There is nothing in the said notification to place any onus on the manufacturer to find out the use of such yarn. The only condition of production of certificate stand fulfilled by the appellant. As such, we are of the prima facie view that the appellant has a good case in its favour. - Stay granted.

Summary

Issues:
1. Dispensing with the condition of pre-deposit of duty and penalty under Notification No. 5/98-C.E. and 5/99-C.E.
2. Interpretation of condition 16 of the notification requiring production of certificate from Apex bodies regarding the use of yarn on handloom.

Analysis:
1. The appellant sought dispensation of the pre-deposit condition of duty and penalty amounting to &8377; 21,09,571/- under Notification No. 5/98-C.E. and 5/99-C.E. The appellant had supplied yarn to handloom societies based on orders from Apex Handloom Cooperative Society, National Development Corporation, fulfilling condition 16 of the notification, which mandated the production of a certificate confirming the use of yarn on handloom.

2. Central Excise authorities initiated proceedings against the appellant upon finding discrepancies in the utilization of yarn by the societies. However, the Tribunal examined the notification and observed that the only requirement was the production of a certificate from the Apex bodies, which the appellant had complied with. The Tribunal noted that the notification did not impose an obligation on the manufacturer to verify the actual use of the yarn. As the certificate was provided, the Tribunal held that the appellant had fulfilled the condition, leading to the conclusion that the appellant had a strong case in their favor.

3. The Tribunal, therefore, allowed the stay petition unconditionally, emphasizing that the appellant's compliance with the certificate production requirement sufficed to meet the conditions of the notification. The judgment highlighted the absence of any specific obligation on the manufacturer to ensure the actual utilization of the yarn, thereby supporting the appellant's position and granting relief from the pre-deposit condition.