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2015 (12) TMI 943 - AT - Central ExciseManufacturing and Clearance of Tea - purchase of green leaf from the small growers - Benefit of exempted vide Notification No. 4/99-CE dated 26.11.99 - The contention of the department in the SCN that the factory was not worked for six months is not correct - Held that - Adjudicating authority had correctly held that the appellant factory was working throughout the year and complied the conditions of the notification and eligible for the benefit of the notification. It is not the case of the department that the appellants not procured green leaves from small growers. The benefit of exemption is intended to promote small growers having less than 10 hectares. The appellants used not less than two thirds of green leaves which were procured from small growers. The exemption notification should be read and interpreted in right perspective. By respectfully following the Hon ble Supreme Court decision above, we hold that the appellants are eligible for exemption under Notification No. 4/1999. Accordingly, we uphold the adjudication order and the impugned order passed by the LAA is set aside. - Decided in favour of assessee.
Issues Involved:
1. Eligibility for exemption from central excise duty under Notification No. 4/99-CE. 2. Definition and interpretation of "working" for at least six months. 3. Compliance with the conditions specified in the exemption notification. 4. Validity of the Commissioner (Appeals) order confirming duty demand and dropping penalty. 5. Interpretation of exemption clauses in taxing statutes. Issue-wise Detailed Analysis: 1. Eligibility for exemption from central excise duty under Notification No. 4/99-CE: The appellant claimed exemption from central excise duty on tea cleared during the financial year 2000-2001, based on Notification No. 4/99-CE dated 26.11.99. The notification exempted tea from excise duty subject to certain conditions, including the requirement that the factory must have been working for at least six months during the preceding financial year. 2. Definition and interpretation of "working" for at least six months: The appellant argued that the factory was operational for the entire financial year 1999-2000, despite a lack of production activity from 05.07.1999 to 21.03.2000. They contended that maintenance and repair activities should be considered as "working" under the notification. The department, however, asserted that the factory did not meet the six-month working condition, as it only conducted production activities from April to June 1999 and a trial run in March 2000. 3. Compliance with the conditions specified in the exemption notification: The appellant provided records, including raw material purchase registers, wages registers, and electricity payment details, to demonstrate continuous factory operations. The adjudicating authority found these records supportive of the appellant's claim and concluded that maintenance and repair activities were relevant to the factory's functioning. The Commissioner (Appeals) disagreed, leading to the present appeal. 4. Validity of the Commissioner (Appeals) order confirming duty demand and dropping penalty: The Commissioner (Appeals) confirmed the duty demand of Rs. 5,08,452/- but dropped the penalty proceedings. The appellant challenged this decision, arguing that the factory met the exemption notification's conditions and was wrongfully denied the benefit. 5. Interpretation of exemption clauses in taxing statutes: The adjudicating authority emphasized that the exemption notification did not explicitly mention "manufacture" but required the factory to be "working" for six months. Citing the Supreme Court's decision in CCE, New Delhi Vs. M/s. Hari Chand Shri Gopal, the adjudicating authority interpreted "working" to include maintenance and repair activities, thus fulfilling the notification's conditions. Conclusion: The tribunal upheld the adjudicating authority's decision, recognizing that the appellant's factory was operational throughout the year, including during maintenance periods. The tribunal found that the appellant met all conditions of the exemption notification and was eligible for the duty exemption. The appeal was allowed, setting aside the Commissioner (Appeals) order and confirming the appellant's entitlement to the exemption. Pronouncement: The judgment was pronounced in open court on 11.12.2015.
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