1998 (7) TMI 237 - AT - Central Excise

Cotton fabrics in cross reel hanks cleared to registered co-operative societies, thereby fulfilling first condition of Notification No. 25/95-C.E.

Summary

Issues:
1. Confirmation of duty and imposition of personal penalties by the Commissioner of Central Excise.
2. Denial of exemption benefit due to payment method discrepancies by co-operative societies.
3. Interpretation of the condition of making payments by cheques for availing exemption benefits.
4. Dispute regarding the verification of payment method by two specific co-operative societies.
5. Legal arguments on the substantial compliance with the payment condition.
6. Relevance of certificates issued by co-operative societies and banks in determining compliance.

Analysis:
1. The judgment addressed the confirmation of duty and imposition of penalties by the Commissioner of Central Excise on the appellants, a company and its Vice President. The duty amount and personal penalties were specified in the impugned order.
2. The issue revolved around the denial of exemption benefits to the appellants due to discrepancies in the payment method used by the co-operative societies purchasing goods from them. The department contended that payments made by demand drafts did not fulfill the mandatory condition of payment by cheques.
3. The legal argument focused on the interpretation of the payment condition for availing exemption benefits. The appellant's advocate cited precedents where the Tribunal had ruled that payments by demand drafts could constitute substantial compliance with the cheque payment requirement.
4. A dispute arose regarding the verification of payment methods by two specific co-operative societies, where the certificates issued by their banks did not explicitly clarify whether the demand drafts were issued by debiting the society's bank accounts.
5. The appellant's counsel argued for substantial compliance with the payment condition, emphasizing that the certificates from the co-operative societies indicated the demand drafts were issued from their own funds, even if not explicitly stated by the banks.
6. The judgment analyzed the relevance of certificates issued by both co-operative societies and banks in determining compliance with the payment condition. It concluded that the conditions were substantially fulfilled, even for the two societies in question, based on the evidence presented and the lack of rebuttal from the department.

This detailed analysis of the judgment highlights the key issues, legal arguments, and the Tribunal's decision regarding the denial of exemption benefits based on payment method discrepancies by co-operative societies.