1999 (10) TMI 242 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 53/91, dated 25-7-1991 regarding payment conditions for yarn procurement.

Analysis:
The case involved nine appeals consolidated and heard together concerning the procurement of yarn by certain companies from a textile supplier under Notification No. 53/91, dated 25-7-1991. The Department alleged non-compliance with the notification conditions, specifically related to payment methods and restrictions on transferring yarn to others. The appellants argued that they met the notification requirements by making payments through Demand Drafts or Pay Orders obtained against a cheque drawn on their own bank account. They contended that passing on yarn to power looms or for sale was not a stipulated condition of the notification.

During the appeal, the appellants' representative, a Chartered Accountant, emphasized that the notification only mandated two conditions: yarn procurement by a registered co-op. society without duty payment and payment through a cheque drawn on the society's account. The representative argued that the appellants fulfilled these conditions as the co-op. societies were registered, and payments were made via Pay Orders or Demand Drafts issued against cheques drawn on the society's bank account. Referring to previous tribunal decisions, the representative asserted that such payment methods constituted substantial compliance with the notification's cheque payment requirement.

In response, the Department's representative contended that apart from the payment issue, the appellants also breached the notification by transferring yarn to powerloom owners and selling it directly. The representative claimed that the co-op. societies were only registered on paper, casting doubt on their compliance with the notification's intent. Consequently, penalties were imposed on the appellants for non-compliance.

Upon reviewing the arguments, the Tribunal focused on the payment method dispute, noting that previous cases had established that payment through Demand Drafts or Pay Orders obtained against cheques on the society's bank account constituted substantial compliance with the notification. The Tribunal found that the appellants adhered to the notification conditions, emphasizing that subsequent yarn transactions were not specified conditions. Citing consistency with previous decisions, the Tribunal ruled in favor of the appellants, allowing the appeals and granting appropriate relief in accordance with the law.