Malanad Co-operative Tea Factory Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appellants herein are engaged in the manufacture of tea and were availing of exemption under notification 41/99-c.e., dated 26-11-1999 during the financial year 2000-2001. they continued to avail of the exemption under this notification which inter alia exempts tea cleared by a bought leaf factory subsequent to 1999-2000 subject to conditions set out against sr. no. iv of the notification, in the financial year 2001-2002. an undertaking was filed for the year 2001-2002 only on 29-5-2001. the department proposed to deny the benefit of exemption for the period from 1-4-2001 to 28-5-2001 and show cause notice proposing recovery of duty of rs. 1,78,558/- together with interest was issued.the notice was adjudicated by confirming the demand raised thereunder; the order of the deputy commissioner was appealed against before the commissioner (appeals) who upheld the same; hence this appeal before the tribunal.3. the short question to be decided is whether an undertaking is required to be given annually and of the commencement of each financial year. the provisions at sr. no. ii of the notification would make it clear that this indeed is the requirement of the notification.according to clause (b) against condition ii, the manufacturer is required to file an undertaking that green leaf used by the factory during the period from the date of undertaking until the end of the financial year was not purchased from any grower who has a holding exceeding ten hectares under tea cultivation. in other words, the undertaking recording purchase of green leaf would come to an end at the end of a particular financial year. therefore, this leads to the interpretation to be put upon the notification by the revenue, viz., that a declaration is required at the commencement of each financial year. since the benefit of exemption from duty commences from the date of the undertaking as per the notification itself, the benefit is not available to the appellants for the period during 1-4-2001 to 28-5-2001 when the old undertaking had lapsed and the new undertaking had yet to be filed.

Judgment:
1. The appellants herein are engaged in the manufacture of tea and were availing of exemption under Notification 41/99-C.E., dated 26-11-1999 during the financial year 2000-2001. They continued to avail of the exemption under this notification which inter alia exempts tea cleared by a bought leaf factory subsequent to 1999-2000 subject to conditions set out against Sr. No. IV of the notification, in the financial year 2001-2002. An undertaking was filed for the year 2001-2002 only on 29-5-2001. The department proposed to deny the benefit of exemption for the period from 1-4-2001 to 28-5-2001 and show cause notice proposing recovery of duty of Rs. 1,78,558/- together with interest was issued.

The notice was adjudicated by confirming the demand raised thereunder; the order of the Deputy Commissioner was appealed against before the Commissioner (Appeals) who upheld the same; hence this appeal before the Tribunal.

3. The short question to be decided is whether an undertaking is required to be given annually and of the commencement of each financial year. The provisions at Sr. No. II of the notification would make it clear that this indeed is the requirement of the notification.

According to clause (b) against condition II, the manufacturer is required to file an undertaking that green leaf used by the factory during the period from the date of undertaking until the end of the financial year was not purchased from any grower who has a holding exceeding ten hectares under tea cultivation. In other words, the undertaking recording purchase of green leaf would come to an end at the end of a particular financial year. Therefore, this leads to the interpretation to be put upon the notification by the Revenue, viz., that a declaration is required at the commencement of each financial year. Since the benefit of exemption from duty commences from the date of the undertaking as per the notification itself, the benefit is not available to the appellants for the period during 1-4-2001 to 28-5-2001 when the old undertaking had lapsed and the new undertaking had yet to be filed.