Entitlement to exemption under the Exemption Notification No. 30/81-CE dated 1-3-1981 was upheld based on the satisfaction of the condition of being registered as handloom cooperative societies or organisations set up or approved by the Government for the purpose of the development of handlooms.

Headnote:
Exemption Notification - Central Excise - The court held that the appellants were entitled to the benefit of the Exemption Notification No. 30/81-CE dated 1-3-1981, as the condition of being registered as handloom cooperative societies or organisations set up or approved by the Government for the purpose of the development of handlooms was satisfied. The Tribunal's refusal of exemption based on the ownership of factories by the appellants was set aside, and the tax paid or deposited was ordered to be refunded.
Fact of the Case:

The Revenue contended that the appellants were not entitled to the benefit of the Exemption Notification as they did not satisfy the condition of being registered as handloom cooperative societies or organisations set up or approved by the Government for the purpose of the development of handlooms. The Tribunal rejected this contention but held in favor of the Revenue based on the appellants not showing ownership of the factories where woollen fabrics were produced.
Finding of the Court:

The court set aside the Tribunal's order, stating that the appellants were entitled to the benefit of the exemption. It directed the Revenue to give notice to the appellants if they were not entitled to the exemption due to not owning the factories, and ordered the refund of tax paid or deposited.
Issues: Entitlement to Exemption Notification, Ownership of Factories
Ratio Decidendi: The condition of being registered as handloom cooperative societies or organisations set up or approved by the Government for the purpose of the development of handlooms was satisfied, entitling the appellants to the exemption. The Tribunal's refusal of exemption based on ownership of factories by the appellants was not supported by the requirement at any stage of the proceedings.
Final Decision: The appeals were allowed, the judgment and order under appeal were set aside, and the tax paid or deposited pursuant to the order of the Tribunal or of the authorities below was ordered to be refunded to the appellants.

ORDER

1. In all these matters the original contention of the Revenue was that the appellants were not entitled to the benefit of the Exemption Notification No. 30/81-CE dated 1-3-1981, issued under Rule 8(1) of the Central Excise Rules because the appellants did not satisfy the condition of being registered as handloom cooperative societies or organisations set up or approved by the Government for the purpose of the development of handlooms. Ultimately, before the Tribunal, this contention of the Revenue was rejected. What the Tribunal considered, and held in favour of the Revenue, was that the appellants had not shown that they were producing the woollen fabrics in "a factory owned by" each of them.

2. It does not appear that at any stage of the proceedings the appellants had been required to show that the factories in which they produced the woollen fabrics were owned by them. The order of the Tribunal refusing them the exemption on this ground must, therefore, be set aside.

3. If it is case of the Revenue that the appellants are not entitled to the benefit of the exemption under the said notification by reason of the fact that the appellants do not own the factories in which the woollen fabrics are produced, the Revenue must give to the appellants a notice to show cause in this regard and the a matter must be processed from that stage.

4. The appeals are allowed. The judgment and order under appeal is set aside.

5. The tax, if paid or deposited pursuant to the order of the Tribunal or of the authorities below, shall be refunded to the appellants.

6. There shall be no order as to costs.

Click Here to Read the rest of this document