2003 (9) TMI 375 - AT - Central Excise

Issues: Application for waiver of pre-deposit of duty and penalty, eligibility for duty-free supply under Notification 1/95, availability of benefit under Notification 125/84, time bar plea

Waiver of Pre-Deposit of Duty and Penalty:
The case involved an application for the waiver of pre-deposit of duty amounting to Rs. 49,91,915/- and an equal penalty arising from a dispute related to the clearance of polyester grey fabrics to a company. The applicants, engaged in manufacturing, held a license for a private bonded warehouse under the Customs Act. The investigation revealed discrepancies in the re-warehousing and CT3 certificates, leading to a show cause notice for duty demand and penalties. The Commissioner confirmed the demand and penalties, rejecting the applicants' claim for coverage under Notification No. 125/94. The Tribunal, after hearing both sides, found prima facie evidence indicating that the goods did not reach the intended recipient, making the applicants liable to pay duty. The Tribunal also considered the plea for benefit under Notification No. 125/84, finding the matter arguable due to the interpretation of the expression "allowed to be sold in India." Considering the totality of facts, the Tribunal directed a pre-deposit of Rs. 25 lakhs towards duty within eight weeks, with the balance duty and penalties dispensed with upon such deposit, pending the appeal.

Eligibility for Duty-Free Supply under Notification 1/95:
The Tribunal found prima facie evidence suggesting that the goods did not reach the intended recipient, rendering the applicants liable to pay duty as the benefit of Notification No. 1/95 was not available to them. The Commissioner had confirmed the duty demand and penalties, rejecting the applicants' claim for coverage under Notification No. 125/94, leading to the appeal and application for waiver.

Availability of Benefit under Notification 125/84:
The Tribunal considered the availability of benefit under Notification No. 125/84, finding the matter arguable due to the interpretation of the expression "allowed to be sold in India." The Commissioner had given detailed reasons for denying the benefit of Notification 125/84, emphasizing the legitimate clearance of goods to the Domestic Tariff Area (DTA) versus illegal clearance contrary to policy. The Tribunal noted that the plea of time bar was also arguable, given the absence of the re-warehousing certificate from the intended recipient.

Time Bar Plea:
The plea of time bar was considered arguable in light of the finding that the applicants had not received the re-warehousing certificate from the intended recipient. The Tribunal, after assessing the facts and circumstances of the case, directed a pre-deposit of Rs. 25 lakhs towards duty within eight weeks, with the balance duty and penalties dispensed with upon compliance, pending the appeal. Failure to comply would result in the vacation of stay and dismissal of the appeal without prior notice, with compliance to be reported by a specified date.

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