2003 (11) TMI 539 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty under Notification No. 126/94-Cus. dated 3-6-1994 for clearances of cut flowers in DTA.

Analysis:
The case involved an application for waiver of pre-deposit of duty amounting to Rs. 22,70,904/- and a penalty of Rs. 50,000/- arising from a Commissioner of Central Excise (Appeals) order regarding clearances of cut flowers. The applicants were issued a show cause notice proposing recovery of the mentioned amounts due to the alleged ineligibility for exemption under Notification No. 126/94-Cus. dated 3-6-1994 for clearances of cut flowers in DTA. The adjudicating authority acknowledged that the flowers sold by the applicants in DTA were not excisable but held that they would be liable to duty under Para 3 of the notification, confirming the demand and imposing a penalty. The lower appellate authority upheld this decision, leading to the appeal and waiver application before the Tribunal.

Upon hearing both parties and examining the notification in question, the Tribunal observed that the exemption applied to goods imported into India for specific purposes related to export-oriented undertakings. As per Para 3 of the notification, liability to pay customs duty would arise on goods used for production, manufacture, or packaging of articles that are not excisable. In this case, the cut flowers cleared by the applicants to DTA were considered non-excisable articles, shifting the duty liability to the inputs used in the production or packaging of the cut flowers, not the flowers themselves. The Tribunal found a strong prima facie case for waiver based on a plain reading of the notification, leading to the decision to dispense with the pre-deposit of duty and penalty, thereby staying the recovery pending the appeal.