2004 (6) TMI 527 - AT - Central Excise

Summary

Issues:
- Condonation of delay in appeals
- Waiver of pre-deposit and stay of recovery in relation to duty and penalty amounts
- Interpretation of exemption notifications for intermediate products

Condonation of Delay in Appeals:
The tribunal considered applications for condonation of delay in the appeals and, after hearing both sides, allowed these applications.

Waiver of Pre-Deposit and Stay of Recovery:
The applications sought waiver of pre-deposit and stay of recovery concerning duty and penalty amounts in two appeals. The demands were related to flexible plastic sheets falling under a specific heading of the CETA Schedule, manufactured by the appellants for captive consumption in the production of plastic articles falling under the same heading. The appellants, a Small Scale Industries (SSI) unit, claimed exemption benefits under Notification Nos. 8/98-C.E. and 8/99-C.E. for their final products. The dispute arose as the department contended that duty was payable on the plastic sheets (considered intermediate products) since the final products were duty-exempt. The appellants argued that the plastic sheets could be cleared for home consumption and should be treated as final products eligible for exemption under the said notifications. The tribunal noted an exclusion clause in Notification No. 8/98-C.E., stating that clearances of intermediate products should not be considered for determining the value of clearances for home consumption. Additionally, if the final product was nil-rated or wholly exempted from duty, the clearances of intermediate products would not be deemed exempt. Consequently, the tribunal directed the appellants to make a pre-deposit of Rs. 3.5 lakhs within two months, considering the arguable nature of the case.

Interpretation of Exemption Notifications for Intermediate Products:
The tribunal analyzed the conflicting interpretations of the exemption notifications regarding intermediate products. The exclusionary clause in Notification No. 8/98-C.E. was crucial in determining the appellants' eligibility for exemption under Notification No. 67/95-C.E. for plastic sheets. The department argued that the appellants were liable to pay duty on the intermediate product due to the exclusion clause, as the final products were already duty-exempt. The tribunal found this argument prima facie impressive and noted that the appellants did not present a strong case. Considering the absence of financial hardship claims and the debatable nature of the case, the tribunal directed the appellants to pre-deposit a portion of the duty amount under Section 35F of the Central Excise Act, 1944, within a specified timeline for compliance.