2004 (9) TMI 446 - AT - Central Excise

Summary

Issues:
Application for waiver of pre-deposit of duty on Texturised Yarn and Raw Material under Notification No. 1/95-C.E.

Analysis:
The case involved an application for waiver of pre-deposit of duty amounting to Rs. 56,01,879/- on Texturised Yarn and Rs. 26,59,817/- on Raw Material procured duty-free under Notification No. 1/95-C.E. The applicants, a 100% Export Oriented Unit (EOU) engaged in manufacturing Texturised Yarn, cleared the yarn to subcontractors for weaving grey fabrics, which was not initially included in their industrial license. However, they subsequently applied for and obtained permission to manufacture grey fabrics and other products. The applicants argued that since they obtained permission before clearing the yarn for weaving, there was no violation of the notification's conditions. The Counsel for the appellant emphasized the subsequent permission granted by the authorities and contended that the duty demand on Texturised Yarn was not sustainable.

The prayer for waiver of pre-deposit was opposed by the learned Departmental Representative (DR), who reiterated the findings of the adjudicating authority. Despite the opposition, the Tribunal, comprising Ms. Jyoti Balasundaram and Shri Moheb Ali M., acknowledged the merit in the applicants' submissions based on the facts presented. The Tribunal found prima facie force in the argument that since the applicants had obtained permission before clearing the yarn for weaving, there was no violation of the notification's conditions. Consequently, the Tribunal decided to waive the pre-deposit of duties and penalties amounting to Rs. 82,61,696/- imposed on the 100% EOU. Additionally, the penalties of Rs. 5,00,000/- and Rs. 2,00,000/- imposed on the Managing Director and Executive Director, respectively, were also waived, and the recovery of the same was stayed pending the appeals. The decision was made by Vice-President Jyoti Balasundaram on behalf of the Tribunal, granting relief to the appellants based on the circumstances presented during the proceedings.