2004 (9) TMI 449 - AT - Central Excise

Summary

Issues:
- Waiver of pre-deposit of duty and penalty arising from the order of the Commissioner of Central Excise, Ghaziabad.
- Applicability of Notification No. 8/97, dated 1-3-1997 to the imported consumable items.
- Period of limitation for the demand of duty from 1997-1998 to November 2001.
- Dispute regarding duty payable within the normal period.
- Use of imported consumables in the manufacture of processed and unprocessed fabric.
- Prima facie case for waiver of pre-deposit of balance amount of duty and penalty.

The judgment revolves around the application for the waiver of pre-deposit of duty and penalty amounting to Rs. 6,03,89,280/-, resulting from the Commissioner of Central Excise, Ghaziabad's order confirming the duty demand by denying the benefit of Notification No. 8/97. The applicant, a 100% Export Oriented Unit engaged in manufacturing processed and unprocessed fabric, imported various consumable items. The plea raised by the applicant's counsel challenges the extended period of limitation due to the delayed issuance of the show-cause notice and disputes the duty amount, arguing for a lower duty based on the clearance of processed fabrics only.

The Tribunal considered the arguments presented by both sides. The applicant contended that the extended period of limitation should not apply as the show-cause notice was issued after the period in question. Additionally, the applicant claimed that the duty amount within the normal period should be reduced, asserting that the imported consumables were used solely in processed fabrics, not unprocessed yarn and fabric. However, the Department's representative opposed the waiver, emphasizing the findings on the use of chemicals in both types of fabrics and the applicability of the extended limitation period based on the Department's knowledge of the activities.

The Tribunal analyzed the evidence, including certificates from IIT and NITRA, regarding the nature of the imported consumables and their usage in the manufacturing process. Despite the applicant's contentions, the Commissioner found that the chemicals could be utilized in both processed and unprocessed fabrics. Consequently, the Tribunal concluded that the applicant failed to establish a prima facie case supporting their claim that the chemicals were exclusively used in processed fabric production.

In its final decision, the Tribunal directed the applicant to deposit Rs. 10 Lakhs towards duty within eight weeks. Upon this deposit, the pre-deposit of the remaining duty and penalty would be waived, and the recovery stayed during the appeal's pendency. Failure to comply would lead to the vacation of stay and dismissal of the appeal without prior notice, with a compliance report due by 9-11-2004.

This detailed analysis of the judgment highlights the key issues surrounding the waiver of pre-deposit of duty and penalty, the period of limitation, and the dispute over the duty amount payable, providing a comprehensive overview of the Tribunal's decision in the case.