2005 (6) TMI 332 - AT - Central Excise

Summary

Issues:
Demand of duty and penalty against M/s. Gayatri Textiles and others under Section 11AC of the C.E. Act, 1944 and Rule 25 of the C.E. Rules, 2002. Prayers for waiver of pre-deposit and stay of recovery for duty and penalty amounts by the assessee-firm and others.

Analysis:
The Commissioner of Central Excise confirmed a demand of duty exceeding Rs. 1.2 crores against M/s. Gayatri Textiles and imposed a penalty of an equal amount under relevant sections and rules. The partners of the firm and other parties were also penalized. The appellant sought waiver and stay of recovery for the duty and penalties, while the remaining parties requested similar relief for the penalties imposed on them.

The learned Senior Counsel for the applicants presented the case, arguing that M/s. Gayatri Textiles had a strong prima facie case against the duty demand. Referring to legal precedents and circulars, the Counsel contended that the transactions in question were in compliance with the applicable rules and practices in the textile sector. The Counsel also highlighted the potential exemption available to M/s. Gayatri Textiles under Notification 14/02-C.E. The Counsel emphasized the revenue-neutral nature of the transactions and the absence of any intent to evade duty.

On the contrary, the learned SDR contended that the relevant notifications did not apply to the grey fabrics involved and that the duty-paid status of the received yarns was crucial. The SDR distinguished the case from previous decisions and argued against the applicability of the Board's Circular to the dispute period. The SDR emphasized specific conditions and explanations under the relevant notifications.

After careful consideration, the Tribunal noted the historical compliance of M/s. Gayatri Textiles with the previous rule and the similarities between the old and new rules. The Tribunal acknowledged the potential support for M/s. Gayatri Textiles' case based on previous decisions. It was observed that the duty demand did not account for the Cenvat credit benefit due to the job worker. Consequently, the Tribunal inclined towards granting waiver and stay for the duty and penalties demanded from M/s. Gayatri Textiles and the other aggrieved parties.

In conclusion, the Tribunal granted waiver and stay for the duty amount and penalties imposed in the case. Due to the significant stakes involved, the appeals were scheduled for an expedited hearing after four weeks to ensure timely resolution.