2004 (11) TMI 461 - AT - Central Excise

Summary

Issues Involved: Stay application arising from Order-in-Original passed by the Commissioner of Central Excise Mumbai-IV regarding classification of Readymade Garments under Central Excise Tariff Act and imposition of duty.

Analysis:
1. Facts and Background: The appellants, traders in Readymade Garments, do not engage in manufacturing activities but get the goods manufactured from outside manufacturers on job work basis. The duty on the goods was 'nil' before 28-2-2001, but a duty of 16% ad valorem was imposed post the 2001 budget. A detailed inventory of finished goods in stock as of 1-3-2001 was conducted by officers, leading to a demand for duty on such goods stored in the godown.

2. Legal Issue: The main contention of the appellants is that the goods were kept in the godown before becoming liable to duty, and hence, no duty is payable. Reference is made to a relevant case, M/s. K. Prashant Enterprises v. Commissioner of Central Excise, Mumbai-IV, where a similar issue was addressed by CESTAT. The appellants have established a strong prima facie case in their favor regarding the liability of duty on the stored goods.

3. Decision: The Tribunal, after considering the facts and legal precedents, has waived the pre-deposit of duty and penalty, and stayed the recovery during the pendency of the appeal. This decision indicates a favorable stance towards the appellants' argument that the duty is not payable on the goods stored in the godown before becoming dutiable.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai, addresses the issue of duty liability on Readymade Garments stored in a godown before becoming dutiable. The decision to waive pre-deposit and stay recovery during the appeal process reflects a consideration of the appellants' strong prima facie case and relevant legal precedents.