2006 (2) TMI 327 - AT - Central Excise

Summary

Issues:
1. Pre-deposit of duty amount and penalty for appeal hearing.
2. Interpretation of Notification No. 54/87 for exemption from duty.
3. Use of power in the manufacture of 'Tarpaulin cloth'.
4. Eligibility for exemption under Notification No. 54/87 based on total clearance of tarpaulin cloth.
5. Direction for pre-deposit and waiver of balance duty and penalty.
6. Consequences of non-compliance with the order.

Analysis:
1. The appellant was required to pre-deposit a specific duty amount and penalty for the appeal hearing. A partial amount had already been deposited towards the duty on 'Tarpaulin', but a balance was due for 'Tarpaulin Cloth'. The dispute revolved around the use of power in the manufacture of 'Tarpaulin cloth'.

2. The appellants contended that as per Notification No. 54/87, tarpaulin cloth cleared below 50 lakhs square meters is exempt from duty. They argued that their total clearance fell within this limit, hence no duty should be demanded for tarpaulin cloth. The appellants sought a waiver for the balance duty amount based on this interpretation.

3. The Tribunal noted that the use of power for stitching in all four sides of tarpaulin cloth was essential in creating 'Tarpaulin'. The process involved cutting the tarpaulin cloth to the required size and stitching it using power-operated machines. The Tribunal found a strong case for the appellants to claim exemption under the Notification based on the total clearance of tarpaulin cloth.

4. However, the Tribunal determined that the appellants still needed to pre-deposit a specific sum towards duty on 'Tarpaulin'. Considering the overall circumstances, including interest and penalty liabilities, the Tribunal directed the appellants to pre-deposit a designated amount within three months. Upon this deposit, the balance duty and penalty pre-deposit were waived, and recovery stayed pending appeal disposal.

5. The Tribunal cautioned that failure to comply with the pre-deposit order could lead to dismissal of the appeal under Section 35F of the Act. Additionally, the appellants requested an early hearing for the appeal, which required a separate application to be filed for consideration alongside compliance reporting.

This detailed analysis of the judgment highlights the key issues, arguments presented, Tribunal's findings, and the directions given regarding pre-deposit, exemption eligibility, and consequences of non-compliance.