2006 (9) TMI 436 - AT - Central Excise

Summary

Issues:
Violation of Notification No. 30/2004-C.E. dated 9-7-2004 regarding duty and penalty pre-deposit requirement.

Analysis:

The appellant was required to pre-deposit a substantial duty amount and penalty due to an alleged violation of Notification No. 30/2004-C.E. dated 9-7-2004. The notification granted benefits for yarns procured from outside and subjected to specific processes, excluding texturising, by manufacturers lacking the necessary facilities for yarn or textured yarn manufacture. The appellant contended they were not engaged in texturising and highlighted two unused machineries in their factory without power connection. The appellant argued that the mere presence of these machines should not disqualify them from the notification's benefits. They emphasized the lack of facilities for yarn or texturising yarn production, asserting a misapplication of the notification's terms by the Commissioner. The appellant's position was that the notification only pertained to yarns subjected to processes, which they were not equipped to carry out, rendering the Commissioner's findings legally unsustainable.

The learned DR, representing the respondent, contended that the mere presence of two unused machines without power connection was sufficient grounds to deny the notification's benefits to the appellant.

Upon thorough consideration and scrutiny of the notification's provisions, the Tribunal concluded that the Commissioner had misinterpreted the notification. It was established that the appellant lacked the necessary facilities for yarn or texturising yarn production in their factory and had only manufactured textured yarn. The Tribunal emphasized that the presence of two unused machines was not a valid reason to reject the exemption. Consequently, the Tribunal granted the appellant's stay application by waiving the pre-deposit requirement for duty and penalty amounts and suspending their recovery until the appeal's resolution. Given the substantial amount involved in the case, the appeal was scheduled for an expedited out-of-turn hearing on 17th November 2006.