2007 (4) TMI 420 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalties under exemption Notification No. 3/2005.
2. Interpretation of the term "manufactured with the aid of power" in relation to exemption eligibility.
3. Application of legal definitions from Employees State Insurance Act and Factories Act in determining manufacturing process.

Analysis:
The Appellate Tribunal CESTAT, New Delhi, considered an application for waiver of pre-deposit of duty amounting to Rs. 9.4 crores and penalties under exemption Notification No. 3/2005. The revenue alleged that the applicants were wrongly availing the exemption benefit by using CNG gas for heating purposes. The revenue relied on a decision of the Karnataka High Court regarding manufacturing with the aid of power. The Tribunal noted that the High Court's interpretation in the Employees State Insurance Act case involved the use of power as defined in the Factories Act, which includes energy not generated by human or animal agency. However, the Tribunal found that the notification in question did not incorporate the Factories Act definitions. Additionally, the applicants referenced a board circular clarifying that goods manufactured with gas did not constitute the use of power. Based on these factors, the Tribunal concluded that the applicants had a strong prima facie case, leading to the waiver of pre-deposit for the duty and penalty, with the stay application granted. The appeal was scheduled for a hearing from 30th April 2007, as directed by the registry. The decision was dictated and pronounced in open court by the Vice-President of the Tribunal.