2007 (5) TMI 396 - AT - Central Excise

Stay/Dispensation of pre-deposit - SSI Unit - Captive consumption - Notification No. 67/95-C.E.

Summary

Issues:
Claim of exemption under Notification No. 67/95-C.E. for plastic strips used in manufacturing plastic sacks.

Analysis:
The appellants, a small scale industrial unit manufacturing plastic woven sacks, were demanded duty on plastic strips manufactured and used in the production of sacks. The ld. Commissioner imposed duty, interest, and penalty on the appellants, rejecting their claim under Notification No. 67/95-C.E. for exemption from duty on the plastic strips. The Revenue argued that as the strips were used in the manufacture of duty-exempt sacks, the benefit of the Notification would not apply to the appellants. The Department relied on the proviso to the Notification, which excludes inputs used in or in relation to the manufacture of final products exempt from duty. The appellants contended that the final product specified for SSI benefit is not exempt from "the whole of the duty of excise" or chargeable to a "nil" rate of duty, thus challenging the Commissioner's decision.

Upon examining the records and arguments, the Tribunal noted the conflicting interpretations of the proviso to the Notification. The ld. Counsel for the appellants argued that the benefit of the Notification should not be denied to the intermediate product (plastic strips) when the final product (plastic sacks) is not wholly exempt from duty or chargeable to a nil rate. The Tribunal found merit in the appellants' argument but refrained from delving into a detailed interpretation at that stage. The Tribunal acknowledged the prima facie case made by the appellants against the duty demand. Consequently, the Tribunal ordered a waiver of pre-deposit and a stay on the recovery of the duty and penalty amounts, indicating a favorable stance towards the appellants' position.

In conclusion, the Tribunal's decision to grant a waiver of pre-deposit and stay of recovery in favor of the appellants signifies a preliminary acceptance of the argument presented by the appellants regarding the applicability of the exemption Notification to the plastic strips used in manufacturing plastic sacks. The Tribunal refrained from a detailed interpretation but acknowledged the prima facie case made by the appellants, indicating a potential favorable outcome for the appellants in the ongoing dispute with the Revenue.