2008 (5) TMI 587 - AT - Central Excise

Summary

Issues:
Determination of duty liability under small scale exemption notification for manufacturing P & P medicines; Interpretation of Para-3 and Para-4 of the notification for computing aggregate value of clearances; Requirement of deposit by the appellant to avail stay on penalty and duty amount.

Analysis:
The case involved the confirmation of duty amounting to Rs. 1,90,799 against the appellant, along with interest and penalty of an identical amount. The appellant, engaged in manufacturing P & P medicines, availed the benefit of a small scale exemption notification. However, the Revenue denied them the benefit for the next financial year as their total clearances exceeded Rs. 3 crores, including clearances of branded goods. The dispute centered around whether the value of branded goods cleared on payment of duty should be considered while computing the total aggregate value for exemption eligibility in the subsequent year.

The appellant contended that the value of branded goods cleared on duty payment should not be included in the computation. On the other hand, the Revenue argued that only branded goods ineligible for exemption under the notification should be excluded from the aggregate value calculation. The Tribunal analyzed Para-3 and Para-4 of the notification and upheld the Revenue's position. It was held that branded goods manufactured by the appellant, eligible for exemption under Para-4 due to being produced in a rural area, must be considered in determining eligibility criteria for the exemption, regardless of being cleared on payment of duty.

The Tribunal found that the appellant had not established a prima facie case in their favor for an unconditional stay. Consequently, the appellant was directed to deposit 50% of the duty amount within eight weeks, with compliance to be reported by a specified date. Upon this deposit, the pre-deposit of the balance duty amount and the penalty would be waived, and the recovery stayed. The decision emphasized the need for the appellant to meet certain terms of deposit to avail the stay on the penalty and duty amount.