2009 (6) TMI 864 - AT - Central Excise

Summary

Issues:
Classification of product 'abda' as a plant vitalizer or fertilizer, evasion of duty, demand of duty, penalty under Section 11A, waiver of pre-deposit, reliance on Fertilizer Control Order, plea of limitation, notification to the appellants about reliance on Fertilizer Control Order.

Analysis:
The judgment by the Appellate Tribunal CESTAT, CHENNAI involved the classification of the product 'abda' manufactured by M/s. EID Parry (India) Ltd. as a plant vitalizer or fertilizer. The original authority found that the appellants had wrongly classified 'abda' as a fertilizer, leading to duty evasion amounting to Rs. 22,09,717. The original authority affirmed the demand of duty, interest, and imposed a penalty under Section 11A. The appellants sought a waiver of pre-deposit and stay of recovery of the dues.

In the application for waiver of pre-deposit, the appellants argued that they had intimated the department about the classification of 'abda' as per CSH 31010099 in August 2005. They contended that the demand confirmed in 2007 was time-barred. The product had passed the test of the Fertilizer Control Order, 2006, and was entitled to full exemption as organic manure. The appellants argued that they were not informed about the department's reliance on the Fertilizer Control Order for classification.

The appellants further cited a CBEC Circular and a Supreme Court judgment to support their argument that the reliance on the Fertilizer Control Order without notifying them was unjust. The JCDR argued that the plea of limitation was not justified as the details of clearance were not intimated in the ERl returns. He also supported the reliance on the Fertilizer Control Order based on the test results.

After considering the submissions, the Tribunal found that the demand was not sustainable as it was based on the Fertilizer Control Order without notifying the appellants. The Tribunal also acknowledged the plea of limitation, stating that most of the demand was time-barred. Consequently, the Tribunal granted a complete waiver of pre-deposit and stayed the recovery of the dues pending the appeal, as the appellants had made a prima facie case against the demand and penalty.

This judgment highlights the importance of proper notification to the parties regarding the basis of classification and the significance of complying with procedural requirements, such as informing the appellants about the reliance on specific orders or regulations.