2009 (9) TMI 846 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty imposed on the appellant.
2. Challenge to the exemption under Notification No. 30/04-C.E.
3. Interpretation of Notification provisions by the High Court.
4. Special Leave Petition (SLP) filed by the department against High Court's judgment.
5. Reference to the new entry (Sr. No. 10a) in the Notification.
6. Consideration of the High Court's judgment for waiver of pre-deposit and stay of recovery.

Analysis:

1. The judgment pertains to an adjudication of a show-cause notice demanding duty of over Rs.28.66 crores from the appellant for a specific period, along with an equal amount of penalty imposed by the Commissioner. Additionally, penalties were levied on two functionaries of the company. The appellant sought waiver of pre-deposit and stay of recovery for these amounts based on the demand of duty consequential to the denial of exemption under Notification No. 30/04-C.E.

2. The appellant had filed two Writ Petitions before the Bombay High Court challenging the vires of the above Notification. The High Court interpreted the provisions of the Notification and rejected the Revenue's argument regarding the exemption criteria. The High Court held that Polyester Tops manufactured from duty-paid 'tow' were exempted from excise duty under the new tax regime. The main issue raised in the present matter is considered covered by the High Court's judgment in Writ Petition No. 2931 of 2008.

3. The department filed a Special Leave Petition (SLP) with the Supreme Court against the High Court's judgment, and notice has been issued in this regard. The Counsel for the appellant was directed to file a counter-affidavit within eight weeks concerning the SLP.

4. A recent amendment to Notification No. 30/04-C.E. was highlighted by the Jt. CDR, introducing a new entry (Sr. No. 10a) effective from 10-7-2009. The Jt. CDR suggested that the High Court's decision might have been different had this provision been available during the earlier proceedings.

5. Despite the new amendment to the Notification, the Tribunal decided to consider the Notification as it stood during the relevant period, as interpreted by the High Court. The Tribunal found that the results favored the appellant, allowing them to claim the benefit of Sr. No. 10 of Notification No. 30/04 for the disputed period. Consequently, there was a waiver of pre-deposit and stay of recovery for the duty, penalty amounts, and fine.

6. The learned Counsel requested the appeals to be finally disposed of in light of the High Court's judgment, pending the outcome of the proceedings before the Supreme Court. The Tribunal decided in favor of the appellant based on the High Court's interpretation of the Notification provisions.