2007 (3) TMI 90 - AT - Central Excise

Stay/Dispensation of pre-deposit Department contended that appellant is not entitle for the benefit of SSI Notification 175/86 on the activity of mounting of tanks on to motor vehicle chassis and accordingly duty demanded alongwith penalty and interest Held that appellant is entitle for SSI Exemption

Summary

Issues:
1. Application for waiver of pre-deposit of duty and penalty based on the benefit of SSI Notification.
2. Classification of goods under Heading 87.04 of the Central Excise Tariff Act, 1985.
3. Prima facie case for waiver based on the nature of activity carried out by the applicants.

Analysis:
1. The judgment revolves around the application for waiver of pre-deposit of duty and penalty amounting to Rs. 17,65,050/- and Rs. 5,00,000/- respectively. The duty demand was confirmed against the applicants due to their alleged ineligibility for the benefit of SSI Notification 175/86. The reason cited was their activity of mounting tanks onto motor vehicle chassis, leading to the classification of goods under Heading 87.04, thereby denying the SSI notification benefit.

2. The Tribunal found a strong prima facie case for waiver presented by the applicants. It was noted that the applicants were not engaged in mounting iron or steel containers/tankers on duty paid chassis, as confirmed by the Joint Commissioner's order and the Tribunal's earlier decision. The Tribunal considered the nature of the activity, specifically the fabrication of steel tanks for storing compressed gas and mounting them on a combination of chassis and trailers. As the dispute covered a period where the applicants had not yet mounted the tankers/containers, the goods in question could fall under Chapter Heading 87.07 or 73.11, both covered by the SSI notification. Therefore, the Tribunal granted the prayer for waiver of pre-deposit of duty and penalty, staying the recovery pending the appeal.

3. The judgment highlights the importance of establishing a prima facie case for waiver based on the actual nature of the activity carried out by the applicants. By analyzing the specific details of the manufacturing process and the intended use of the goods, the Tribunal determined that the applicants were eligible for the benefit of the SSI notification. This decision underscores the significance of accurately classifying goods under the appropriate tariff headings to determine the applicability of tax benefits and exemptions, ensuring a fair and just outcome in excise duty disputes.