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Issues Involved:
Demand confirmation, interest imposition, penalty under Section 11AC, penalty under Rule 26(1) of Central Excise Rules, 2002, non-excisable goods trading, time-bar defense, dilution process not amounting to manufacture, Chapter Note 9 applicability, suppression of information, pre-deposit requirement, financial hardship plea. Analysis: 1. Demand Confirmation, Interest Imposition, and Penalties: The adjudicating Commissioner confirmed a demand of Rs. 2,15,37,361 against the appellants, along with appropriate interest and penalties under Section 11AC and Rule 26(1) of the Central Excise Rules, 2002. The appellants contested this decision, arguing that the impugned goods are not excisable and are traded after import. They claimed to have a separate registration for trading activities, making the duty demand unsustainable both on merit and due to time-bar limitations. 2. Non-Excisable Goods Trading and Dilution Process: The appellants contended that the imported goods are not sold as imported but marketed after dilution, which they argued does not amount to manufacture as the product remains the same post-dilution. They disputed the applicability of Chapter Note 9 to Chapter 38, asserting that the imported goods are marketable as such even before dilution, and no new product emerges post-dilution. The defense highlighted that dilution does not render the goods marketable, challenging the conditions under Chapter Note 9. 3. Suppression of Information and Applicability of Chapter Note 9: The department supported the impugned order, emphasizing that Chapter Note 9 to Chapter 38 applies to the case, as different conditions specified within the note are met. It was argued that the appellants did not inform the department about processing and re-labeling of imported products, leading to suppression of information. The self-removal procedure followed by the appellants was cited as evidence of non-disclosure. The adjudicating Commissioner found that the appellants were importing AXXANOL-33C, diluting it to produce AXXANOL-33CD, and marketing the processed product after necessary dilution, meeting the criteria under Chapter Note 9. 4. Pre-Deposit Requirement and Financial Hardship Plea: The Tribunal, after hearing both sides, determined that the appellants failed to establish a case for complete waiver of pre-deposit based on merit or limitation arguments. The lack of financial hardship arguments from the appellants, despite mentioning cash liquidity issues in their stay application, influenced the Tribunal's decision. Consequently, the appellants were directed to pre-deposit 25% of the duty amount within a specified period, with the balance amount waived during the appeal's pendency, subject to compliance. This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT CHENNAI covers the issues of demand confirmation, penalties, non-excisable goods trading, dilution process, suppression of information, Chapter Note 9 applicability, pre-deposit requirement, and financial hardship plea, providing a comprehensive overview of the case and the Tribunal's decision.
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