2007 (10) TMI 652 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are waiver of pre-deposit and stay of recovery of cess not paid on tea exported, interpretation of Notification exempting tea from levy and collection of cess, applicability of Circular No. 60/1/2006-CX, and the decision of the Commissioner (Appeals) regarding the payment of cess on tea exported under bond.

Waiver of Pre-deposit and Stay of Recovery of Cess:
M/s. Dunsandle Tea Factory applied for waiver of pre-deposit and stay of recovery of &8377; 39,297/- being cess not paid on tea exported and interest due thereon demanded for the period 2/05 to 9/05. The appellants exported tea under bond without paying cess imposed under Tea Act, 1953, believing in the exemption notification issued by the Ministry of Commerce. The Commissioner (Appeals) held that cess had to be paid on tea when exported under bond as the levy of cess was not exempted in terms of the Tea Act, 1953. However, the Circular No. 60/1/2006-CX issued by the CBEC stated that goods are exempt from payment of cess when exported under bond if the provisions of the Central Excise Act and Rules were applicable. Considering the Circular and the Notification dated 1-9-2004 of the Ministry of Commerce, the Tribunal found that cess on tea is not liable to be paid when exported under bond by a star export house. Therefore, a complete waiver of pre-deposit and stay of recovery of the demanded cess was granted until the appeal is finally disposed of.

Interpretation of Notification Exempting Tea from Levy and Collection of Cess:
The Notification No. S.O. 9777(E) issued by the Ministry of Commerce exempted all tea produced in India and exported by Export-Oriented Units from the levy and collection of cess. The appellants claimed exemption based on this notification, supported by Circular No. 60/1/2006-CX issued by the CBEC. The Commissioner (Appeals) held that the levy of cess on tea exported under bond was not exempted under the Tea Act, 1953. However, the Tribunal, after considering the Circular and the Notification, found that cess on tea is not liable to be paid when exported under bond by a star export house, leading to the waiver of pre-deposit and stay of recovery of the demanded cess.

Decision of the Commissioner (Appeals) Regarding Payment of Cess on Tea Exported Under Bond:
The Commissioner (Appeals) relied on a decision of the Government of India in the case of Bharath Beedi Works Ltd., where it was held that in the absence of a Notification under Rule 18 of the Central Excise Rules, 2001, cess had to be paid on export of goods under bond. The Government concurred with the decision of CEGAT that cess was leviable unless there was an exemption notification issued. However, the Tribunal, after analyzing the Circular and the Notification, concluded that cess on tea exported under bond by a star export house is not liable to be paid, leading to the waiver of pre-deposit and stay of recovery of the demanded cess.