2011 (1) TMI 1073 - HC - Central Excise

Whether the goods cleared by the appellant a 100% EOU to DTA were excisable or not? - fresh mushrooms - Tribunal directing the appellant to pre- deposit the amount of Rs. 1.25 crores - Held that - Prior to 28-2-2005 as also subsequent to 28-2-2005 fresh mushrooms were excisable but were subjected to Nil rate of duty - the demands raised herein pertains to the period from December, 2006 to June, 2008 when the orders passed in the appellant s own case were in operation. As per those orders, the appellant was not liable to duty on clearances to DTA. In these circumstances, this is a fit case for grant of full waiver of pre-deposit.

Summary

Issues:
Whether the CESTAT was justified in directing the appellant to make a pre-deposit of Rs. 1.25 crores for entertaining its appeal against the order confirming a demand for Rs. 3.15 crores.

Analysis:
The appellant, established in 1995 as a 100% Export Oriented Unit (EOU), cultivated fresh mushrooms for export and domestic clearance. The excise authorities, post-2005 amendment, sought duty on clearances to the domestic tariff area (DTA) under the proviso to Section 3 of the Central Excise Act. Earlier show cause notices were dropped, and subsequent amendments maintained a 'Nil' rate of duty for mushrooms. The excise authorities issued new show cause notices for duty on clearances in specific periods, leading to a demand confirmed in an order dated 27-2-2009, challenged by the appellants before the CESTAT.

The Tribunal initially directed a pre-deposit of the entire duty amount, which was set aside by the High Court and remanded for fresh disposal. Subsequently, the Tribunal directed a pre-deposit of Rs. 1.25 crores for entertaining the appeal. The key question was whether the clearances of fresh mushrooms to DTA by the appellant, a 100% EOU, were excisable. Previous orders held no duty payable unless overturned by a higher authority.

The High Court analyzed the validity of the order dated 27-2-2009, which held the clearances liable to duty under the proviso to Section 3 of the Central Excise Act. Considering the previous favorable orders for the appellant and the absence of duty liability during the relevant period, the Court deemed it a fit case for full waiver of pre-deposit. Consequently, the High Court quashed the CESTAT's order and directed the Tribunal to dispose of the appeal without insisting on pre-deposit, emphasizing expeditious resolution within six months.

In conclusion, the High Court disposed of the appeal with no order as to costs, setting aside the pre-deposit requirement and instructing the Tribunal to adjudicate the appeal promptly, independent of the High Court's prima facie observations.