2013 (2) TMI 519 - AT - Central Excise

Clearance of goods by 100% EOU to DTA - Notification No.23/2003-CE dated 31.3.2003 - Imported paraffin wax use in the manufacture of pesticides - Whether paraffin wax is raw material or consumable - With reference to the manufacturing process and the final product that is emerging - Held that - The paraffin wax was forming part of the final product hence which was not in agreement with the argument of applicant. Therefore, direct the applicants to make pre-deposit 20% of the duty demand. - applicants to make pre-deposit 20% of the duty demand.

Summary

Issues:
1. Denial of exemption on duty payment for using imported paraffin wax in the manufacturing process.
2. Invocation of extended period for duty demand.
3. Request for waiver of pre-deposit for appeal admission and stay on collection of dues.

Analysis:
1. The case involved a 100% Export Oriented Unit (EOU) manufacturing pesticides using imported paraffin wax, which was not wholly produced in India, leading to the denial of exemption on duty payment. The Revenue issued a Show Cause Notice for recovery of excise duty short paid. The Applicant argued that paraffin wax was a consumable and relied on a Tribunal decision to support their claim. However, the Revenue contended that paraffin wax was a raw material forming part of the final product. The Tribunal held that the classification of paraffin wax as raw material or consumable depended on its role in the manufacturing process and final product, directing the Applicant to make a pre-deposit of 20% of the duty demand for appeal admission.

2. The Applicant also raised the issue of the invocation of the extended period for duty demand, arguing that the use of imported paraffin wax was known to the department due to a previous Show Cause Notice. The Revenue maintained that the extended period was justified as the use of imported paraffin wax was not disclosed. The Tribunal decided to defer the examination of the time-barred demand until the final hearing of the appeal, emphasizing the need for the pre-deposit to proceed with the case.

3. Additionally, the Applicant requested a waiver of pre-deposit for appeal admission and a stay on the collection of dues. The Tribunal granted the waiver of pre-deposit for the balance duty, interest, and penalty upon the Applicant's compliance with the directive to make a 20% pre-deposit within 8 weeks. The recovery of the remaining dues was stayed during the pendency of the appeal, with a warning of dismissal in case of non-compliance with the pre-deposit directive. Compliance was required by a specified date to proceed with the appeal process effectively.