2013 (9) TMI 776 - HC - Central Excise

Concessional rate of duty - Use of metallic parts in the manufacturing of tent - Notification No.29/2004-CE - Held that - The use of aluminum pipes to hold the tents will not prima facie take them out of the notified goods for deny the concessional rate of clearance of goods - petitioner has made out prima facie case for waiver of the pre-deposit of the entire amount as a condition for hearing of the appeal before the Commissioner of Appeals and that the order to deposit 25% of the duty is not only against the strong prima facie case but will also in the facts and circumstances of the case cause serious prejudice to the petitioner - The order of the Commissioner (Appeals) dated 24.8.2012 directing the petitioner to deposit 25% duty as pre-deposit as condition of waiver is set aside. - full stay granted.

Issues:
1. Interpretation of Section 35B and 35G of the Central Excise Act regarding maintainability of appeals.
2. Eligibility of the petitioner for concessional rate of duty under Notification No.29/2004-CE.
3. Use of metallic parts in the manufacturing process affecting the benefit of the notification.
4. Pre-deposit requirement for filing an appeal before the Commissioner, Central Excise (Appeals).
5. Applicability of the findings in the case of Standard Niwar Mills to the present case.
6. Prima facie case for waiver of pre-deposit based on the use of aluminum pipes in manufacturing tents.

Analysis:
1. The judgment addresses the interpretation of Sections 35B and 35G of the Central Excise Act, focusing on the maintainability of appeals to the Central Excise and Service Tax Appellate Tribunal (CESTAT) against different orders of the appellate authority. The petitioner argues that while Section 35G allows appeals to the High Court against every order, Section 35B permits appeals to CESTAT only against final orders under Section 35A. This discrepancy in interpretation by CESTAT is highlighted.

2. The petitioner, engaged in manufacturing tents falling under Chapter 63 of the Central Excise Tariff, had been availing a concessional rate of duty under Notification No.29/2004-CE. However, a show cause notice alleged the use of metallic parts in the tents, potentially disqualifying them from the benefit of the notification. The issue of eligibility for the concessional rate based on the nature of goods manufactured is crucial.

3. The Adjudicating Authority found that the petitioner had used metallic parts in the tents, deviating from the conditions of the notification. This finding impacted the petitioner's eligibility for the concessional rate of duty. The presence of metallic components raised concerns about compliance with the notification's requirements and the subsequent denial of benefits.

4. The Commissioner, Central Excise (Appeals) directed the petitioner to make a pre-deposit of 25% of the duty and penalty amount to file an appeal. The requirement for pre-deposit as a condition for appeal before the appellate authority is a significant procedural aspect addressed in the judgment.

5. The judgment refers to the findings in the case of Standard Niwar Mills, emphasizing that goods made from fabric of cotton, even with additional components like sewing threads or fasteners, can still qualify for the concessional rate of duty. The applicability of these findings to the petitioner's case, especially regarding the use of aluminum pipes in tent manufacturing, is crucial.

6. Based on the Tribunal's findings in Standard Niwar Mills and the petitioner's use of aluminum pipes for tents, a prima facie case for waiving the pre-deposit requirement is established. The judgment acknowledges the petitioner's strong case for waiver, indicating that the use of aluminum pipes to hold tents does not automatically disqualify them from the concessional rate. The decision to allow the writ petition, setting aside the pre-deposit condition, and granting a stay on the requirement for pre-deposit during the appeal process reflects the court's consideration of the petitioner's circumstances and the need for a fair hearing.

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