2013 (12) TMI 505 - AT - Central Excise

Denial of benefit of Notification 6/2006 - CTC tea processing machines cleared for home consumption as well as for export - Waiver of Pre-deposit Held that - In the clearance documents the said leave cutting machine has been classified under chapter 84388040 and the department consistently accepting the said classification - There is no material suppression, on the function of the said machine. Besides, the applicant had submitted Chartered Engineer s certificate in support of their claim that the said machines are used for the purpose of leaf cutting only - they have produced certificates from the consumers research associations and consumers forum establishing that their machines are used for the purpose of cutting tea leaves - the applicants have been able to make a prima facie case in their favour Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
- Seeking waiver of pre-deposit of duty and penalty
- Classification of CTC tea processing machines under Central Excise Tariff Act

Analysis:
The case involved applications seeking waiver of pre-deposit of duty and penalty amounting to Rs. 98,34,693/- and Rs. 78,27,771/- on the main applicant company, along with personal penalty of Rs. 5,00,000/- each on other applicants. The applicants were engaged in manufacturing CTC tea processing machines and claimed exemption from duty under Notification No. 6/2006-C.E., dated 1-3-2006. The department issued a demand notice disputing the classification of the machines under Tariff Item No. 84388040, arguing they should fall under chapter sub-heading 84388090.

The consultant for the applicant argued that the machines were marketed and described as leaf cutting machines, supported by certificates from Chartered Engineers confirming their exclusive use for cutting tea leaves. The consultant contended that the machines should be classified under the specific entry in the Central Excise Tariff Act, rather than a residuary entry, citing Rule 3A of Classification Rules and relevant Note 3 of Section XVI of the Act. The consultant challenged the adjudicating authority's conclusion of the machines discharging multiple functions, stating there was no evidence to support this claim. The consultant asserted a strong prima facie case on merit.

The Revenue's representative reiterated the findings of the adjudicating authority. Upon hearing both sides and examining the records, the Tribunal found that the applicants were denied the benefit of the notification for the CTC tea processing machines. The machines were consistently classified under chapter 84388040 in clearance documents, with no material suppression regarding their function. The applicants provided Chartered Engineer's certificates and endorsements from consumer research associations confirming the machines' use for cutting tea leaves. Consequently, the Tribunal concluded that the applicants had established a prima facie case for the total waiver of pre-deposit of dues adjudged. As a result, the pre-deposit of all dues was waived, and recovery was stayed during the pendency of the Appeal, with the stay petition being allowed.