2013 (12) TMI 1236 - AT - Central Excise

Eligibility of Notification No.70/92 - Job-worked goods cleared by the Applicant Waiver of Pre-deposit Held that - Prima facie, the condition of Notification has not been complied with and relying upon Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal 2010 (11) TMI 13 - SUPREME COURT OF INDIA the benefit of the Notification cannot be extended to the Applicant - the second show cause notice invoking extended period of limitation on the same issue, may not be correct - the Applicant could not be able to make out a prima facie case for total waiver of pre-deposit of amount - the Applicant is directed to deposit Rs. 10.50 Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
Application for waiver of pre-deposit of duty and penalty under Central Excise Act, 1944.

Analysis:
The case involved an Application seeking waiver of pre-deposit of duty amounting to Rs.1.55 Crores and an equal penalty imposed under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. The Appellants, engaged in manufacturing parts of arms and ammunition for ordinance factories falling under the Ministry of Defense, claimed eligibility for certain exemptions under Notification No.70/92-CE dated 17.06.1992 and Notification No.8/2003-CE dated 01.03.2003. The issue revolved around the compliance of conditions under Notification No.70/92-CE, specifically relating to the responsibility of the manufacturer (ordinance factory) to discharge excise duty on job-worked materials. The department argued that the mandatory condition had not been fulfilled as the ordinance factory did not submit the required undertaking, rendering the Applicants ineligible for the benefit of the Notification.

The Tribunal considered the arguments from both sides and observed that the principal manufacturer, i.e., the ordinance factory, had not provided the necessary undertaking certifying the payment of duty on the job-worked goods. Citing a Supreme Court judgment, the Tribunal concluded that the benefit of the Notification could not be extended to the Applicant due to non-compliance with the conditions. However, it noted that the department had previously dropped a show cause notice for recovery of Service Tax on the same job-work, indicating a lack of prima facie case for total waiver of pre-deposit. In light of the interests of Revenue and legal principles, the Tribunal directed the Applicant to deposit Rs. 10.50 Lakhs within eight weeks. Upon such deposit, the balance amount of dues would be waived, and recovery stayed during the appeal's pendency. Failure to comply would lead to the dismissal of the Appeal without further notice. The compliance deadline was set for 19.11.2013.