2014 (2) TMI 58 - HC - Central Excise

Waiver of the pre-deposit - Suppression of facts - Violation of the conditions of the Notification No.31/2007-C.E.(NT) dated 02.08.2007 - Held that - From the series of communications sent by the Development Commissioner to the Central Excise Authorities as well as Director General of Foreign Trade, it is evident that the assessee is a 100% Exported Oriented Unit. It would be of relevance to refer to the observations contained in the various communications sent by the Development Commissioner, wherein, it has been observed that the Central Excise Authorities stand is that the DTA has not registered with the jurisdictional Central Excise and hence they cannot not be issued CT-1 Form; but the unit claims that since the DTA units involved in this transaction are garment exporters yet they are exempted from Excise registration. It is further stated that the assessee is facing difficulties in their day to day affairs due to the conditions stipulated by the Central Excise Authorities and the assessee has requested the authorities to take up their grievance with the appropriate authorities. In the communication of the Development Commissioner dated 24.10.2013 addressed to the Commissioner of Central Excise, Chennai, it has been observed by the Development Commissioner that the goods cleared into the DTA under clause 6.9(g) of the Foreign Trade Policy is used by the garment exporters meant for manufacture and exports and it is a deemed export and they are also paying for the goods in foreign exchange in terms of the said condition and the Notification 31 (2007) also provides for verification of foreign exchange remittance with reference to Bill of Lading, Form-II etc., and in view of the peculiar circumstances, request was made to the Commissioner of Central Excise that the sales effected by the assessee may be treated as deemed exports and help the assessee to reduce the hardship faced by them and the stand taken by the Central Excise negates the facility provided by the exim policy - assessee has made out a prima facie case in its favour and satisfied with the grounds raised by the assessee - Stay granted.

Issues:
1. Direction for pre-deposit by the Tribunal
2. Financial hardship plea and CT-I form requirement
3. Violation of Notification No.31/2007-C.E.(NT)
4. Control over issuance of C.T.-1 Forms
5. Procedural nature of the Notification and evidence of exports
6. Prima facie case against the demand
7. Requirement of CT-1 forms and discussions between Ministries

Analysis:

1. The appeal challenged the Tribunal's order directing the assessee to deposit Rs.30,00,000 for stay and waiver of pre-deposit. The questions of law raised included the sustainability of the demand, financial hardship plea, violation of Notification No.31/2007-C.E.(NT), control over C.T.-1 Forms, and the procedural nature of the Notification.

2. The Senior Counsel for the assessee argued that the condition imposed by the Tribunal was onerous given the financial situation of the company. The Department's insistence on CT-I form production was deemed impossible as the hangers were exported, and payments received were from export funds, which was not disputed.

3. The appellant's Counsel highlighted communications explaining factual positions and the hardship caused by the excise duty demand. The Department sought to uphold the Tribunal's order based on submissions before the Original Authority.

4. The assessee, engaged in plastic hanger manufacturing, supplied to garment exporters under Notification No.31/07 Central Excise NT. A show cause notice demanded excise duty, but the assessee contended that hangers supplied were exported, entitling them to Notification benefits.

5. The Tribunal acknowledged the prima facie case favoring the assessee but noted a possible contravention of Notification conditions. Communications from the Development Commissioner emphasized the assessee's status as a 100% Export Oriented Unit and the challenges faced due to Central Excise conditions.

6. Considering the evidence and grounds raised by the assessee, the Court set aside the Tribunal's order, granting full waiver of pre-deposit. The demand was stayed until the appeal's disposal, ensuring the Tribunal could decide on merits and in accordance with the law.

7. The judgment allowed the Civil Miscellaneous Appeal, with no costs, and closed the connected miscellaneous petitions, providing relief to the assessee based on the prima facie case and the hardships faced due to Notification conditions and Central Excise requirements.

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