2014 (2) TMI 356 - HC - Central Excise

Waiver of a pre-deposit of duty - fabrication and erection of structural glazing - curtain wall/structural glazing - Imposition of interest and penalty - Whether in the facts and circumstances of the case, the Tribunal was right in holding that the Appellants did not make out a prima facie case for total waiver of pre-deposit - Held that - assessee has been following judicial pronouncements to decide if the goods were liable to excise duty, the judgment in Man Structurals 2001 (4) TMI 87 - SUPREME COURT OF INDIA could not have escaped its notice. Hence, assessee could not have required the exposition of law by a Larger Bench in Mahindra and Mahindra to understand that the goods were liable to excise duty. Since an application for rectification is pending before the Tribunal in its Bangalore Bench, we are not expressing a final view on the correctness of this line of reasoning. However, we may only observe at this stage that what the Tribunal clearly missed in its Bangalore decision was the fact that the decision of the Supreme Court in Man Structurals found fault with the order of the Tribunal on the ground that the Tribunal had merely proceeded on the basis that structurals are not exigible to excise duty without considering in each case as a matter of fact whether new and identifiable goods which were marketable had come into existence. A prima facie case was made out by the Appellants for the grant of a complete waiver of pre-deposit of duty. We accordingly set aside the impugned order of the Tribunal insofar as it declines to grant a waiver of pre-deposit of duty and direct that the Appellants shall be heard without requiring the Appellants to deposit the duty of Rs. 28,12,634 - Decided in favour of assessee.

Issues Involved:
1. Whether the Tribunal was right in holding that the Appellants did not make out a prima facie case for total waiver of pre-deposit.
2. Applicability of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1985.
3. Classification of the goods under the appropriate tariff heading.
4. Whether the Tribunal's reliance on the Bangalore Bench's decision was appropriate.

Detailed Analysis:

Issue 1: Prima Facie Case for Waiver of Pre-deposit
The Tribunal directed the Appellants to deposit the entire duty amount of Rs. 28,12,634/- while waiving the penalty and interest. The Tribunal's decision was influenced by a prior judgment from the Bangalore Bench, which held similar goods as excisable. The Tribunal concluded that no prima facie case for waiver was made, particularly since the Appellants did not plead financial hardship.

Issue 2: Extended Period of Limitation
The show cause notice issued on 23 March 2009 invoked the extended period of limitation under the proviso to Section 11A(1) on the grounds of suppression of facts by the Appellants. The Appellants argued that the law was unsettled before the Larger Bench decision in Mahindra and Mahindra Limited v. Commissioner of Central Excise, Aurangabad (2005), and therefore, there was no suppression. The Tribunal, however, relied on the Bangalore Bench's decision which applied the extended period of limitation, citing the Supreme Court's judgment in Commissioner of Central Excise v. Man Structurals Limited (2001).

Issue 3: Classification of Goods
The dispute centered on whether the fabricated curtain wall/structural glazing installed by the Appellants should be classified under Heading 76.10 of the Central Excise Tariff Act, 1985. The Tribunal's decision was influenced by the Bangalore Bench's ruling that the goods were excisable. The Appellants contended that their activities did not result in new, identifiable, and marketable goods, thus should not be classified under the said heading.

Issue 4: Reliance on Bangalore Bench's Decision
The Tribunal's decision to deny the waiver was heavily influenced by the Bangalore Bench's ruling. The Appellants argued that the Bangalore Bench misinterpreted the Supreme Court's decision in Man Structurals and that the law was only settled post the Larger Bench decision in Mahindra and Mahindra. The Court noted that the Bangalore Bench's reasoning was flawed as it overlooked the Supreme Court's directive to determine the facts of each case individually.

Court's Evaluation:
The Court emphasized that the evaluation at this stage was limited to whether a prima facie case for waiver of pre-deposit was made out. The Court noted that prior to the Larger Bench decision in Mahindra and Mahindra, the prevailing judgment in Aruna Industries was in favor of the Appellants. The Supreme Court had established that where a bona fide doubt existed due to conflicting decisions, the extended period of limitation could not be applied. The Court found that the Tribunal failed to consider this principle and the state of the law before the Larger Bench decision.

Conclusion:
The Court concluded that a prima facie case for the waiver of pre-deposit was indeed made out by the Appellants. The impugned order of the Tribunal was set aside, and the Appellants were directed to be heard without depositing the duty amount. The observations were confined to the application for waiver, and the substantive question of law was left open for the Tribunal's consideration during the appeal hearing. The appeal was disposed of with no order as to costs.

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