2012 (2) TMI 425 - AT - Central Excise

Waiver of pre deposit - Denial of Refund claim - Benefit of Notification No. 56/2002-C.E., dated 14-11-2002 - Held that - appellants have a strong case in view of Chapter Note 8 in Chapter 38 and also in view of the fact that Revenue is accepting excise duty paid on the same goods manufactured in other localities. Therefore, we grant waiver of requirement of pre-deposit of entire dues arising out of impugned order and stay the recovery thereof during the pendency of the appeals - Stay granted.

Summary

Issues: Classification of manufactured product under Central Excise Tariff, Benefit of exemption notification for excise duty refund, Interpretation of Chapter Note 8 to Chapter 38

Classification of manufactured product under Central Excise Tariff:
The case involves the appellants located in Jammu who purchase Gibberillic acid and 6 Benzyl aminopurine to produce a plant growth regulator and pay excise duty on the final product. The Revenue argues that the manufactured product remains Gibberillic acid and should be classified under Tariff Item 3808 93 40, which is exempted from duty under a notification. The Counsel for the appellant relies on Chapter Note 8 to Chapter 38, which states that the addition of chemicals and other ingredients to pesticidal chemicals amounts to manufacture. The Counsel argues that the product's appropriate classification is under Heading 3808 98 40, and the duty paid is correct. Additionally, the Counsel highlights that the same manufacturing process in Bihar faces no objections from the Revenue regarding duty payment.

Benefit of exemption notification for excise duty refund:
The appellants, being situated in Jammu and Kashmir, avail the benefit of Notification No. 56/2002-C.E., which allows them to claim a refund of excise duty paid through PLA. The Revenue challenges this practice, claiming that the appellants should not pay duty and then claim a refund under the exemption notification. The Revenue contends that the duty paid should be refunded back to the revenue.

Interpretation of Chapter Note 8 to Chapter 38:
The Authorised Representative of the Revenue argues that the essential character of the product does not change by adding additives, maintaining that it remains Gibberillic acid and should be classified under Tariff Item 3808 93 40. However, the Tribunal finds in favor of the appellants, considering Chapter Note 8 in Chapter 38 and the Revenue's acceptance of excise duty paid on similar goods manufactured in other locations. Consequently, the Tribunal grants a waiver of the pre-deposit requirement and stays the recovery of dues pending the appeals.