2012 (4) TMI 523 - AT - Central Excise

Waiver of pre-deposit of duty - Penalty u/s 11AC - Denial of benefit Notification No. 2/2008-C.E. dated 1-3-2008 and Notification No. 4/2006-C.E. dated 1-3-2006 - Held that - applicant had calculated and paid CVD component of the total duty availing exemption Notification No. 2/2008-C.E. dated 1-3-2008 and exemption Notification No. 4/2006-C.E. dated 1-3-2006 for clearance of LABSA & Spent Sulphuric Acid in DTA respectively. We find that a clarification was issued vide F.No. DGEP/EOU/03/2007 dated 2-4-2008 by the Addl. Director General (EP) under C.B.E. & C. Department of Revenue Ministry of Finance Govt. of India clarifying that the applicant could avail exemption Notification under Section 5A of the Central Excise Act 1944 for the purpose of computation of CVD to be paid by EOU on the goods cleared in DTA. It is opined that the restriction on EOU for applying exemption issued under Section 5A of the Central Excise Act is for the purpose that EOU should not pay excise duty only as in the case of clearances from DTA units unless so intended. Applicant could able to make out a prima facie case for total waiver of pre-deposit of duty and penalty. Accordingly the pre-deposit of duty and penalty is waived and its recovery stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
Application for waiver of pre-deposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The case involved an application for the waiver of pre-deposit of duty amounting to Rs. 1,03,86,375/- and an equal penalty imposed under Section 11AC of the Central Excise Act, 1944. The appellant, a 100% Export Oriented Unit (EOU), had cleared goods in the Domestic Tariff Area (DTA) availing benefits of certain notifications. The Revenue contended that these notifications were not applicable to EOUs for DTA clearances during a specific period, leading to the demand for duty and penalty. The appellant argued that the notifications were valid and had been considered while calculating the duty. A clarification issued by the Directorate General of Export Promotion supported the appellant's position, stating that EOUs could apply excise exemption notifications for computing additional excise duty. The Commissioner, however, rejected this clarification, leading to the dispute.

The appellant's consultant highlighted the economic rationale behind the notifications and the specific clarification supporting their position. The Revenue's argument was based on the non-binding nature of the clarification and cited previous judgments to support their stance. The Tribunal examined the facts, noting that the appellant had paid the duty considering the exemption notifications. It acknowledged the clarification issued by the Directorate General of Export Promotion, emphasizing that it allowed EOUs to avail exemptions for computing duty on goods cleared in DTA. The Tribunal considered the non-binding nature of the clarification and previous judgments requiring pre-deposit of duty. However, it found that the appellant had made a prima facie case for a total waiver of pre-deposit of duty and penalty. Consequently, the Tribunal granted the waiver and stayed the recovery of duty and penalty during the appeal process.

In conclusion, the Tribunal's decision was based on the appellant's compliance with the exemption notifications, supported by a relevant clarification. Despite the non-binding nature of the clarification and past judgments requiring pre-deposit, the Tribunal found merit in the appellant's case for a total waiver of pre-deposit of duty and penalty, thereby granting relief to the appellant during the appeal process.