2014 (11) TMI 366 - AT - Central Excise

SSI exemption under Notification No. 8/2003-CE dated 01.03.2003 - denial of the benefit of exemption under Notification No. 67/95-CE dated 16.03.95 - final product was cleared without payment of duty - Held that - Benefit of the Notification is not available to the intermediate product (covered by the expression input vis-a-vis final product) where the final product is exempt from the whole of the duty of excise or additional duty of excise or chargeable to nil rate of duty. It is submitted that a final product specified under SSI Notification is not one exempt from the whole of the duty of excise or chargeable to nil rate of duty. It is also pointed out that ld. Commissioner, in the impugned order, has not examined the issue properly appellants have made out prima facie case against the demand of duty. Accordingly, there will be waiver of pre-deposit and stay of recovery in respect of the duty and penalty amounts - Stay granted.

Summary

Issues:
Demand of duty on PP Tapes or Strips under Notification No. 67/95-CE for products cleared without payment of duty.

Analysis:
The case involved the manufacturing of PP sacks and fabrics cleared without duty payment under SSI exemption. The issue arose regarding the duty demand on PP Tapes or Strips, claiming exemption under Notification No. 67/95-CE, as the final product was cleared without duty payment. The Revenue contended that the final product being dutiable was a basic condition for exemption under the notification. The Tribunal referred to a similar case where unconditional stay was granted, emphasizing the need for the final product to be dutiable for exemption. The contention was based on the proviso to Notification No. 67/95-CE, which restricted the benefit for inputs used in relation to final products exempt from duty. The appellants argued that the final product specified under SSI Notification was not wholly exempt or chargeable to nil duty, questioning the proper examination of the issue by the Commissioner.

The Tribunal acknowledged the arguments made by the appellants but refrained from further interpretation of the Notification at that stage. However, they found a prima facie case against the duty demand, leading to the waiver of pre-deposit and stay of recovery for duty and penalty amounts. The decision was based on the understanding that the appellants had presented a strong case against the duty demand, warranting the waiver and stay of recovery until the appeal's disposal. The Tribunal, following a previous order, granted the waiver of pre-deposit, interest, and penalty, allowing both stay applications.

In summary, the judgment revolved around the demand of duty on PP Tapes or Strips under Notification No. 67/95-CE for products cleared without duty payment. The Tribunal considered the conditions for exemption under the notification, the arguments presented by both parties, and the need for further interpretation of the notification. Ultimately, the Tribunal found a prima facie case against the duty demand, leading to the waiver of pre-deposit and stay of recovery for duty and penalty amounts until the appeal's final decision.