2014 (12) TMI 1027 - AT - Central Excise

Waiver of pre deposit - Manufacturing activity - activity of cutting fabrics, cutting quilts manufactured of the fabrics - Held that - Activity of cutting fabrics and wadding according to the sizes required cannot be said to amounting to manufacture since activity does not result in any new product with distinct name, character and use. The fabrics and wadding so cut are sent to job worker who manufactures quilts and after the quilt is received, the appellants undertake inspection, packing and sale. Inspection, packing and sale of quilt cannot be considered as manufacture. Further as submitted by the appellants, they do not have even any machinery for manufacturing quilt fabrics at all. Prima facie, we find that the appellant has a case in their favour, Therefore, in our opinion, the matter can be heard without insisting on any redeposit. However, in view of the fact that Commissioner has rejected the appeal after asking them to pay the entire amount of duty along with penalty which in our opinion was not required, we are constrained to remand the matter to the learned Commissioner - Matter remanded back - Decided in favour of assessee.

Summary

Issues: Appeal dismissal for failure to deposit duty and penalties as per stay order.

Issue 1: Failure to deposit entire amount of duty and penalties as per stay order
The appeal was dismissed due to the appellant's failure to deposit the entire amount of duty along with penalties as directed in the stay order by the Commissioner (Appeals). The appellant argued that they had a strong prima facie case, emphasizing that their activities of cutting fabrics, wadding, and subsequent inspection, packing, and sale did not amount to manufacturing. The Tribunal found merit in the appellant's argument, noting that the cutting activities did not result in a new product with distinct characteristics, as the fabrics and wadding were sent to a job worker for quilt manufacturing. The Tribunal opined that the appellant's case should be heard without requiring a redeposit, as the Commissioner's insistence on full payment was deemed unnecessary. Consequently, the matter was remanded to the Commissioner to decide the appeal on its merits without insisting on any pre-deposit, allowing the appellant a fair opportunity to present their case.

Conclusion
The judgment revolved around the dismissal of the appeal for failure to comply with the duty and penalty deposit requirements set forth in the stay order. The Tribunal acknowledged the appellant's argument regarding the nature of their activities not constituting manufacturing, leading to the decision to remand the matter for a fresh consideration by the Commissioner without the need for a pre-deposit.