2015 (6) TMI 822 - AT - Central Excise

Waiver of pre deposit - Restoration of appeal - Appeal dismissed for non prosecution - Held that - During the period prior to amendment of the tariff in 2007 in terms of the Apex Court judgement in the case of Metelex India Pvt. Ltd vs. CCE Noida (2004 (2) TMI 387 - SUPREME COURT OF INDIA), the process undertaken by the appellant did not amount to manufacture. If this is so, clearance of laminated polyster fills would amount to clearances of the cenvat credit availed inputs as such, which is permitted in terms of the cenvat credit Rule 2002/2004 provided an amount equal to the cenvat credit involved is paid, while in this case there is no dispute that the amount paid by the appellant on the clearances on laminated polyster Films is much more than the cenvat credit availed. In view of this and also following the judgements of the Tribunal mentioned above, we hold that the impugned order is not sustainable and as such the appellant have strong prima facie case in their favour. The requirement of pre-deposit of the cenvat credit demand, interest thereon and penalty is therefore waived of for hearing of the appeal and its recovery is stayed. - Stay granted.

Issues:
1. Restoration of stay application dismissed for non-prosecution.
2. Cenvat credit demand and penalty imposition.
3. Manufacturing process classification and central excise duty liability.
4. Tribunal's jurisdiction to waive pre-deposit of cenvat credit demand, interest, and penalty.

Analysis:
1. The appellant filed a miscellaneous application seeking restoration of the stay application dismissed due to non-prosecution. The Tribunal had directed the appellant to deposit the assessed liability but the appellant failed to appear. The appellant argued that non-appearance was due to not receiving the hearing notice and cited a Supreme Court judgment against dismissal for non-prosecution. The Tribunal, upon hearing both sides, recalled the previous order and restored the stay application for further merits consideration.

2. The appellant, a manufacturer of Printed Laminated Polyster Films, faced a Cenvat Credit demand and penalty following a Commissioner's order. The appellant contended that their manufacturing process was subject to duty payment based on historical circulars until 2007 when a Supreme Court judgment altered the classification. The appellant argued that the demand was unsustainable as their process did not amount to manufacture during the disputed periods. Citing precedents where similar issues favored the appellant, they sought waiver of pre-deposit for the appeal.

3. The classification of the manufacturing process and the subsequent central excise duty liability formed a crucial part of the case. The appellant highlighted the evolution of legal interpretations and amendments to the central excise tariff, emphasizing that their process only became subject to duty from 2007. They challenged the Commissioner's order, stating that the demand was based on a misinterpretation of the law and that their activities were in line with permissible rules regarding cenvat credit availed inputs.

4. The Tribunal, after considering arguments from both sides, found merit in the appellant's contentions regarding the manufacturing process classification and duty liability. Given the historical context and legal precedents, the Tribunal held that the impugned order was unsustainable. Consequently, the Tribunal waived the pre-deposit requirement for the appeal, including cenvat credit demand, interest, and penalty, and stayed the recovery process. The Tribunal allowed the miscellaneous application and the restoration of the stay application, acknowledging the appellant's strong prima facie case in their favor.

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