2015 (9) TMI 573 - HC - Central Excise

Waive of pre-deposit - Denial of benefit of Notification No.83/94-CE - Whether the non- fulfillment of conditions of Notification No.214/86-CE as also Notification No.83/94-CE, dated 11.4.1994 can be held to be procedural violation so as to extend the benefit of the Notification to the appellant - Held that - Appellant admittedly has not followed the substantive conditions of the Notification in question which require the supplier of the raw material or semi-finished goods to give an undertaking to the proper officer of Central Excise having jurisdiction over the factory of the job worker to the effect that such goods shall be used in or in relation to the manufacture of the final product in his factory and removed from his factory either on payment of duty or without payment of duty under bond for export or to units in free trade zone or to 100% EOUs etc. Hence, we do not find any ground to interfere with the impugned order, inasmuch as it is seen that the detailed conditions prescribed in Notification No.214/1986 are substantive conditions, which require fulfillment so as to ensure that the goods manufactured by the assessee suffer duty of excise at the hands of the customer who has supplied the inputs free of cost to the job worker. - Partial stay granted.

Summary

Issues:
1. Whether the appellant's activities amount to "manufacture" under the Central Excise Act, 1944.
2. Whether the appellant fulfilled the conditions of relevant Notifications for exemption.
3. Whether the Tribunal's direction for predeposit of central excise duty was justified.

Analysis:

1. The appellant, engaged in manufacturing Populated Printed Circuit Boards (PPCBs), faced allegations of not following job work procedures under the Central Excise Act, leading to a show cause notice and subsequent penalty imposition by the Commissioner. The Commissioner held that the appellant's activities constituted "manufacture" under the Act, attracting duty liability. The Tribunal upheld this decision, emphasizing the duty liability of the appellant as a manufacturer of excisable goods, dismissing the appellant's appeal.

2. The Tribunal examined whether the appellant's non-fulfillment of conditions of Notifications No.214/86-CE and No.83/94-CE could be considered procedural violations affecting exemption eligibility. Citing a Supreme Court precedent, the Tribunal concluded that the conditions in the Notifications were substantive and mandatory, requiring strict compliance for exemption benefits. As the appellant failed to meet the conditions, the Tribunal found no grounds to interfere with the penalty and duty imposition, affirming the lower authorities' decisions.

3. The Tribunal directed the appellant to predeposit a sum of Rs. 2.25 Crores within twelve weeks, with the waiver of the balance amount of dues, interest, and penalties upon such deposit. The Tribunal justified this decision by noting the absence of substantial financial hardship pleaded by the appellant and the lack of documentary evidence supporting such claims. The Tribunal's decision to uphold the predeposit requirement and stay the recovery of the remaining amounts was deemed appropriate and just under the circumstances, leading to the dismissal of the appeals.

In conclusion, the High Court upheld the Tribunal's decision, finding no substantial question of law in the appeals, and consequently dismissed them. The Court also dismissed the stay application, affirming the Tribunal's order for predeposit of central excise duty by the appellant.