2015 (12) TMI 799 - AT - Central Excise

Waiver of pre deposit - Whether the Melamine Formaldehyde Resins (MFR) and Phenol Cardanol Formaldehyde Resins (PCFR) which are made by the appellant for captive use in the manufacture of their final product are liable to duty or not - Held that - identical issue was involved in the case of Archidply Industries Limited and Ors. Vs. CCE-Meerut-II and the Tribunal 2014 (8) TMI 499 - CESTAT NEW DELHI had ordered pre-deposit of 50 per cent of the duty demand within normal limitation period. There is no reason as to why the stay order in case of Archidply Industries Ltd. (Supra) should not be followed in this case. In view of this order has to be followed. In the present case, the duty demand within normal limitation period is about 72 lakh. Therefore, the appellant are directed to deposit an amount of ₹ 36 lakh within the period of 12 weeks - Partial stay granted.

Summary

Issues Involved:
Classification of products for duty liability under Central Excise Tariff, applicability of duty exemption notification, invocation of extended period for show cause notices, principles of natural justice in adjudication process, pre-deposit requirement for appeal hearing, marketability of products, test reports validity, compliance with tribunal orders.

Classification of Products for Duty Liability:
The appellant manufactured paper-based decorative laminates requiring Melamine Formaldehyde Resins (MFR) and Phenol Cardanol Phenol Formaldehyde Resins (CPFR) for which they purchased Formaldehyde, Phenol, Melamine, etc. The dispute centered on whether MFR and CPFR, considered plastic resins under Chapter 39 of the Central Excise Tariff, were eligible for duty exemption under notification no. 50/03-CE. The department argued that since the final product was cleared at nil duty under the notification, the captive consumption notification was not applicable to the alleged manufacture of MFR and CPFR. Four show cause notices were issued for duty demands, with one notice invoking the extended period.

Applicability of Duty Exemption Notification:
The Commissioner confirmed duty demands totaling &8377; 2,63,30,440/- along with interest and penalties, adjusting available CENVAT Credit. The appellant contested the duty demand based on samples drawn on a specific date, alleging a violation of natural justice principles due to disallowed cross-examination requests. The appellant sought waiver of pre-deposit for the appeal hearing, emphasizing the lack of evidence supporting the marketability of the goods and the existence of plastic resins.

Marketability of Products and Test Reports Validity:
The dispute revolved around whether MFR and PCFR, produced by the appellant for captive use, were liable to duty. The crucial issue was the classification of these products under Chapter 39 and their marketability. Reference was made to a previous Tribunal order involving a similar issue, which ordered a 50% pre-deposit of duty demand within the normal limitation period. The Tribunal directed the appellant to deposit &8377; 36 lakh within 12 weeks, following the previous order's precedent, with compliance due by a specified date to waive the pre-deposit requirement for the balance amount.

Compliance with Tribunal Orders:
The Tribunal's decision emphasized the need for the appellant to deposit a specific amount within a set timeframe to proceed with the appeal process. Failure to comply with the deposit requirement would result in the continuation of duty demand, interest, and penalty obligations. The decision highlighted the importance of adhering to previous Tribunal orders and ensuring timely compliance with the specified directives to address the duty liability issues effectively.