2021 (3) TMI 280 - HC - Central Excise

Process amounting to manufacture or not - maintainability of petition - failure of the petitioner to make the pre-deposit - HELD THAT - The petitioners have highlighted the financial stringency being suffered by the petitioners and the fact that they are unable to make payment of any deposit. The impugned orders dated September 24, 2001, January 15, 2002 and 1st April, 2002 is set aside and the matter remanded to the Tribunal to hear out the appeal without requiring the petitioner to deposit any amount - petition allowed by way of remand.

Summary

Issues:
Challenge against orders of Customs, Excise and Gold (Control) Appellate Tribunal regarding classification of printed papers, duty demand, penalty, and interest. Petitioners' appeal dismissal for noncompliance due to failure to make pre-deposit. Application for modification of pre-deposit order rejected. Subsequent favorable Supreme Court decision on classification of printed papers. Financial stringency preventing petitioners from making any deposit.

Analysis:
The petitioners, engaged in printing business, faced duty demand for using printed papers from biri manufacturers for wrapping biris. The dispute arose regarding the classification of the printed papers under the Central Excise Tariff. The petitioners argued that printing and cutting did not constitute manufacture and that the papers fell under sub-heading 4901.90 attracting nil duty. They also contended that if classified as excisable goods, they should be considered printed labels under heading 48.21 with nil duty. The Tribunal directed a pre-deposit of &8377; 20 lakhs, which the petitioners challenged but was rejected without consideration of their contentions.

The subsequent Supreme Court decision in Headway Lithographic Company case clarified that papers printed for wrapping fell under subheading 4901.90 attracting nil duty. Considering this development and the prima facie arguable case of the petitioners, the High Court set aside the Tribunal's orders and remanded the matter for a fresh hearing without requiring any deposit. The Court emphasized that the appeal should be decided on merits without influence from previous observations or the question of pre-deposit. The financial hardship faced by the petitioners was also taken into account in this decision.

In conclusion, the High Court allowed the petition, directing the Tribunal to hear the appeal without any pre-deposit requirement, considering the subsequent Supreme Court decision and the financial constraints of the petitioners. The matter was remanded for a fresh hearing on merits, leaving all points open for the Tribunal's decision except the issue of pre-deposit. The case was disposed of without costs.