2003 (9) TMI 109 - HC - Central Excise

Summary

Issues involved:
Challenge against Tribunal's order under Section 35F of Central Excise Act for waiver of pre-deposit of duty and penalty demanded.

Detailed Analysis:

1. Background and Claim for Exemption:
The petitioner, engaged in the business of manufacturing Iron Bars, cleared a certain quantity of Iron bars during the relevant period. Claimed exemption under Notification No. 202/88-C.E. on the ground that inputs used in the manufacture were deemed to have been duty paid. However, the Addl. Commissioner confirmed the demand of excise duty due to lack of declaration of the source of purchase and absence of duty paying documents.

2. Appeals and Tribunal's Decision:
The petitioner's appeal before the Commissioner, Central Excise (Appeals) was rejected, leading to a Second Appeal before the Tribunal, New Delhi. Alongside the appeal, the petitioner filed an application under Section 35F for waiver of pre-deposit, which the Tribunal rejected. Tribunal's observation was that the inputs used in manufacturing Iron Bars, purchased from railway Stockyard, were recognizable as non-duty paid material, hence not warranting waiver.

3. Contentions and Precedents:
The petitioner argued that the rerollable material from Railways used in manufacturing should not be considered non-duty paid. Cited a previous case where the burden of proof was on the department to establish non-duty paid status of goods. Mentioned instances where the Tribunal had waived pre-deposit conditions in similar cases, providing references to support the argument.

4. Court's Decision and Rationale:
After hearing both parties, the Court acknowledged the arguments presented by the petitioner regarding the nature of materials used and the burden of proof. Noted that in comparable cases, pre-deposit conditions had been waived by the Tribunal. Therefore, the Court decided to allow the writ petition, setting aside the Tribunal's order and directing an expedited hearing of the appeal without requiring any pre-deposits from the petitioner to maintain consistency and fairness.

5. Final Verdict:
The Court allowed the writ petition, overturning the Tribunal's decision, and instructed the Tribunal to promptly adjudicate the appeal within three months without demanding any pre-deposits from the petitioner. This ruling aimed to ensure uniformity in the treatment of similar cases where pre-deposit conditions had been waived, emphasizing the arguable nature of the issue at hand.