2002 (10) TMI 193 - AT - Central Excise

Summary

Issues:
Four appeals filed by the same appellants with confirmed duties and penalties, seeking waiver of pre-deposit.

Analysis:
The appeals in question involved four separate orders passed by the Commissioner, confirming duties and imposing penalties on the same appellants. The duties and penalties imposed in Appeal Nos. E/1211/2002-Mum, E/1215/2002-Mum, E/1221/2002-Mum, and E/1241/2002-Mum were specified. The applications sought waiver of pre-deposit of these sums, and all four applications were addressed together in a common order.

The appellants, engaged in sizing of yarn, had cleared such sized yarn to other EOUs. The Commissioner issued show cause notices seeking recovery of Central Excise duty on the cleared goods and alleging liability to penalty. The clearances were made in accordance with the permission granted by the Development Commissioner under Para 9.10(b) of the Exim Policy, 1997-2002, against payment in foreign exchange. The Commissioner confirmed the duties and penalties in identical orders, citing relevant notifications and policy provisions to justify the actions.

The Policy mandates that the entire production of an EOU must be exported, with provisions for sales in the Domestic Tariff Area (DTA) after fulfilling export quotas. Sales in the DTA attract Central Excise duty, with specific rates and modalities prescribed in notifications. Paragraph 9.10(b) of the Policy deems supplies made in the DTA against foreign exchange payment as export performance, as held in a previous Tribunal judgment. The issue before the Commissioner was whether excise duty was leviable on clearances made under Para 9.10(b), not the availability of Notification 2/95-C.E. Unfortunately, the Commissioner did not provide sufficient reasoning on why the goods were deemed cleared in the DTA instead of as exports under the deeming clause.

Upon analysis of the Policy and the Tribunal's judgment, it was found that the appellants had established a strong prima facie case. As a result, the applications for waiver of pre-deposit of duties and penalties were allowed, with a stay on recovery during the appeal proceedings granted.