1993 (3) TMI 204 - AT - Central Excise

Summary

Issues:
1. Classification of goods for excise duty exemption.
2. Claim of benefit under specific notifications.
3. Financial hardship of the appellant.
4. Granting of stay application.

Classification of goods for excise duty exemption:
The appellant, a processing unit, appealed against an order by the Collector, Central Excise, Kanpur, regarding the levy of additional excise duty. The appellant contended that they were engaged in single processing of grey fabrics, exempt from duty under specific notifications. The appellant failed to mention these notifications in their classification lists initially. The issue of claiming exemption under the notifications was contentious and arguable.

Claim of benefit under specific notifications:
The appellant argued for the benefit of Notification Nos. 253/82-C.E. and 297/79-C.E., asserting that their clearances after single processing were exempt from excise duty. The appellant's financial documents showed a net profit, but with significant debits for depreciation and transfer to Investment Allowance Reserve. The Tribunal considered the appellant's liquidity position and directed a reduced deposit of Rs. 5 lakhs within three months, suspending recovery proceedings during the appeal.

Financial hardship of the appellant:
Both parties presented conflicting views on the financial status of the appellant. The appellant claimed financial strain, citing carry-forward losses and minimal profits. In contrast, the respondent argued that the appellant was a profit-earning unit based on the financial records. The Tribunal analyzed the Profit and Loss Account, considering the appellant's profitability and liquidity to determine the appropriate deposit amount.

Granting of stay application:
After hearing both sides and reviewing the case details, the Tribunal acknowledged the appellant's failure to initially claim exemption under specific notifications but found the issue arguable. Considering the financial circumstances and gravity of the offense, the Tribunal directed a reduced deposit amount of Rs. 5 lakhs within three months, with a stay on recovery proceedings pending the appeal. Failure to comply would automatically vacate the Stay Order.