1993 (1) TMI 160 - AT - Central Excise

Issues Involved:
1. Waiver of pre-deposit under Section 35F of the Central Excises and Salt Act, 1944.
2. Interpretation of Explanation-III to Notification No. 175/86-C.E.
3. Applicability of previous Tribunal decisions.
4. Disclosure of facts and classification lists.
5. Conceded duty liability and implications thereof.
6. Financial hardship and balance of convenience.

Detailed Analysis:

1. Waiver of Pre-Deposit under Section 35F:
The applicants filed a stay application seeking waiver of pre-deposit of duty amounting to Rs. 5,42,406.33 and a penalty of Rs. 75,000. The Tribunal considered whether the applicants had a strong prima facie case that warranted an unconditional stay.

2. Interpretation of Explanation-III to Notification No. 175/86-C.E.:
The applicants argued that heating elements manufactured and captively consumed in the production of Immersion Heaters and Room Heaters were exempt from excise duty under Explanation-III to Notification No. 175/86-C.E. They contended that the explanation stipulates that inputs used for further manufacture within the same factory should not be included in the aggregate value of clearances. The Department, however, interpreted that the exemption applied only if the final product was also cleared under the same notification.

3. Applicability of Previous Tribunal Decisions:
The applicants cited previous Tribunal decisions, particularly in the cases of Dukarat & Company (P) Ltd. v. Collector of Central Excise, Calcutta, and Stay Orders No. E/147/91-B1 and E/331/91-B1, which granted unconditional stays in similar circumstances. The Tribunal noted that while interim orders are not binding, judicial discipline warranted following the ratio of earlier orders.

4. Disclosure of Facts and Classification Lists:
The dissenting opinion highlighted that the applicants had not correctly and completely disclosed all facts to the Department, particularly in the classification lists prior to 1-4-1990. The classification lists showed that heating elements were not declared as components of immersion or room heaters before this date. The dissenting member observed that the appellants' assertion of claiming benefits under Notification No. 175/86 was incorrect for the period before 1-4-1990.

5. Conceded Duty Liability and Implications Thereof:
The dissenting opinion noted that the applicants conceded duty was payable on heating elements sold to outside parties but argued against invoking the extended period of limitation or imposing a penalty. The dissenting member emphasized that the appellants had not disclosed the total amount of duty involved or the value of goods sold without duty payment.

6. Financial Hardship and Balance of Convenience:
The dissenting opinion pointed out that the applicants had not pleaded financial hardship in their stay application. The balance of convenience was deemed to be in favor of the Department, as the appellants had not shown sufficient cause for an unconditional stay.

Majority Opinion and Final Order:
The majority opinion, concurring with the earlier Tribunal decisions, found that the applicants had a strong prima facie case. The member noted that both the heating elements and the final products were specified goods under Notification No. 175/86, and the explanation excluded the value of captively consumed inputs from the aggregate value of clearances. The majority opinion granted an unconditional stay, except for the quantity of inputs cleared as such other than for captive consumption.

Conclusion:
In view of the majority opinion, the Tribunal granted an unconditional stay for the applicants, except for the quantity of heating elements cleared as such other than for captive consumption. The dissenting opinion highlighted issues of non-disclosure and the applicants' failure to show financial hardship, but the majority found sufficient prima facie merit in the applicants' case to warrant the stay.

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