1993 (11) TMI 125 - AT - Central Excise

Summary

Issues:
Application for waiver of pre-deposit of duty and penalty under impugned order of the Collector of Central Excise, Madras.

Analysis:
The case involved an application for waiver of pre-deposit of duty amounting to Rs. 42.91.363/- and a penalty of Rs. 1,00,000/- imposed on the petitioner by the Collector of Central Excise, Madras. The duty demanded was on a differential duty on a quantity of 210 D Nylon yarn cleared at concessional/new rate of duty. The petitioner contended that the goods were cleared for the manufacture and repair of fishing nets/parachute cords at a concessional rate of duty. The petitioner argued that the goods cleared were used for manufacturing twine for fishing nets/parachute cords at the premises of converters and did not return to the petitioner's factory. The petitioner claimed exemption from duty under the Notification, citing that similar manufacturers were not paying any differential duty. The petitioner also argued against the invocation of the longer period of limitation under Section 11A of the Central Excises & Salt Act, 1944, as the goods were cleared under direct superintendence. The Madras High Court's ruling in a similar case was cited to support the petitioner's argument regarding the interpretation of the Notification.

The respondent, representing the authorities, contended that the petitioner did not account for waste in the returns and should be liable to pay duty. Enquiries revealed that other manufacturers agreed to pay duty on waste generated during manufacturing, but there was no precise information on whether similar manufacturers were paying duty on waste contained in the yarn generated at job workers' premises. The petitioner clarified that duty was being paid on waste generated in their factory.

The Tribunal analyzed the Notification and observed that the goods should be "meant for use in the manufacture or repair of fishing nets or parachute cords," rather than "used in the manufacture." Referring to the Madras High Court's ruling on a similar matter, the Tribunal found merit in the petitioner's argument regarding the levy of duty on waste. Considering the absence of information on similar manufacturers paying duty on waste, the Tribunal granted the waiver of pre-deposit of duty and penalty pending appeal, citing the applicability of the Madras High Court's ruling and the lack of evidence of similar manufacturers paying duty in similar circumstances. The appeal was directed to be transmitted to the Central Registry, CEGAT, New Delhi, as it was a special Bench appeal.