1994 (7) TMI 153 - AT - Central Excise

Summary

Issues: Stay Application regarding classification of goods under Notification No. 281/86, coercion by Collector in recovering duty amount, waiver of pre-deposit of penalty, and return of recovered amount.

In this case, the appellants, who are manufacturers of glass bottles, filed a Stay Application challenging the Collector's decision disallowing the benefit of Notification No. 281/86 for the classification of moulds used in their factories. The appellants argued that the moulds were essential for repair and maintenance of machinery and had been approved for clearance under Chapter X procedure. However, show cause notices were issued alleging suppression and misstatement of facts, leading to the Collector denying the benefit specifically for moulds. The appellants contended that they had not suppressed any information and had followed the necessary procedures for claiming the benefit. The Collector's stance was that the moulds were final products and not parts of machinery, hence not eligible for the benefit. The appellants emphasized that the moulds were integral to the manufacturing process of glass bottles and should be considered as excisable goods used for repairs and maintenance.

The Departmental Representative (DR) argued that the classification list used the term "captive consumption," implying the goods were for internal use within the same factory, raising questions about using them in another factory. The DR also questioned whether replacing the moulds constituted repair and maintenance of machinery and whether the other units could be considered part of the manufacturer's factory. Additionally, the DR contended that the recovery of duty by coercion did not entitle the Tribunal to grant a refund under Section 35F, as it exceeded the Tribunal's powers. The DR highlighted the Collector's reasons for denying the benefit and emphasized the need for a fair interpretation of the term "captive consumption."

The Tribunal considered the arguments presented and found a strong prima facie case in favor of the appellants regarding the classification and time-bar aspects. The Tribunal noted the coercive action taken by the Collector despite the scheduled hearing of the Stay Application, deeming it unfair and defeating the purpose of the application. Citing relevant case law, the Tribunal waived the pre-deposit of penalty and ordered the return of the amount recovered coercively. The Tribunal directed the Assistant Collector to report compliance within eight weeks and prohibited further re-recovery actions during the appeal's pendency. The matter was disposed of, with a compliance report scheduled for a later date.