1995 (9) TMI 196 - AT - Central Excise

Summary

Issues:
1. Duty and penalty imposition on the appellants.
2. Eligibility for exemption under Notification No. 178/83.
3. Applicability of Board circular and amending notification.
4. Financial hardship faced by the appellants.

Analysis:

Issue 1: Duty and penalty imposition
The appellants were required to deposit a substantial sum towards duty and penalty, with an individual penalty imposed on the Managing Partner. Additionally, their plant and machinery were ordered for confiscation but allowed redemption upon payment of a fine.

Issue 2: Eligibility for exemption under Notification No. 178/83
The appellants, job workers in the textile industry, claimed eligibility for exemption under Notification No. 178/83 for manufacturing texturised yarn. The Department alleged suppression and invoked the extended period for imposing penalties. The appellants argued that they were eligible for exemption based on following the conditions of the notification and a Board circular indicating that even if the base yarn is exempted, it should be construed to have paid the appropriate duty.

Issue 3: Applicability of Board circular and amending notification
The Department contested the applicability of the Board's circular, stating that the exemption notification required that the base yarn should not have availed any exemption. The appellants argued that an amending notification allowed exemption for texturised yarn made from imported base yarn under DEEC, claiming it to be clarificatory and not prospective.

Issue 4: Financial hardship
The appellants highlighted their financial losses and small-scale unit status, stating their inability to make the required deposit. The Tribunal acknowledged the arguable aspects of the case, including eligibility for exemption and the possibility of claiming drawback if duty is paid, indicating no prima facie mala fide intention. Considering their financial position, the Tribunal directed them to furnish a Bank Guarantee instead of cash deposit, with a stay against recovery and waiver of pre-deposit upon compliance.

In conclusion, the Tribunal found merit in the appellants' case regarding exemption eligibility and financial constraints, granting relief by allowing a Bank Guarantee instead of a cash deposit and providing a stay against recovery. The decision balanced the legal aspects of the case with the practical financial challenges faced by the appellants.