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Issues Involved:
The judgment involves the issue of waiver of pre-deposit of Central Excise duty on Compact Discs cleared from an Export Processing Zone to the domestic tariff area. The main contention is whether the activity of packing Compact Discs in Jewel Boxes amounts to manufacturing under the relevant Notification. Waiver of Pre-Deposit: The applicant sought waiver of pre-deposit of Central Excise duty amounting to Rs. 3,66,368 demanded on Compact Discs cleared from their unit in an Export Processing Zone to the domestic tariff area. The dispute arose when the Departmental Authorities denied the benefit of Notification No. 2 of 95-C.E. to the applicant, claiming that the packing of Compact Discs in Jewel Boxes did not constitute a process of manufacture under Section 2(f) of the Central Excise Act. The applicant argued that their activity was duly disclosed to the licensing authority, and they should be granted the same benefit as another manufacturer in the same zone for a similar activity. Interpretation of Exemption Notification: The Departmental Representative opposed the plea for grant of stay, citing Supreme Court decisions emphasizing strict interpretation of exemption notifications. He highlighted that a Circular issued by the Central Board of Excise and Customs, clarifying the scope of the term "manufacture," should not override the Supreme Court decisions. The Circular was issued after the adjudication order and pertained to Notification 1/95, whereas the present appeal concerned Notification 2/95. The representative argued that the Circular was administrative in nature and could not alter the interpretation of exemption notifications. Decision and Reasoning: The Tribunal considered the arguments presented and noted that the clarification in the CBEC circular dated 6-5-1997 regarding the term "manufacture" had persuasive value. The circular indicated that export-oriented schemes cover activities beyond the strict definition of manufacture under Section 2(f) of the Central Excise Act. The Tribunal found that this interpretation was applicable to the provisions of Notification 2/95. Based on this reasoning, the Tribunal held that the applicant had established a prima facie case in their favor. Consequently, the Tribunal granted waiver of pre-deposit and stayed the recovery of the duty amount during the pendency of the appeal.
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