1999 (9) TMI 170 - AT - Central Excise

Summary

Issues:
Stay Applications for waiver of pre-deposit of duty and penalty, classification of goods under Central Excise Tariff Act, interpretation of Notification No. 205/88, exemption eligibility for Turbines for Hydro Electric equipment, applicability of Section 37 B order, financial hardship consideration.

Classification of Goods under Central Excise Tariff Act:
The Appellants argued that they manufactured Turbines for Hydro Electric equipment below 15 M.W., availing exemption post-amendment of Notification No. 205/88. The Commissioner, Central Excise, imposed duty and penalty, contending that duty applies at the time of parts clearance from the factory, classifying under sub-heading 8410.90. The Appellants referenced Rule 2(a) of Interpretative Rules, emphasizing the exemption's applicability to unassembled goods. They cited precedents like Vishwa Industrial Co. (P) Ltd. v. C.C.E., Calcutta-II to support their position.

Applicability of Section 37 B Order and Exemption Eligibility:
The Appellants relied on Section 37 B order No. 4/92 for exemption clarity regarding sub-assemblies supplied directly to the customer site. They argued that the Notification should not be interpreted to render it redundant, citing Ellora Paper Mills Ltd. v. C.C.E. They maintained a bona fide belief in exemption eligibility since 16-3-1995, highlighting the duty paying documents' clarity and lack of method change post-amendment.

Financial Hardship Consideration:
The Appellants presented financial hardship evidence, indicating a loss of Rs. 1 crore as per unaudited Balance Sheet. They argued that the duty element was covered in the contract, and the Modvat credit exceeded the duty payable, emphasizing no intent to defraud the Government. The Commissioner contended that the Appellants incorrectly classified goods under Heading 8410.00 post-amendment, failing to classify under sub-heading 8410.90, and that the exemption did not apply to parts cleared outside the factory.

Judgment:
The Tribunal directed the Appellants to deposit Rs. 50 lakhs within eight weeks, considering the lack of a prima facie case for full waiver but acknowledging a prima facie case on the time limit issue. Compliance with the order would lead to the waiver of the remaining duty and penalty pre-deposit, with a stay on recovery during the appeal pendency. Failure to comply would risk dismissal of the appeals without further notice, with a compliance reporting set for 25-11-1999. The Tribunal reserved the examination of whether part clearance and direct supply to the site constituted Turbine clearance in CKD condition for the main appeal hearing.