1999 (4) TMI 300 - AT - Central Excise

Summary

Issues:
Waiver of duty payment and penalty under Rule 173Q(1) read with Section 11AC of the Act for an application filed. Confiscation of land, building, plant, and machinery with redemption allowed on payment of a fine of Rs. 20,000.

Analysis:
The appellant, a manufacturer of Ayurvedic medicaments, filed an application seeking waiver of duty payment of Rs. 32,20,623.00 and an equal penalty amount under Rule 173Q(1) read with Section 11AC of the Act. The impugned order also involved the confiscation of land, building, plant, and machinery, with redemption permitted upon payment of a fine of Rs. 20,000. The Collector of Central Excise and Customs observed discrepancies in the declarations filed by the appellant for the periods 1991-92, 1992-93, and 1993-94 regarding the item GHANA, an intermediate product for the final Ayurvedic medicament. The appellant argued that GHANA was an intermediate product falling under Chapter 30 and that the duty demand was unjustified as the production processes were disclosed in earlier declarations, which the department was aware of. The appellant also contended that the claim was time-barred and that GHANA was never declared as a final product.

The learned Counsel for the appellant argued that GHANA was an intermediate product for the final Ayurvedic medicament and that the duty demand was illegal. The departmental officials had certified the final product's exemption eligibility after visiting the factory. The appellant claimed that the product was never declared as a final product. On the other hand, the learned DR justified the Commissioner's reasoning by referring to chapter notes under Chapter 13 and Chapter 30 of the CETA, stating that the intermediate product lacked curative or preventive qualities. The Tribunal considered the submissions and found that the appellant had a strong prima facie case. It was noted that GHANA was disclosed as an intermediate product in earlier declarations, and the departmental officials were aware of its production process. The Tribunal concluded that there was no justification for the appellant to pay any amount for hearing the appeal on merits. Consequently, the pre-deposit of duty and penalty was waived, and the confiscation order regarding plant and machinery was lifted.

In summary, the Tribunal ruled in favor of the appellant, waiving the duty payment and penalty, and lifting the confiscation order on plant and machinery. The decision was based on the appellant's strong prima facie case, supported by the disclosure of GHANA as an intermediate product in earlier declarations and the department's awareness of the production process.