2014 (3) TMI 909 - AT - Central Excise

Waiver of pre-deposit - recovery of the amount which has been refunded to the appellant under the Notification No. 32/99, as amended from time to time - Held that - it is not in dispute that the appellant had correctly followed the conditions of Notification No. 32/99, as amended from time to time. We find that the said Notification provides exemption from duty on the goods specified in First Schedule and Second Schedule of the Central Excise Tariff Act, 1985 cleared from the Unit located in notified areas in the North-East Zone. We find that prima facie, the appellant has made out a case in their favour and that the view is fortified by judgments of Hon ble High Court. The show cause notice in this case is issued to the appellant under Section 11A of the Central Excise Act, 1944. As correctly pointed out by the learned Counsel, this has been not accepted as a correct position of law by the Hon ble High Court of Gauhati in the case of C.C.E., Shillong v. Jellalpore Tea Estate (2011 (3) TMI 11 - GAUHATI HIGH COURT ). In view of the foregoing, we are of the considered view that the appellant has made out a prima facie case for waiver of the pre-deposit of the amounts involved - Stay granted.

Summary

Issues:
Recovery of refunded amount under Notification No. 32/99 - Applicability of Section 11A of the Central Excise Act, 1944.

Analysis:
The case involved a Stay Petition seeking the waiver of pre-deposit of a substantial amount demanded from the appellant, along with interest and penalty. The primary issue revolved around the recovery of an amount refunded to the appellant under Notification No. 32/99, as amended. The appellant had taken Cenvat credit on duty paid for capital goods used in manufacturing final products, which were cleared by utilizing the credit and subsequently through debits in the account current. The appellant sought to dispose of the capital goods on which credit was availed, leading to a refund under the notification. The Adjudicating Authority's failure to consider this aspect was highlighted by the appellant, who argued that the provisions of Section 11A would not apply for recovery in such cases, citing a judgment from the Hon'ble High Court of Gauhati.

The learned Counsel for the appellant contended that the appellant had complied with the conditions of Notification No. 32/99, which provided duty exemption for specified goods cleared from designated areas. The Tribunal acknowledged that the appellant had adhered to the notification's requirements and had a prima facie case in their favor. Citing judgments from the Hon'ble High Court, the Tribunal noted that the show cause notice issued under Section 11A of the Central Excise Act, 1944, was not deemed legally sound in a similar case by the Hon'ble High Court of Gauhati. Consequently, the Tribunal found that the appellant had established a strong case for waiving the pre-deposit amounts. As a result, the application for the waiver was granted, and recovery of the disputed amounts was stayed pending the appeal process.