2004 (97) ECC 376 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member (J) and Shri Jeet Ram Kait, Member (T)

Jumbo Bags Ltd.

Versus

Commissioner of Central Excise, Chennai

E/MS/388/2003, E/EH/35/2004 in E/34/2003

Misc. Order No. 337 & 338/2004, dt. 31.5.2004, Certified on 15.6.2004

Waiver of pre-deposit

Appellant claiming the benefit of the Notification No. 125/84-CE dt. 26.5.1984 -- Under the notification exemption of payment of excise duty is allowed unless the same are sold in India -- Appellant sold in DTA -- Hence, waiver of pre-deposit neither reduced nor waived -- Section 35F of Central Excise Act.

Appeal rejected

PRESENT :

S/Shri R. Raghavan & T.S. Balasubramanian, Advs. for the appellant.

Smt. R. Bhagya Devi, SDR for the respondent.

Cases Cited :

1. Commissioner of Central Excise, Jaipur v. Pratap Singh, 2003 (153) ELT 711..... [Para 2]

2. Himalaya International Ltd., 2003 (88) ECC 244 (LB)......................................... [Para 2]

Per : P.G. Chacko (Oral)

By Stay Order No. 257/2003, dated 27.8.2003, we had directed the appellants to predeposit an amount of Rs. 45 lakhs within 3 months and report compliance on 4.12.2003. We had also directed the appeal to be posted for final hearing out of turn, taking into account the high stake involved in the case. The records indicate that, instead of complying with the direction for predeposit, the party has been moving the Bench from time to time for modification of the order. It also appears that they had paid an amount of Rs. 5 lakhs on 22.10.2003. Today, Ld. Counsel for the appellants, moving the modification application, claims that they were eligible for the benefit of Notification No. 125/84-CE, dated 26.5.1984 in respect of the goods cleared by them in DTA during the material period. In this connection, Ld. Counsel has relied on a miscellaneous order passed by the West Zonal Bench (WZB) in the case of another 100% EOU. It is submitted that, by the miscellaneous order, the WZB dismissed an application filed by the department for stay of operation of the order of the Commissioner (Appeals) impugned in that case. The Commissioner (Appeals), in that case, had granted the benefit of Notification No. 125/84-CE, ibid to the assessee. Ld. Counsel, on this basis, claims a strong prima facie case for M/s Jumbo Bags Ltd., and prays for waiver of predeposit of the amount of duty in excess of Rs. 5 lakhs already deposited. He further submits that the party has been put to liquidity-related financial hardships.

2. Ld. SDR reiterates the cross objections filed in the present application. These cross objections are with reference to an order passed by the Northern Bench of the Tribunal vide Commissioner of Central Excise, Jaipur v. Pratap Singh, 2003 (153) ELT 711, wherein it was, interalia, held that a 100% EOU was liable to pay excise duty in respect of goods sold in DTA without the permission of the competent authority, under the main Section 3(1) of the Central Excise Act, 1944 and not under the proviso thereto. This view of the Bench was in favour of 100% EOUs. However, a subsequent Larger Bench decision in the case of Himalaya International Ltd., 2003 (88) ECC 244 (LB) : 2003 (154) ELT 580 was to the contra. In the present application, the appellants have pointed out that the decision in Pratap Singh (Supra) had not arisen for consideration by the Larger Bench in the case of Himalaya International Ltd. They have thus sought to discount the precedent value of Himalaya International Ltd., (Supra). In the cross objections of the department, it has been pointed out to the effect that Pratap Singh (Supra) is not good law after the Larger Bench decision in Himalaya International Ltd. (Supra). The applicants have pointed out that Pratap Singh (Supra) has been affirmed by the Supreme Court vide 2003 (156) ELT A. 382. We note that the Supreme Court dismissed the SLP filed by Pratap Singh Kamat against 2003 (153) ELT 711. The Tribunal's decision in Pratap Singh (Supra) on the question of applicability of the main Section 3(1) of the Central Excise Act to DTA clearances made by a 100% EOU without the Development Commissioner's permission was in favour of the assessee. What was against them in Pratap Singh (Supra) was the Tribunal's decision on the question whether the activity undertaken by the assessee in their unit amounted to "manufacture" for the purpose of levy of duty of excise. It was against this part of the Tribunal's order that the party had filed the above SLP. Hence Ld. SDR has argued that the dismissal of the SLP filed by Pratap Singh Kamat did not have the effect of overruling the Larger Bench decision on the first question in Himalaya International (Supra). We are in full agreement with this argument of the SDR. Obviously, then, the miscellaneous order passed by the WZB is of no aid to the applicants.

3. All the legal arguments advanced by Ld. Counsel with reference to Notification No. 125/84-CE ibid shall stand reserved for consideration in the appeal. None of these arguments seem to be appealing to our mind at this stage. Incidentally, we have come across a departmental clarification of Notification No. 125/84-CE, which reads thus "It is observed that goods produced in a 100% EOU are already exempted from payment of excise duty under Notification No. 125/84-CE, dated 26.5.1984, unless the same are sold in India". This clarification immediately paves the way for a prima facie view that, if the goods manufactured by a 100% EOU are sold in India, the benefit of the notification would not be available. Admittedly, the goods in question were sold in DTA.

4. Nevertheless, we have examined the plea of financial hardships with a compassionate mind and are inclined to reduce the quantum of duty for predeposit on this sole basis. The quantum will stand reduced to Rs. 25 lakhs and Stay Order No. 257/2003, dated 27.8.2003 shall stand modified accordingly.

5. The party has already paid an amount of Rs. 5 lakhs. They shall deposit the balance amount of Rs. 20 (Twenty) lakhs within 30 days from today and report compliance on 8.7.2004.

6. As we had earlier ordered out-of-turn posting of the appeal for hearing, the present application for early hearing is dismissed as infructuous.

………………..