Appellate Tribunal waives duty & penalties for company and Director, grants relief under Notification No. 3/2001

SARLA POLYESTER LIMITED Versus COMMISSIONER OF C. EX. & CUS., VAPI

SARLA POLYESTER LIMITED Versus COMMISSIONER OF C. EX. & CUS., VAPI - 2004 (176) E.L.T. 481 (Tri. - Mumbai) Issues:
1. Waiver of pre-deposit of duty and penalty arising from the order of the Commissioner of Central Excise, Vapi.
2. Correct method of duty computation under Notification No. 2/95.
3. Classification of yarn under Central Excise Tariff sub-headings.
4. Benefit of exemption under Notification No. 3/2001 for air-mingled yarn.

Analysis:
1. The case involved applications for waiver of pre-deposit of duty and penalty based on the Commissioner's order confirming a duty demand and penalties on the company and its Director. The duty demand comprised two parts: one related to DTA clearances by a 100% EOU, and the other involved the classification of yarn under specific sub-headings of the Central Excise Tariff.

2. The issue of correct duty computation under Notification No. 2/95 was discussed. The Tribunal referred to a Larger Bench due to divergent views on whether duty should be based on 50% of the duties of customs or 50% of the aggregate duties of customs. A prima facie case for waiver of pre-deposit was acknowledged, leading to the dispensation of duty payment on the first part of the demand.

3. Regarding the second part of the demand, the applicant argued for the benefit of exemption under Notification No. 3/2001 for air-mingled yarn. The Tribunal found merit in the plea as the yarn was manufactured using inter-mingling machinery, fulfilling the conditions of the exemption notification. The Tribunal considered the interpretation of "appropriate duty of excise," including a Nil rate of duty, based on past circulars and judicial decisions, ultimately waiving the pre-deposit of duty and penalties on this count as well.

4. The Tribunal's decision to waive the pre-deposit of duty and penalties was based on the fulfillment of conditions for exemption and the interpretation of relevant legal provisions and circulars. Recovery of the duty and penalties was stayed pending the appeals, providing relief to the appellant company and its Director in this case before the Appellate Tribunal CESTAT, Mumbai.