Tea Act cess liability on processed tea rejects: prima facie case supported waiver of pre-deposit and stay of recovery.

Cess under section 25 of the Tea Act, 1953 on black tea and re-processed tea rejects was challenged on the basis that the proviso to section 25(1) limits liability to tea produced by estates or gardens, and not to goods arising from processing such tea. The CESTAT, Chennai found that this proviso gave the appellants a strong prima facie case for waiver of pre-deposit and stay of recovery. It also noted that the precedent cited by the revenue was not shown to be comparable, because no equivalent provision under the Jute Act had been established for the dispute.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery of cess demanded under section 25 of the Tea Act, 1953 on black tea and re-processed tea rejects.

Analysis: The demand was under section 25 of the Tea Act, 1953. The appellants relied on the proviso to section 25(1) to contend that cess is payable only on tea produced by estates or gardens and not on goods arising out of processing of such tea. The Tribunal found a strong prima facie case in favour of the appellants on the strength of that proviso and noted that no comparable provision under the Jute Act had been shown to make the cited precedent reliable for the present dispute.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants.

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