2006 (1) TMI 381 - AT - Central Excise

Tribunal Waives Duty & Penalty on Export Packing Material; Relief for Appellants

The Tribunal, comprising Ms. Jyoti Balasundaram and Shri S.S. Sekhon, waived the pre-deposit of duty and penalty amounting to Rs. 7,97,201/- and Rs. ... Excisability of packing material exported with dutiable goods - Exemption of clearances from aggregate value under SSI Notification 8/2002 - Scope of 'clearances for home consumption' and Explanation G - Waiver of pre-deposit and stay of recovery pending appealExcisability of packing material exported with dutiable goods - Exemption of clearances from aggregate value under SSI Notification 8/2002 - Scope of 'clearances for home consumption' and Explanation G - Prima facie determination whether clearances of packing material exported along with frozen marine products are not to be included in aggregate clearances for home consumption under SSI Notification 8/2002 and thus not liable to excise duty - HELD THAT: - The Tribunal found on a prima facie basis that the packing material (corrugated and duplex boxes) was exported along with the frozen marine products by the merchant exporters and that such clearances, being exports, fall within the category of clearances on which no excise duty is payable. Paragraph 3 of SSI Notification 8/2002-C.E., dated 1-3-2002 read with Explanation G was applied to conclude that clearances for home consumption, for the purpose of the notification, are to be determined in the specific manner set out therein and include only clearances for export to Bhutan and Nepal as excepted by Explanation G; the goods in the present case were not exported to Bhutan or Nepal. On this basis the Tribunal held that, prima facie, the clearances in question are not to be taken into account for determining aggregate value of clearances for home consumption and therefore are not chargeable to excise duty for the purpose of assessing entitlement under the notification. The finding was framed as a prima facie conclusion sufficient to ground relief in the interlocutory application before the Tribunal. [Paras 2]On a prima facie view the clearances of the packing material exported along with the frozen marine products are not to be included in aggregate clearances for home consumption under SSI Notification 8/2002 and therefore are not liable to excise duty for the purposes of the appeal.Waiver of pre-deposit and stay of recovery pending appeal - Whether pre-deposit of duty and penalty should be waived and recovery stayed pending the appeal - HELD THAT: - Having recorded a strong prima facie case that the clearances were not chargeable to excise duty under the notification, the Tribunal exercised its discretion to grant the interlocutory relief sought. The Tribunal concluded that the circumstances justified waiver of the pre-deposit of the duty and penalty and a stay of recovery, pending adjudication of the appeal on merits. [Paras 3]Pre-deposit of duty and penalty waived and recovery stayed pending the appeal.Final Conclusion: The Tribunal granted interlocutory relief by waiving the pre-deposit of the disputed duty and penalty and staying recovery, having recorded a prima facie view that the packing material exported with the frozen marine products need not be included in aggregate clearances for home consumption under SSI Notification 8/2002 and thus is not liable to excise duty for the purpose of the appeal. Issues:Waiver of pre-deposit of duty and penalty on packing material cleared for export.Analysis:The judgment revolves around the application for waiver of pre-deposit of duty and penalty amounting to Rs. 7,97,201/- and Rs. 50,000/- respectively. The case originated from the order of the Commissioner of Central Excise (Appeals) confirming the demand on packing material, specifically corrugated and duplex boxes, cleared by the appellants to merchant exporters. The issue arose as the packing material was not exported directly from the appellants' unit or through the merchant exporters directly from the appellants' unit as mandated by a CBEC Circular dated 25-7-2002.The Tribunal, comprising Ms. Jyoti Balasundaram and Shri S.S. Sekhon, analyzed the case and acknowledged that a strong prima facie case for waiver exists. The Tribunal noted that the goods in question were those on which no excise duty is payable since the packing material was exported along with the frozen marine products. This scenario exempts these clearances from excise duty payment, as per the SSI Notification 8/2002-C.E., dated 1-3-2002. The notification clarifies that clearances for home consumption, for the purpose of the notification, do not include clearances for export to Bhutan and Nepal. In this case, the goods were not exported to Bhutan or Nepal by the merchant exporters.Consequently, the Tribunal decided to waive the pre-deposit of duty and penalty, along with staying the recovery pending the appeal. This decision was pronounced in court, providing relief to the appellants in the matter concerning the duty and penalty on the packing material cleared for export.