100% EOU appellants granted stay on duty demand & penalty imposition for job work

The Tribunal granted a stay without pre-deposit to the 100% EOU appellants in a case involving duty demand confirmation and penalty imposition for job work undertaken for their sister unit. The Tribunal found merit in the appellants' argument on limitation and revenue neutrality, emphasizing their compliance efforts and lack of intention to evade duty. The decision highlighted the importance of considering all aspects, including limitation and revenue impact, to ensure fair adjudication in such cases.

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Issues: Whether, for the purpose of stay, the appellants had made out a prima facie case on limitation and revenue neutrality so as to justify dispensation of pre-deposit of duty and penalty.

Analysis: The documents showing job work were reflected in the ER-2 returns and there was no material to doubt their correctness merely because a separate verification certificate was not attached to each document. The record indicated that the department was aware of the activity, and the adjudicating authority had not adequately dealt with the plea that suppression with intent to evade duty was absent. The receipts and returns also showed that raw materials moved under challans and the finished goods were returned on the same basis. Further, any duty paid by the appellants would have been available as credit to the sister concern for payment of duty on its final product, supporting the plea of revenue neutrality. On that basis, the demand was regarded as raising a strong limitation issue for interim consideration.

Conclusion: The appellants established a prima facie case on limitation and revenue neutrality, and pre-deposit of duty and penalty was dispensed with.

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