2012 (12) TMI 884 - AT - Central Excise

Tribunal grants waiver of duty & penalty for motor vehicles in UN project.

The Tribunal granted the applicant's request for a waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944. It found ... Interpretation of Explanation 2 to Notification - Benefit of exemption notification for goods supplied to projects financed by international organisations - Requirement that goods 'brought into the project' are not withdrawn from the ongoing project - Waiver of pre-deposit and stay of recovery pending appealInterpretation of Explanation 2 to Notification - Benefit of exemption notification for goods supplied to projects financed by international organisations - Whether, for the purpose of Notification benefit, the expression 'brought into the project' in Explanation 2 requires that goods remain in the on-going project and are not withdrawn by the supplier or contractor. - HELD THAT: - The Tribunal construed the expression 'into' in Explanation 2 as denoting an on-going or continuous state, meaning that the goods supplied (motor vehicles) must not be withdrawn from the ongoing project in order to qualify for the notification benefit. It was accepted on the record that the project is financed by the United Nations and that the goods have been brought into and remain in the project; there is no dispute that the goods were withdrawn. On this prima-facie construction, the applicant appears entitled to the benefit of the Notification unless further evidence on appeal shows otherwise.Explanation 2 construed to require that goods brought into the project must not be withdrawn from the ongoing project; on the facts before the Tribunal a prima-facie case for notification benefit is made out.Waiver of pre-deposit and stay of recovery pending appeal - Whether pre-deposit of the adjudged duty and penalty should be waived and recovery stayed pending disposal of the appeal. - HELD THAT: - Applying the prima-facie conclusion on the eligibility for Notification benefit, the Tribunal found that the applicant had made out a prima-facie case for relief. In the circumstances and in absence of dispute on the goods remaining in the project, the Tribunal exercised its discretion to allow total waiver of the pre-deposit of the adjudged dues and to stay recovery during the pendency of the appeal.Total waiver of pre-deposit of all dues adjudged and stay of recovery granted during pendency of appeal.Final Conclusion: The Tribunal held, on a prima-facie construction of Explanation 2, that goods must remain in the on-going project (not be withdrawn) to attract the Notification benefit; accepting that the goods in this case remain in the project, the Tribunal allowed total waiver of the pre-deposit and stayed recovery pending the appeal. Issues:1. Application for waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944 based on Notification No.108/95-CE.2. Interpretation of Explanation 2 to Notification 13/2008-CE regarding goods supplied to projects financed by the United Nations or an international organization.Analysis:1. The applicant sought waiver of predeposit of duty and penalty amounting to Rs.5,49,19,588/- each under Section 11AC of the Central Excise Act, 1944. The dispute arose from the denial of benefit under Notification No.108/95-CE due to the interpretation of the Explanation to the Notification. The contention was that the goods supplied, specifically motor vehicles, should not be withdrawn from the ongoing project financed by the United Nations. The applicant argued that the goods remained in the project and were not withdrawn, meeting the criteria of the Notification.2. The Explanation 2 inserted by Notification 13/2008-CE clarified that the benefit under the notification for goods supplied to projects financed by the United Nations is available when the goods brought into the project are not withdrawn by the supplier or contractor. The expression 'goods are required for the execution of the project' was to be construed accordingly. The Tribunal observed that the term 'into' in the Explanation suggested an ongoing or continuous presence of goods in the project, indicating that the goods, in this case, motor vehicles, should not be removed from the ongoing project. It was noted that the project was indeed financed by the United Nations, and the goods had not been withdrawn, remaining within the project as required by the Notification.3. The Tribunal found that the applicant had made a prima facie case for the total waiver of predeposit of all dues adjudged in the case. Consequently, the recovery of the duty and penalty amount was stayed during the pendency of the appeal. The Tribunal allowed the stay petition, considering that the goods supplied by the applicant were still in the project financed by the United Nations and had not been withdrawn, meeting the conditions specified in the Notification for availing the benefit.