Conflicting Tribunal views on EOU duty demand led to waiver of pre-deposit and stay of recovery pending appeal disposal.

Conflicting Tribunal views on the duty demand arising from clearances by an Export Oriented Unit to the Domestic Tariff Area led to interim relief pending resolution of the legal question. The dispute concerned the effect of exemption notifications governing duty forgone on imported and locally procured inputs. Because two co-ordinate benches had taken different views on the same issue, the matter was referred for consideration of constitution of a Larger Bench. Pending that determination, waiver of pre-deposit was granted and recovery of the disputed amounts was stayed until disposal of the appeals.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeals when the underlying duty-demand issue had conflicting Tribunal views.

Analysis: The appellants had cleared goods by an Export Oriented Unit to the Domestic Tariff Area and the dispute turned on the effect of the exemption notifications governing duty forgone on imported and locally procured inputs. The Tribunal noticed that the issue had already been interpreted differently by two co-ordinate benches, creating a conflict on the same legal question. In view of the divergence, the matter was referred to the Hon'ble President for consideration of constitution of a Larger Bench. Pending such resolution, the Tribunal granted relief against immediate enforcement.

Conclusion: Waiver of pre-deposit was granted and recovery of the amounts involved was stayed till disposal of the appeals.

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