Excisable goods from a 100% EOU denied exemption and full pre-deposit waiver after failure to meet notification conditions.

Goods cleared into the Domestic Tariff Area by a 100% EOU were treated as excisable because they were specified in the tariff schedule, and a nil rate of duty did not remove them from excise coverage. The clearances were held to fall under the proviso to Section 3(1) of the Central Excise Act, and exemption under Notification No. 23/2003-C.E. was denied because the notification conditions and Foreign Trade Policy requirements were not met. Financial hardship was not accepted on the record. Applying the twin tests of prima facie case and undue hardship, complete waiver of pre-deposit was refused; duty was required to be deposited, while penalty and interest were stayed pending appeal.

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Issues: Whether the appellant had made out a case for complete waiver of pre-deposit and stay of recovery of the demanded duty, penalty and interest.

Analysis: The goods cleared into the Domestic Tariff Area were held to be excisable goods because they were specified in the tariff schedule, and the fact that the rate of duty was nil did not take them outside the definition. Clearances by the 100% EOU were found to be governed by the proviso to Section 3(1) of the Central Excise Act, 1944, and the benefit of Notification No. 23/2003-C.E. was found unavailable because the notification conditions and the Foreign Trade Policy requirements were violated. The claim of financial hardship was not accepted, as the record showed continuing business operations and substantial revenue. On the twin considerations of prima facie case and undue hardship, full waiver was not justified.

Conclusion: Complete waiver of pre-deposit was refused. The appellant was directed to deposit the entire duty amount, while pre-deposit of penalty and interest was dispensed with and recovery thereof stayed pending the appeal.

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