Tribunal grants partial stay, directs deposit for first notice, stays recovery on second notice pending appeal.

The Tribunal granted a partial stay in the case, directing the applicants to deposit the amount from the first show cause notice within four weeks. Upon this deposit, recovery of the amount demanded in the second notice was stayed until the appeal's disposal. The Tribunal considered factors such as the historical classification under Tariff Item 68, the applicants' financial hardship, and the time-barred nature of the second show cause notice in reaching this decision.

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Issues: Classification of stove burner parts under Central Excise Tariff Item 26A(3)(ii) vs. Tariff Item 68, retrospective demand confirmation under Section 11A, financial hardship, time-barred show cause notices.

Classification Issue:
The applicants sought a stay on the duty imposed by the respondent Collector, who classified stove burner parts under Central Excise Tariff Item 26A(3)(ii) from 1-8-1984. The applicants argued that the parts should be classified under Tariff Item 68, citing similar classification by other manufacturers and historical classification under Item 68. They emphasized their small scale industry status and compliance with exemption rules, supported by a declaration and an exemption letter. The first show cause notice demanded Rs. 7,247.21, followed by a second notice for Rs. 1,03,834.01, with seized goods redeemed on payment of a fine. The applicants contended that no new item was manufactured, relying on trade rulings and financial hardship due to the standstill in operations post-seizure.

Time-Barred Confirmation Issue:
The applicants argued that the retrospective demand confirmation under Section 11A was time-barred, highlighting the classification history under Item 68, exemption granted based on a declaration, and the small profit margin, causing financial strain post-seizure. The Departmental Representative contended that the seized parts were not exempted stove burners, leading to a denial of relief. The Tribunal noted the exemption granted based on verification by the Superintendent and the historical classification of similar items under Item 68, supporting the applicants' argument of no change in the product character post-drilling.

Decision:
After hearing both sides, the Tribunal found it a fit case for stay, requiring the applicants to deposit the amount from the first show cause notice within four weeks. Upon this deposit, the recovery of the amount demanded in the second notice was stayed until the appeal's disposal. The Tribunal acknowledged the applicants' prima facie case, historical classification under Item 68, financial hardship, and the time-barred nature of the second show cause notice, leading to the decision for partial stay pending deposit.

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