Tribunal grants waiver of pre-deposit & stays recovery pending appeals. Matter referred to CEGAT, influenced by Board's order.

The Tribunal, by majority decision, granted the waiver of pre-deposit of duty and penalty pending appeals and stayed the recovery of the same. The matter was directed to be transmitted to CEGAT, New Delhi, for disposal. The decision was influenced by the Board's latest order clarifying the non-excisable nature of the Printing Paste and considerations of balance of convenience and potential discrimination.

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Issues Involved:
1. Classification of Printing Paste.
2. Applicability of Board's Order No. 2/93 dated 21-4-1993.
3. Waiver of pre-deposit of duty and penalty.
4. Financial hardship of the petitioners.
5. Retrospective application of Board's Order.

Issue-wise Detailed Analysis:

1. Classification of Printing Paste:
The primary issue revolves around the classification of Printing Paste and whether it constitutes excisable goods. The petitioners argued that the Printing Paste, prepared from formulated, standardized, or prepared dyes by simple mixing with other materials, does not amount to manufacture and should not be classified under sub-heading 3204.29 of the Tariff. This argument was supported by the Board's Order No. 2/93 dated 21-4-1993, which clarified that such preparation does not amount to manufacture.

2. Applicability of Board's Order No. 2/93 dated 21-4-1993:
The petitioners contended that the Board's instruction is statutory and binding on the Excise authorities. They emphasized that the impugned orders were passed before the issuance of the Board's statutory instruction, which clarified that the goods in question are not excisable. The Tribunal noted that the Department is not levying any duty on such goods based on the Board's clarification, and it would be unjust to demand duty from the petitioners alone, causing hostile discrimination.

3. Waiver of Pre-deposit of Duty and Penalty:
The Tribunal was divided on whether to grant a waiver of pre-deposit of duty and penalty. One member (Judicial) argued for the waiver, citing the Board's latest order and the balance of convenience favoring the petitioners. The other member (Technical) disagreed, stating that the demand was raised during the period when the earlier Board's order was in force, and thus, the petitioners were required to pay the duty like others. The President of the Tribunal, upon reviewing the difference, agreed with the Judicial member, granting the waiver of pre-deposit and stay of recovery.

4. Financial Hardship of the Petitioners:
The financial hardship of the petitioners was considered, particularly for M/s. Karnataka Handloom Development Corporation, which claimed losses. However, upon examining their financial statements, it was found that the company had a healthy financial position, with substantial advances, cash on hand, and deposits. Therefore, the Technical member concluded that no undue hardship would be caused by requiring the pre-deposit of duty.

5. Retrospective Application of Board's Order:
The Technical member argued that the Board's Order No. 2/93 should apply prospectively and not retrospectively. During the relevant period, the earlier Board's order was in force, and the duty was being charged accordingly. The Judicial member, supported by the President, took into account the latest Board's order and the balance of convenience, leading to the decision to grant the waiver of pre-deposit.

Conclusion:
In conclusion, the Tribunal, by majority decision, granted the waiver of pre-deposit of duty and penalty pending appeals and stayed the recovery of the same. The matter was directed to be transmitted to CEGAT, New Delhi, for disposal. The decision was influenced by the Board's latest order clarifying the non-excisable nature of the Printing Paste and considerations of balance of convenience and potential discrimination.

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