Duty of excise classification for export-oriented unit clearances supported waiver of pre-deposit and stay of recovery.

Notifications governing domestic clearances by a 100% export-oriented unit were read with the existing judicial position to indicate, prima facie, that the levy on such clearances was duty of excise rather than duty of customs. On that basis, the penalty provision also appeared to lack sufficient legal foundation for pre-deposit purposes. The tribunal therefore granted waiver of pre-deposit of the confirmed duty and penalties and stayed recovery during pendency of the appeals.

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Issues: Whether the demand and penalties arising from clearance of goods by a 100% export oriented unit into the domestic tariff area were, prima facie, referable to duty of excise under the applicable notifications, and whether pre-deposit of duty and penalties should be waived with stay of recovery pending the appeals.

Analysis: The notifications permitting domestic clearance by an export oriented unit were read with the relevant judicial position to indicate that the levy attracted was duty of excise and not duty of customs. On that prima facie basis, the penalty imposed also appeared to lack legal foundation for the purpose of pre-deposit.

Outcome: Waiver of pre-deposit of the confirmed duty and penalties was granted, and recovery was stayed during pendency of the appeals.

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