A.V.R. Enterprises vs Union of India and Others

1 We have heard Shri Ashutosh Agrawal and Shri Anubhav Chandra for the petitioner. Shri B.K.S. Raghuvanshi appears for the Central Excise Department. The petitioner is registered under the Central Excise Act and is engaged in the manufacturing of "tents" nomenclated as "tent extendable" falling under Chapter 63 of the Central Excise Tariff and had been clearing the same under Notification No. 29/2004-CE, dated July 9, 2004 at concessional rate of duty as per the notification.

A show-cause notice was issued to the petitioner on October 30, 2011 to which the petitioner submitted a reply and was given personal hearing. The adjudicating authority in the order-in-original has observed that the petitioner has used metallic parts in the tent, which takes it out from the benefit of notification dated July 9, 2004, and has suppressed the fact of clearance of metal products along with tents.

The petitioner filed an appeal before the Commissioner, Central Excise (Appeals), Kanpur, which has while considering the application u/s 35F of the Central Excise Act directed the petitioner to deposit 25 percent of the amount of duty and penalty. The petitioner filed an appeal u/s 35B before the Customs, Excise and Service Tax Appellate Tribunal, which has been dismissed on January 14, 2003 on the ground that it is not maintainable in view of the judgment of the 2006 (111) ECC 183 and Sapta Shrungi Steel Rolling Mills P. Ltd. reported in [2008] 231 ELT 192 (Trib.-Mum).

It is submitted by the learned counsel for the petitioner that whereas an appeal is maintainable against every order to the High Court u/s 35G, an appeal is maintainable in the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) only against the final order u/s 35A of the appellate authority. It is submitted that the words used in sections 35B and 35G have been differently interpreted by the Customs, Excise and Service Tax Appellate Tribunal.

The learned counsel for the petitioner further submits that on merits he has a very good case inasmuch as the CESTAT in 2013 (197) ECR 416 decided on January 14, 2013 has recorded the findings that the goods, which do not contain any other textile material will include goods made from fabric of cotton, even if they contain sewing threads, cords, labels, elastic tapes, zip fasteners and similar items used for stitching, fastening, holding or adornment of materials other than cotton.

It is submitted by the learned counsel for the petitioner that in making tents the petitioner is using aluminium pipes and joints, which are cleared as tent extendable and are used for holding tents. The findings recorded by the Tribunal in 2013 (197) ECR 416 are quoted as below:

After hearing both the sides, we find that Notification No. 29/2004 exempts the goods falling under Chapters 61, 62 and 63 (except 6309 and 6310) and four percent rate of duty had been made applicable to all goods of cotton not containing any other textile material. In Explanation (1) given in the notification it is stated that the goods of cotton not containing any other textile material, shall include goods made from fabric of cotton, not containing any other textile materials, even if they contain sewing threads, cords, labels, elastic tapes, zip fasteners and similar items used for stitching, fastening, holding or adornment of materials other than cotton. We find that the last line of the Explanation similar items used for stitching fastening, holding or adornment of materials other than cotton is also mentioned. We find that the aluminium pipes and joints cleared along with the tent extendable are used for holding of the tents. We also take note of the fact that the Commissioner (Appeals), Kanpur in the case of V.K. Brothers in his Order-in-Appeal Nos. 19 to 22/CE/APPL/KNP/2011, dated January 28, 2011 has taken a view granting the benefit of the notification to the other assessees and that order has not been stayed by the Tribunal and the other assessees are availing of the benefit of the notification. We are therefore prima facie of the view that the applicant had a strong case for waiver of pre-deposit and accordingly we waive the pre-deposit and stay the recovery of the dues till disposal of the appeal.

In the present case there is no finding recorded in the order-in-original that the goods are containing any textile material. The use of aluminium pipes to hold the tents will not prima facie take them out of the notified goods for denying the concessional rate of clearance of goods.

On the aforesaid findings recorded by the Tribunal in the case of 2013 (197) ECR 416 , we are satisfied that the petitioner has made out a prima facie case for waiver of the pre-deposit of the entire amount as a condition for hearing of the appeal before the Commissioner (Appeals) and that the order to deposit 25 percent of the duty is not only against the strong prima facie case but will also in the facts and circumstances of the case cause serious prejudice to the petitioner.

The writ petition is allowed. The order of the Commissioner (Appeals) dated August 24, 2012 directing the petitioner to deposit 25 percent duty as pre-deposit as the condition of waiver is set aside. There will be stay of 100 percent of the requirement of pre-deposit as condition of hearing of appeal. The appeal however, will be heard and decided expeditiously and preferably within eight weeks.