MYSORE SPINNING AND MFG MILLS Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS is an application for waiver of pre-deposit of duty of Rs. 1,63,380/- and a penalty of Rs. 16,000/-levied on the appellants under the impugned order of the Collector of Central Excise, Bangalore, dated 25-4-1989.

(2.) The learned Consultant for the petitioner pleaded that the appellants have a good case on merits and in this connection he drew our attention to the show cause notice dated 14-4-1988. He has pleaded that duty has been demanded from the appellants in respect of clearances offents, rags and chindies in excess of 8% of the total quantity of clearances of low price fabrics falling under Chapter 5501.20 of the Central Excise Tariff Act, 1985 without payment of Central Excise duty and without following the Central Excise procedure by suppressing the fact of excess clearances. He pleaded that the appellants were manufacturing fabrics after obtaining the polyester yarn in terms of Notification 191/85 at concessional rate of duty and were manufacturing low price polyester cotton fabrics in pursuance of the Policy decision of the Government of India for making available the fabrics at cheap rates to the poor masses. In this connection he drew our attention to the terms of the Notification 191/85. The operative portion of the notification for convenience of reference is reproduced below:

(3.) IT is observed that the appellants have made a valid legal plea as to whether the liability for duty was on the supplier or on them and also as to the period for which the correlation of the clearance of fents, rags etc. with reference to the total clearance of the low price fabrics has to be done. We observe that the learned lower authority has failed to take note of their plea in regard to the liability of the appellants in terms of the notification and to this extent there has been a failure on his part. In view of the above we hold that the appellants have prima facie a good case and in this view we dispense with the pre-deposit of the duty and penalty as demanded in terms of the impugned order till the disposal of the appeal today.