1. The appellant is engaged in the manufacture of agricultural irrigation equipment which is used mainly for sprinkling water in the fields, lawns and gardens. The appellant, prior to commencing the production, by a letter sent on 11-8-1986 along with the classification list, claimed exemption for payment of duty in terms of notification dated 10-2-1986 as amended by another notification dated 14-3-1986. However, the Assistant Collector held that the appellant is not eligible for exemption under the said notification. The matter was carried in appeal and the Collector upheld the order made by the Assistant Collector. When a further appeal was filed before CEGAT, the appellant pointed out that he is entitled to the benefit of exemption in view of the notifications issued in this behalf. However, CEGAT took the view that the appellant was not eligible to claim exemption under the said notification.
2. It is now brought to our notice that the Central Board of Excise and Customs issued Circular No. 44/44/94-CX dated 27-6-1994 granting exemption in respect of agricultural mechanical appliances and it was specifically stated that the agricultural implements include agricultural mechanical appliances/machinery and would be covered by the exemption in Notification No. 64/86-CE as amended by Notification No. 196/86-CE dated 14-3-1986 with which we are concerned in the present case. In view of this circular issued by the Board, we think that the Department ought to have allowed the claim of the appellant and they are bound by such circulars issued under Section 37-B of the Central Excise Act.
3. In this view of the matter, we allow the appeal filed by the appellant and the claim made by the appellant will have to be upheld. At this stage, learned counsel for the respondent brought to our notice that when the matter was filed before CEGAT, a conditional stay order had been granted directing the appellant to pre-deposit an amount of Rs 4,44,000 and on compliance thereof, the balance amount of duty shall stand waived till the disposal of their appeal and that amount should not be released to the appellant until he establishes that he has not wrongly enriched himself by collecting duty from his customers. It is not clear that the amount paid is a condition for waiving of payment for grant of stay by the appellate authority and not duty which is to be refunded. In that view of the matter, we do not think that there is any reason to accede to the contention advanced by the respondent.
4. The appeal is accordingly allowed. There will, however, be no order as to costs.
Comments