[Order]. - The impugned order affirmed an order of the original authority. After due process of law, the original authority had found that the appellants M/s. EID Parry (India) Ltd. had manufactured and cleared a product called ‘abda’, a plant vitalizer falling under Chapter Sub-heading 3808 treating it as fertilizer of CSH 3101.0099. By wrongly classifying the plant vitalizer as fertilizer the appellants evaded duty due on clearances of abda made during 1-9-05 to 31-5-06 to the tune of Rs. 22,09,717/-. Fertiliser was exempt from payment of duty. The original authority affirmed demand of duty of Rs. 22,09,717/- together with applicable interest and imposed equal amount of penalty on the appellants under Section 11A of the Act. The appellants seek waiver of pre-deposit and stay of recovery of these dues affirmed in the impugned order.
2. Moving the application for waiver of pre-deposit, the ld. Counsel for the appellants submit that as far back as in August, 2005, the assessee had intimated the department that the classification of abda was under CSH 31010099. Therefore, the impugned demand confirmed after adjudicating a Show Cause Notice issued in February, 2007 was barred by limitation. The authorities had drawn a sample of the product and got it tested by the Regional Centre of Organic Farming, Bangalore. As per the test report, the product passed test of Fertilizer Control Order, 2006 and as per the test report abda was organic manure entitled to full exemption. The original authority had relied on Fertiliser Control Order to decide that the subject product was not classifiable under Chapter Sub-heading 3101.0099.
3. The appellants had not been put on notice about the department relying on Fertilizer Control Order to decide the classification of the impugned goods. Moreover, as per CBEC Circular No. 392/25/98-CX., dated 19-5-98, Fertilizer Control Order was not to be relied upon to decide the classification of goods as fertilizer. Relying on a judgment of the Apex Court in CCE, Nagpur v. Ballarpur Industries Ltd. [ (S.C.)] it is submitted that the orders of the lower authorities were not sustainable as the same had confirmed demand and penalty against the appellants without putting them on notice that the department relied on the Fertilizers Control Order in issuing the SCN.
4. We have heard ld. JCDR who submits that the appellants though intimated the classification of abda followed by them vide their letter dated 1-8-2005, they had not intimated the details of clearance of the impugned goods made by them in the ERl returns filed by them. Therefore, the plea of limitation was not justified. As regards the reliance on Fertilizer Control Order he submits that the test result was on the basis of the Fertilizer Control Order.
5. We have carefully considered the rival submissions. We find that prima facie the impugned demand is not sustainable as the same follows a classification based on Fertilizer Control Order and that the decision on classification was made without putting the appellant on notice of the fact that the Fertilizer Control Order was relied upon. We also find considerable force in the plea of limitation and that most of the demand is barred by limitation. In the circumstances, we find that the appellants have made out prima facie case against the impugned demand and penalty. Accordingly we grant complete waiver of pre-deposit of the adjudged dues and stay recovery thereof pending the appeal.
(Order pronounced and dictated in the open Court)