Full Judgment
2. Shri Sidartha Sen, learned Counsel arguing the case for the appellant(s) submits that there was gross violation of the principles of natural justice as the application for modification of the Stay Order was rejected without giving the applicants an opportunity of presenting their case. He submits that the Development Commissioner had granted ex-post facto approval in relation to procurement of duty free HSD oil. Learned Counsel submits that the appellants being a 100% EOU is entitled to procure duty free input/capital goods to utilize in the manufacture of final product. He submits that permission to use CT-3 certificates was issued by the Development Commissioner for procuring duty free goods. He submits that the appellant procured HSD oil on the basis of CT-3 certificate. Learned Counsel submits that Notification No. 31/98 where under approval of Commissioner of Customs was made conditional for procurement of duty free goods was issued after issue of CT-3 certificate by the Superintendent of C. Ex. for procurement of duty free HSD oil. Learned Counsel submits that though on merits the applicants have a goods case and that if the learned Commissioner (Appeals) had considered these items on merits they would have won the case. Learned Counsel submits that since there was a denial of natural justice and since the matter has not been considered on merits by the learned Commissioner (Appeals) the matter may be remanded.
3. Shri Hitesh Shah learned DR appearing for Revenue submits that in terms of Notification No. 31/98 permission from the Commissioner of Customs was necessary. He submits that in this case no permission was taken and the appellant started procuring HSD oil in terms of CT-3 certificate. He submits that no permission was obtained from the Commissioner concerned in terms of Notification No. 31/98. Therefore, the Additional Commissioner had rightly confirmed the demand of Central Excise duty amounting to Rs. 3,26,954 and imposing a penalty of 3.0 lac.
4. We have heard the rival submissions. On careful consideration of the submissions made we note that the learned Commissioner (Appeals) had not examined the case on merits and rejected the appeal of the appellants for non-compliance of the provision of Section 35F. Since the appellants have now deposited a sum of Rs. 1.0 lac (rupees one lac) this amount may be taken as pre-deposit by the Commissioner (Appeals) to whom the papers are being sent back with the direction that he will examine the appeal on merits without insisting any pre-deposit in view of the deposit already made in terms of Stay Order No. S/14/2002-D dated 17.1.2002 and pass appropriate order in accordance with law.
5. The appeal is thus allowed by way of remand after setting aside the impugned order.