Full Judgment
2. The issue relates to clearances of goods produced by a 100% EOU to DTA. The applicant is a 100% EOU. The applicants produced silico manganese. They entered into a contract with a DTA unit, TISCO, to supply Silico Manganese. According to their understanding with TISCO, the latter would supply certain raw materials free of cost and the applicants would produce the goods and supply to TISCO. According to the applicants, this supply to TISCO is a sale to DTA allowed under para 9.9 (b) of EXIM policy. Under para 9.9(b) of the said policy, a 100% EOU can sell goods upto 50% of FOB value of exports subject to payment of appropriate duty and fulfilment of minimum NFED. Under para 9.17(b), an EOU may undertake job work for export on behalf of DTA units provided the goods are exported from the EOU directly. The Department's contention is that the applicants in the present case are engaged in job work for TISCO and so the clearances to TISCO are made cannot be considered as DTA sales under para 9.9(b). The applicants cleared goods to TISCO under the terms aforesaid during the period September 2001 to June 2002. The unit availed of the benefit of Central Excise notification 8/97 on all clearances to TISCO. The Department held that the applicant is not entitled to the benefit of notification 8/97 and therefore assessed the said goods to duty under proviso to Section 3(1) of the Central Excise Act. In the two impugned orders, the Commissioner demanded duties of Rs. 11,56,08,497/-and Rs. 3,90,53,248/-, interests as applicable, and imposed a penalties of Rs. 50 lakhs and Rs. 3,90,53,248/-, for the period September 2000 to June 2002 and March 2000 to August 2000 respectively. He also imposed a penalty of Rs. 5,00,000/- on Shri D.M. Naterwala, Chairman of the company.
3. It is evident from the above narration that the applicants have undertaken a job work for TISCO. The issue whether such clearances to DTA are covered under para 9.9(b) of the policy is debatable. The issue regarding eligibility to the concessional rate of duty under Central Excise notification 8/97 has to be also gone into. The applicants have not made out a strong prima facie case in their favour for the Tribunal to waive pre-deposit of duty and penalty fully. The applicants claimed financial hardship supported by their Annual Reports 2002-2003. Keeping all these factors in mind, the following order is passed.
4. In E/Stay-1793/03 the applicant is ordered to deposit a sum of Rs. 1 crore towards duty and in E/Stay-1794/03 a sum of Rs. 40 lakhs, within 12 weeks from today. Compliance to be reported on 1.4.2004. Upon pre-deposit of the said amounts, further deposit of duties and penalties is waived and recovery stayed. Non-compliance would result in dismissal of appeals without further notice. In E/Stay-1795/03, pre-deposit of penalty imposed on Shri D.M. Naterwala, Chairman of the company, is waived and recovery stayed pending his appeal.