ORDER
S.K. Bhatnagar, Vice President
1. This is a stay application filed w.r.t. the Order-in-Appeal passed by Commissioner of Central Excise, New Delhi dated 26-6-1995.
2. Ld. Counsel stated that the appellants are small scale unit manufacturing, inter alia, Non Refractory Preparations for facades and inside walls; and they had claimed benefit of Notification No. 1/93. The item was classified under Tariff Item 82 and the benefit of Notification No. 1/93 was allowed in the approved classification list. However in computing the exemption limit the Department had committed errors. As such they had filed another classification list in which they had claimed that the product was classifiable under 32.14 and for the purposes of computing the exemption limit the goods in the nature of machinery items classifiable under Heading 84.37 as well as the quantity of goods which had been exported was required to be excluded.
3. They had also furnished their literature and the technical opinion of a retired Chemical Examiner of the Department.
4. Their contentions were noted by the authorities below, but even the Collector (Appeals) did not record any finding w.r.t. them.
5. Initially even the Departmental examiner’s report was not given to them, but under directions of the Collector (Appeals) it was supplied to them but then they were not allowed the opportunity to cross-examine the Departmental Chemical Examiner which was necessary in view of the fact that they had forwarded their Chemical Examiner’s opinion and it was required to be ascertained as to on what basis these goods could be considered as paints or distemper as against their claim that these were non-refractory surface preparations. In this connection they would also draw attention to the HSN Heading 32.14 which has got a persuasive effect and in this case would like to draw attention to the exclusion clause in the explanatory note under Item 3208.
6. Ld. Counsel further stated that in fact the appellants have doubly suffered because in view of a mistake of law they had been paying duty on those machinery items which were otherwise exempted under Notification No. 111/88. At the same time the Department had not excluded the value of these goods for the purpose of calculating the exemption limit.
7. It was their submission that the Collector (Appeals) has erred in merely noting but not recording any finding w.r.t. these submissions made before him and on this ground alone their request for stay is justified.
8. In support of his contention that the goods worth Rs. 5 lacs had been exported he drew attention to the particulars of the GP 2 No. 1 in the chart appended by them to their application which shows a figure of Rs. 5,85,000/-against the entry dated 9-11-1993. He would also like to draw attention to the gate pass showing the clearance of the machinery classifiable under 84.37.
9. He would also like to cite the order reported in 1990 (49) E.L.T. 457 in support of his contention that the pleas which were raised are required to be taken into consideration.
10. Ld. DR stated that the authorities below have taken into consideration the report of the Consultant said to be retired Chemical Examiner, the classification list, and the description and particulars given in the classification list by the appellants themselves.
11. The rival entries are 32.09 and 32.14 and the differences between the products falling in these entries are technical in nature and the correct classification can at best said to be arguable. The Collector (Appeals) has also looked into the technical opinion filed by the appellant before him. Therefore it cannot be said that their submissions had not been duly considered.
12. It is of course true that the value of the goods exported and the value of the goods wholly exempted were required to be excluded for the purposes of calculation but then it was required to be shown by them at the relevant time but they are themselves saying that they had been paying duty on the machinery items at that time.
13. Ld. Counsel stated that apart from the above facts he would also like to mention that if the demands are confirmed it would amount to discrimination because in the case of other parties similar products have been classified under 32.14 as would evident from the copy of the classification list of M/s. Spectrum Paints Pvt. Ltd. (Jaipur Collectorate); M/s. Acromix Chemicals and Coatings as evident from copies of classification lists enclosed by them.
14. It was also his submission that in the circumstances, in any case there was no cause for imposing penalty because there has been no clandestine removal and no evasion of duty was involved.
15. Ld. Counsel further stated that the Appeal No. E/2419/94-C, dated 2-12-1994 which relates to the dispute on classification is still pending in the tribunal and this may be noted. In response to a query from the bench ld. Counsel clarified that the A.C. has mentioned that the present demand is consequential to decision regarding classification taken earlier.
16. We have considered the above submissions. We observe that prima facie the classification of the product appears to be arguable on merits. At the same time it is correct that all pleas raised before the authorities are required to be duly considered by them. We also observe that whereas the ld. DR has stated that at the original stage the product was considered as a type of paint on the basis of the appellant’s own literature. The department’s chemical examiner has described product as distemper. We also note that the ld. Counsel has suceeded in showing from the records before us that goods of a value of Rs. 5,85,000/- had been cleared on GP 2 and their statement that the value has not been excluded has not been contradicted or shown to be wrong by the other side. Similarly, he has also been able to show us a gate pass indicating clearance of certain types of machinery under 84.37.
17. We also take note of the fact that the report of the retired Chemical Examiner, whom the appellant had consulted and that of the Departmental Chemical Examiner do not appear to tally.
18. Looking to the totality of facts and circumstances we grant waiver of pre-deposit of the amount in question and stay its recovery during the pendency of the appeal subject to the appellants depositing Rs. 75,000/- within eight weeks from the date of receipt of this order. (It is made clear that the pre-deposit of penalty is stayed).
19. To come up for reporting compliance on 20th February, 1997.