ORDER
P.G. Chacko, Member (J)
1. This application is for waiver of pre-deposit of an amount of duty of Rs. 3,50,083/-. The applicants have, inter alia, stated that their factory is lying closed since 15-4-98 and that their accumulated loss is Rs. 10.85 crores. During the material period, they were in the manufacture of Cigarettes (CSH 2403.11) and were following Chapter X procedure. Their raw material was cut tobacco procured from manufacturers thereof. In 1995, they received 100 bags (3400 kgs.) of cut tobacco at concessional rate in terms of Notification No. 356/86-C.E. from one party and 339 bags (11,525 kgs) of cut tobacco at the said rate from another party. On 7-11-95 and 14-11-95, they applied to the Commissioner for permission to return the said quantities of 100 bags and 339 bags to the respective original manufacturers under Rule 196B(i) of the Central Excise Rules, 1944. There was no response to these applications. Later on, by their applications dated 2-4-96 and 23-5-96, they applied to the Commissioner for permission to destroy the goods under Rule 196B(ii). The department, by show cause notice, asked the applicants to show cause why their applications for destruction of the aforesaid quantities of cut tobacco should not be rejected in terms of Rule 49 of the Central Excise Rules, 1944. This proposal was contested by the party. In adjudication of the dispute, the Commissioner passed an adverse order, which was set aside by this Tribunal and the matter remanded to the adjudicating authority. In the remanded proceedings, the Commissioner, in terms of the remand order of this Tribunal, obtained expert opinion from one Mr. M.V. Krishna Rao, a Science graduate with a standing of 28 years with tobacco industries. His report was that the cut tobacco in question had deteriorated in quality and had become unfit for manufacture of cigarette. The Commissioner, however, did not consider the expert’s report as relevant to the issue on hand. He went into the question as to whether duty was liable to be demanded from the party under Rule 196 on the deteriorated cut tobacco. He decided on this question against the applicants and after rejecting their applications for destruction of cut tobacco, confirmed demand of differential duty of Rs. 3,50,083/- against them. Hence the present appeal and application.
2. Examined the records and heard both sides. Ld. Advocate Sh. K.K. Gupta for the applicants submits that the impugned order passed by the Commissioner is beyond the scope of the remand order passed earlier by this Bench. He submits that the Commissioner ought to have allowed the application for destruction of the cut tobacco on the basis of the expert’s report, in which event according to Counsel, there would have been no reason for demanding any duty. He claims a strong prima facie case and prays for. full waiver of pre-deposit of the duty amount and for stay of recovery thereof, pending the appeal. Ld. JDR Shri S.C. Pushkarna reiterates the findings of the Commissioner.
3. Examined the submissions. A specific query was put to the Counsel as to whether the applicants had specifically applied to the Commissioner for remission of duty under Rule 49 of the Central Excise Rules, 1944. This query has not received a satisfactory answer, nor do I find any material on record to show that any duty on the cut tobacco had been remitted by the Commissioner under Rule 49. The Counsel’s case is, substantially, based on the provisions of Clause (ii) of Rule 196B. This provision, as it stood at the material time, enabled the parts to destroy unfit/damaged tobacco with prior permission of the proper officer. This benefit, however, was subject to a further condition that the duty payable on the goods should have been remitted. A cursory reading of these provisions coupled with the aforesaid facts of the case would suffice to hold, in the instant case, that this latter condition does not appear to have been satisfied inasmuch as no request for remission of duty under Rule 49 was even made by the party to the Commissioner. Ld. Counsel has relied on certain decisions of the Tribunal today. All the cases are distinguishable on facts from the instant case. The applicants have not been able to make a strong prima facie case for waiver of pre-deposit and stay of recovery. However, having regard to the fact that their factory is lying closed for the last few years and in view of the documents filed in support of their plea that they have suffered huge loss, I am inclined to be considerate and, accordingly, I call upon the party to deposit an amount of Rs. 1.5 lakhs within a period of six weeks from today and report compliance on 28-5-2002. In the event of due compliance with this direction, there will be waiver of pre-deposit and stay of recovery in respect of the balance amount of duty.