Jyoti Balasundaram, Member (J)

1. The application for waiver of pre-deposit of duty of Rs. 44,29,652/- and penalty of Rs. 3,85,000/- arises out of the order of the Commissioner (Appeals) who has dismissed the appeal filed before him by the applicants against the demand confirmation by the Asstt. Commissioner, on the ground that they did not comply with the requirement of pre-deposit of the entire duty amount as directed by him in his stay order dated 8.11.2001. The issue relates to classification of product "Cetraben cream" manufactured by the applicants herein. According to the applicants, the product is a medicament falling under CET sub-heading 3003.10 while the authorities below have upheld the classification under CET sub-heading 3304.00 as a cosmetic.

2. We find that the adjudicating authority considered the notes to Chapter 30.03 and came to the conclusion that the item in question is not a medicament as claimed but it was a preparation for dry skin and in the nature of cosmetic classifiable under Chapter 33. We find that against the order of the Asstt. Commissioner, the applicants filed an appeal along with an application under Section 35F of the Central Excise Act and in that application, they reiterated their claim for classification of the product as a medicament with reference to relevant Chapter note and the relevant case law as well as the relevant technical literature. The Commissioner (Appeals) was prima facie not satisfied with the claim of the applicants and passed a detailed order, prima facie, taking all submissions into account and then directing pre-deposit of the entire duty amount and waived only the pre-deposit of the penalty. This order was dated 8.11.2001. The applicants then filed an application for modification in December, 2001, reiterating their earlier submissions. In the present impugned order the Commissioner (Appeals) in para 5 of the order records that he heard the applicants counsel on the application for modification of the stay order but found no prima facie case for modification and since they had not complied with the stay order already issued to them, dismissed their appeal for non compliance.

3. In the above background we do not see any prima facie substance in the plea that the applicants were not heard on the modification application or that there is any prima facie case for modification of the stay order. However, since there is no finding on the merits of the classification by the Commissioner (Appeals) and keeping in view that plea for financial hardship has been raised before us but has not been supported by relevant balance sheet, we direct pre-deposit of a sum of Rs. 10 lakhs (Rupees Ten lakhs) towards duty within a period of eight weeks from today and on such deposit pre-deposit of balance duty and penalty shall stand waived and recovery there of stayed pending the appeal. Failure to comply with this direction shall result in vacation of stay and dismissal of appeal without prior notice.

4. Compliance to be reported on 16.07.2003.

5. Both sides note that in the event of compliance being shown, the appeal itself may be decided on the date.

(Dictated in Court)