2001 (5) TMI 690 - AT - Central Excise

Summary

Issues Involved:
1. Waiver of pre-deposit of duty and penalty amounts.
2. Challenge to the Commissioner's order on the ground of limitation.
3. Applicability of revenue neutrality in the context of Modvat credit.
4. Imposition of penalties on company officers under Rule 209A of the Central Excise Rules.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit of Duty and Penalty Amounts:
The applications sought a waiver of pre-deposit of duty and penalty amounts, and a stay of recovery pending appeals. The company was contesting an order confirming an additional duty demand of Rs. 70,08,789 on bleached cotton fabrics used for captive consumption during August 1996 to February 1998, along with an equal amount of penalty under Section 11AC/Rule 173Q. The officers of the company were appealing against penalties imposed under Rule 209A.

2. Challenge to the Commissioner's Order on the Ground of Limitation:
The company argued that the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act was not invocable. They claimed exemption under Notification 67/95-C.E. and contended that they had no wilful intention to evade duty or suppress facts. The Department was aware of their manufacturing activities and had not raised objections during audits. The issuance of a prior show cause notice for a later period indicated the Department's knowledge, thus nullifying allegations of suppression for the earlier period.

3. Applicability of Revenue Neutrality in the Context of Modvat Credit:
The company contended that even if additional duty was leviable, they could avail Modvat credit, creating a revenue-neutral situation. This argument was supported by Tribunal decisions in Srinivasan Cables (P) Ltd. v. C.C.E. and Bhor Industries Ltd. v. C.C.E. The Department countered that the company did not maintain necessary records or declare the intention to avail Modvat credit, indicating wilful intent to evade duty. The notification did not exempt additional duty of excise, and the provisions were clear. The Tribunal noted that the company had no prima facie case on merits but found some force in the revenue neutrality argument, especially before the enforcement of sub-rule (3) of Rule 57E in 1997.

4. Imposition of Penalties on Company Officers under Rule 209A of the Central Excise Rules:
The adjudicating authority's findings for imposing penalties on the officers were not strong enough. The Tribunal waived the requirement of pre-deposit for these penalties, indicating a lack of prima facie evidence to support the penalties under Rule 209A.

Conclusion:
The Tribunal directed the company to pre-deposit Rs. 15 lakhs within six weeks, after which the penalty amounts would be waived. The plea of revenue neutrality was partially accepted, limited by the provisions of Rule 57E(3). The penalties on the officers were waived due to insufficient prima facie evidence.