2001 (7) TMI 768 - AT - Central Excise

Summary

Issues: Violation of Central Excise Rules, Imposition of Penalty, Appellate Tribunal Decision

Violation of Central Excise Rules:
The case involved M/s. The Indian Iron & Steel Co. Ltd. manufacturing cast articles of Iron & Steel, found to have cleared goods without sufficient balance to cover Central Excise duty, violating Rule 9(1) and Rule 173G(1) of the Central Excise Rules, 1944. The Asst. Commissioner confirmed the demand for duty and imposed a penalty of Rs. 42,20,000 under Rule 173Q. The party contended that clearances were not deliberate but due to late fund release, and the shortfall was rectified promptly. The party argued that despite clearing goods under debit balance, the buyers availed Modvat credit, which was irregular. The appellant's status as a Govt. of India Undertaking and a sick unit referred to BIFR was highlighted to request waiver of the penalty.

Imposition of Penalty:
The Commissioner (Appeals) rejected the appeals against the penalty, leading to the present appeals and stay petitions. The appellant's representative argued that the duty shortfall had been rectified, and the penalty amount was the focus of the stay petition. The respondent contended that repeated clearances without sufficient balance amounted to evasion of duty, emphasizing that financial hardship or BIFR referral did not justify non-payment of duty. The respondent highlighted the irregularity of buyers availing Modvat credit due to duty non-payment by the appellant.

Appellate Tribunal Decision:
The Tribunal upheld the violation of Rule 9(1) and Rule 173G(1) by the appellant, noting the deliberate clearance of goods without payment of duty amounting to crores of rupees. The Tribunal found no merit in the appellant's arguments regarding fund availability or BIFR status as justifications for non-payment of duty. The Tribunal emphasized that the appellant's actions were in clear contravention of statutory provisions and the duty evasion was significant. The Tribunal directed the appellant to pre-deposit Rs. 20,00,000 of the penalty by a specified date, with the balance waived pending appeal disposal. The duty amounts were to be paid, and compliance was required by a set deadline.

This detailed analysis of the judgment outlines the issues of violation of Central Excise Rules, imposition of penalty, and the Appellate Tribunal's decision, providing a comprehensive overview of the case and its legal implications.