2001 (7) TMI 784 - AT - Central Excise

Summary

Issues:
1. Stay application for waiver of duty and penalty.
2. Allegations of evasion of duty and penalty.
3. Failure to respond to show cause notice and appear before the Commissioner.
4. Arguments for and against the waiver of duty and penalty.
5. Decision on the pre-deposit amount and compliance terms.

Issue 1: Stay application for waiver of duty and penalty

The judgment addresses two Stay Applications, one seeking waiver of duty and penalty amounting to Rs. 11,95,072/- and the other seeking waiver of a penalty amount of Rs. 10 lakhs. These applications arose from two separate Appeals filed by the appellants.

Issue 2: Allegations of evasion of duty and penalty

The facts leading to the stay applications involve a raid conducted at the factory premises of the appellant firm and the residential premises of one of the partners. It was discovered that goods were cleared without payment of duty, and investigations revealed the involvement of a company floated by the partner. The appellants failed to appear before the Commissioner, leading to the recording of the impugned order based on evidence of clandestine activities.

Issue 3: Failure to respond to show cause notice and appear before the Commissioner

Despite repeated notices, the appellants did not appear before the Commissioner or respond to the show cause notice. Appellant No. 2 sent a letter requesting consideration of written submissions, claiming lack of notice and opportunity for a response.

Issue 4: Arguments for and against the waiver of duty and penalty

Appellant No. 2 argued in written submissions that they were not served with the show cause notice, not given an opportunity to respond, and that the duty was payable by another company, not them. The SDR, however, supported the impugned order, highlighting the appellants' failure to engage in the proceedings despite opportunities provided.

Issue 5: Decision on the pre-deposit amount and compliance terms

After reviewing the submissions and the impugned order, the Tribunal found evidence of duty evasion and fraudulent activities. Considering the conduct of the appellants, a pre-deposit amount of Rs. 60,00,000/- for appellant No. 1 and Rs. 5,00,000/- for appellant No. 2 was directed. Failure to comply would lead to the dismissal of their appeals under Section 35F of the Act, with a reporting compliance date set for 26-9-2001.

This judgment underscores the importance of responding to legal notices, engaging in proceedings, and maintaining transparency in business operations to avoid severe penalties and consequences for non-compliance with legal obligations.