2001 (2) TMI 825 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty under Compounded Levy Scheme.

Analysis:
The case involved an application for the waiver of pre-deposit of duty amounting to Rs. 7,26,352 and a penalty of Rs. 2,50,000 by the appellants who were previously working under the Compounded Levy Scheme under Section 3A of the Central Excise Act. The applicants had requested to discontinue the scheme and pay duty based on actual production, which was contested by the Department through a show-cause notice demanding the differential duty for a specific period. The Joint Commissioner confirmed the duty demand and imposed a penalty, which was upheld by the Commissioner (Appeals) due to non-compliance with the pre-deposit requirement under Section 35F of the Act, leading to the appeal before the Tribunal.

The main issue raised in the case was whether the assessee was entitled to discharge the duty liability after opting out of the Compounded Levy Scheme based on actual production. The appellant's counsel argued that previous Tribunal decisions supported the assessee's position, citing the case of Ganpati Industries v. Commissioner of Central Excise and the Supreme Court's decision in CCE v. Venus Castings. The counsel acknowledged that the Venus Castings decision was under review by a Larger Bench of the Court but contended that the applicants had a strong prima facie case warranting a complete waiver of the pre-deposit amounts.

Upon hearing both sides, the Tribunal found that the impugned order was based solely on non-compliance with the pre-deposit provision and did not address the merits of the dispute. The Tribunal noted that the Supreme Court's decision in Venus Castings supported the assessee's case, and since the issue was pending before a Larger Bench, the previous decision was in favor of the present assessees. The Tribunal observed that the party had opted to pay duty based on actual production after submitting their intention to opt out of the scheme, and as the duty amount was not disputed, there was no justification for imposing a penalty. Consequently, the Tribunal allowed the application unconditionally, emphasizing the strong prima facie case of the applicants and scheduled the appeal for further proceedings pending the decision of the Larger Bench in the Venus Castings case.