2002 (4) TMI 782 - AT - Central Excise

Demand - Repeated show cause notices - Res judicata - Applicability - Stay/Dispensation of pre-deposit - Financial hardships

Summary

Issues: Stay application for waiver of pre-deposit of duty and penalty amount; Disallowance of Modvat credit; Clandestine removal of goods without payment of duty; Financial hardship of the appellants; Invocation of extended period of limitation; Principles of constructive res judicata.

Analysis:
1. The appellants filed a stay application seeking waiver of pre-deposit of duty and penalty amount as detailed in the impugned order-in-original. The counsel argued that Modvat credit disallowance was incorrect, and there was no evidence of clandestine removal of goods without duty payment. Financial hardship was highlighted, supported by the balance sheet. The counsel contended for total waiver based on a strong prima facie case.

2. The JDR reiterated the correctness of the impugned order. The Tribunal examined the facts, noting the appellants' Modvat credit claim based on incomplete documentation. Statements revealed improper handling of imported inputs and unauthorized clearance of goods. The Commissioner detailed clearances without duty payment and incorrect Modvat credit availed. The Tribunal found no grounds to disagree with the Commissioner's findings at this stage.

3. The counsel's argument against invoking the extended period of limitation due to constructive res judicata was rejected. The Tribunal explained that the first show cause notice had not been finally adjudicated, thus not attracting the principles of res judicata. The Tribunal clarified that the department was not barred from invoking the extended limitation period in the subsequent show cause notice.

4. Addressing the financial hardship claim, the Tribunal reviewed the appellants' balance sheet, indicating a turnover exceeding two crores. Despite this, considering the circumstances and issues involved, the Tribunal directed a pre-deposit of Rs. 5 lakhs by a specified date. Compliance with this deposit would waive the remaining duty amount and penalty, with recovery stayed until appeal disposal. Non-compliance would lead to dismissal under Section 35-F without further reference.

5. The Tribunal scheduled a compliance and further orders hearing for a specific date. The judgment emphasized the importance of timely compliance with the directed pre-deposit to avoid adverse consequences under the law.