2003 (1) TMI 508 - AT - Central Excise

Stay/Dispensation of pre-deposit - Duty and penalty - Appeal to Appellate Tribunal - New plea - Plea beyond show cause notice

Summary

Issues Involved:
1. Waiver of pre-deposit of duty and penalty.
2. Classification of conversion process as manufacture.
3. Allegation of suppression of facts and mis-declaration.
4. Financial hardship plea by the appellants.
5. Difference of opinion between the members of the bench.

Detailed Analysis:

1. Waiver of Pre-deposit of Duty and Penalty:
The appellants sought a waiver of the pre-deposit of duty amounting to Rs. 31,48,359/- and an equivalent penalty under Section 11AC, confirmed under the order dated 12-2-2002. The Commissioner also demanded interest under Section 11AB. The appellants argued for a full waiver based on financial hardship and a strong prima facie case.

2. Classification of Conversion Process as Manufacture:
The appellants contested the Commissioner's basis that converting black bars into bright bars constituted manufacture. They cited the Tribunal's decision in Vishvaman Industries v. CCE, arguing it was applicable to their case. However, the Commissioner dismissed this precedent as irrelevant for the period in question. The appellants also referenced other case laws supporting their stance that the conversion did not amount to manufacture.

3. Allegation of Suppression of Facts and Mis-declaration:
The department alleged that the appellants did not determine the value of bright bars correctly and retained proceeds from scrap sales without proper accounting, leading to a demand for differential duty. The appellants argued there was no suppression of facts and that the duty was paid based on the invoice value. The department countered that the appellants failed to declare job work and the valuation method under Rule 173C, thus hindering proper price analysis.

4. Financial Hardship Plea by the Appellants:
The appellants claimed severe financial distress due to industry recession and inability to secure bank funds, arguing that a full waiver was necessary to avoid undue hardship. However, they did not provide balance sheets to substantiate their financial hardship claim.

5. Difference of Opinion Between the Members of the Bench:
There was a divergence in opinion among the bench members regarding the necessity of pre-deposit. One member directed a pre-deposit of Rs. 15,50,000/-, while another member argued for a full waiver, citing settled legal positions that the conversion process did not constitute manufacture. The third member, upon reviewing the case, concurred with the latter, leading to a majority order granting full waiver and scheduling an early hearing.

Majority Order:
In view of the majority, the stay application was allowed, granting full waiver of the pre-deposit of duty and penalty, and the appeal was directed to be listed out-of-turn for final hearing in the third week of April 2003.