2003 (1) TMI 510 - AT - Central Excise

Issues Involved:
1. Demand of duty under Section 11A(1) of the Central Excise Act, 1944.
2. Imposition of penalties under Rule 173Q of the Central Excise Rules and Section 11AC.
3. Classification of plastic multi-purpose stands.
4. Violation of principles of natural justice.
5. Time-barred show cause notice.
6. Cum-duty-price consideration.
7. Modvat credit benefit.
8. Financial hardship and pre-deposit requirements.

Issue-wise Detailed Analysis:

1. Demand of Duty under Section 11A(1) of the Central Excise Act, 1944:
The Commissioner demanded a duty of Rs. 1,26,10,770/- for the period from 23-6-1995 to 31-3-2000. The Tribunal noted inconsistencies in the invocation of the proviso to Section 11A(1) in one of the show cause notices and the impugned order. Specifically, the Commissioner did not invoke the proviso to Section 11A(1) while confirming the duty, which was inconsistent with the show cause notice he issued.

2. Imposition of Penalties under Rule 173Q of the Central Excise Rules and Section 11AC:
Penalties totaling Rs. 87,15,480/- were imposed under various provisions. The Tribunal found the combined penalty of Rs. 67,15,480/- under Section 11AC and Rule 173Q for the period from 29-9-1996 to 16-11-1998 to be inconsistent with the law. The penalties needed apportionment, as per the precedent set in Punjab Recorders Ltd. v. Commissioner.

3. Classification of Plastic Multi-purpose Stands:
The appellants classified their products under Chapter Heading 3926.90, while the department classified them under Heading 94.03 as furniture. The Tribunal referenced the decision in Periwal Plastics Pvt. Ltd. v. CCE, Bangalore, supporting the department's classification. The Tribunal observed that the appellants could not claim grievance for a combined show cause notice for duty demand and classification.

4. Violation of Principles of Natural Justice:
Appellants argued that show cause notices were issued for duty demand as furniture without a notice for classification under Heading 94.03. The Tribunal found that the combined notice addressed both aspects, thus not violating natural justice principles.

5. Time-barred Show Cause Notice:
Appellants claimed the show cause notice was time-barred, citing a bona fide belief. The Tribunal noted that the Commissioner invoked the longer limitation period under the proviso to Section 11A(1) for the demand covering 23-6-1995 to 16-11-1998.

6. Cum-duty-price Consideration:
Appellants argued that the value should be treated as cum-duty-price. The Tribunal did not specifically address this issue in the summary but focused on the broader aspects of duty demand and penalties.

7. Modvat Credit Benefit:
Appellants contended that they were not given the benefit of Modvat credit. The Tribunal acknowledged this point but did not delve into detailed analysis, focusing instead on the procedural and classification issues.

8. Financial Hardship and Pre-deposit Requirements:
The Tribunal examined the appellants' financial position and concluded that they could pre-deposit Rs. 20,68,994/- without hardship. This amount was inclusive of any duty already paid. The Tribunal directed the appellants to report compliance for de novo adjudication by the Commissioner.

Separate Judgments:
- One member (Jeet Ram Kait) directed a remand with a pre-deposit requirement.
- Another member (S.L. Peeran) allowed the stay application unconditionally, citing time-bar and financial hardship.
- The third member (P.G. Chacko) sided with unconditional stay, emphasizing that the appeal should not be disposed of without a hearing.

Majority Order:
The majority granted full waiver of pre-deposit and stayed recovery, directing the appeal to be heard out-of-turn. The Registry was instructed to list the appeal for final hearing.

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