2004 (7) TMI 407 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of penalty under the Central Excise Act.

Analysis:
1. The issue in this case revolves around an application by a company for the waiver of pre-deposit of a penalty imposed on them under the Central Excise Act. The penalty of Rs. 50,56,275 was imposed due to the company's failure to discharge duty liability within the stipulated period from September 1997 to March 1999. The company, engaged in manufacturing M.S. ingots chargeable to Central Excise duty, argued that they had paid the duty along with interest before the issuance of the show cause notice, citing a precedent where penalty was not imposed under similar circumstances.

2. The company's advocate contended that the penalty should not be imposed as the duty liability was discharged before the show cause notice was issued. Additionally, the advocate referred to a previous Tribunal decision where the applicants were directed to deposit 10% of the penalty amount, which the company was willing to comply with. On the other hand, the respondent argued that the company had a history of delayed duty payments ranging from 1 day to 54 days, emphasizing that timely payment was crucial under the Central Excise Rules. The respondent relied on a High Court decision stating that penalty must be imposed for any delay in duty payment, irrespective of the timing of the show cause notice.

3. After considering both parties' submissions, the Tribunal found that the company had not established a prima facie case for a complete waiver of the penalty amount. Despite the company's plea of financial hardship due to accumulated losses, the Tribunal noted that the company had shown profits in the last two financial years and had a substantial income. Consequently, the Tribunal directed the company to deposit Rs. 10 lakhs within 8 weeks, with the remaining penalty amount being subject to waiver upon compliance. The recovery of the penalty was stayed during the appeal process, with a compliance reporting date set for the future.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal precedents cited, and the Tribunal's decision based on the facts and financial circumstances of the company involved in the case.