2004 (5) TMI 429 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty against M/s. Thejo Engineering Services Pvt. Ltd.
2. Waiver of pre-deposit and stay of recovery for duty and penalty amounts.
3. Differential duty on lagging sheets, Repacking of Solution and Hardener, Repacked Solution and Hardener, and clubbing of clearances.
4. Applicability of CAS-4 methodology and Chapter Note 3 of CETA Schedule.
5. Time-bar plea against the demand of Rs. 24.69 lakhs.
6. Clubbing of clearances of M/s. TES and M/s. Saroth Bonds.
7. Waiver of pre-deposit and stay of recovery for duty demanded by the Commissioner.
8. Pre-deposit of penalty amounts.

Analysis:

1. The adjudicating authority confirmed a duty demand of Rs. 133.89 lakhs against M/s. Thejo Engineering Services Pvt. Ltd. (M/s. TES) and imposed an equal penalty under Section 11AC read with Rule 173Q. The demand pertained to various products for the periods from 1995-96 to 1999-2000, with additional penalties on senior functionaries. The applications sought waiver of pre-deposit and stay of recovery for the duty and penalty amounts.

2. Out of the total duty amount, Rs. 3.4 lakhs, Rs. 1.53 lakhs, and Rs. 97,844 had already been paid by the assessee. The main appeal contested demands including differential duty on lagging sheets, Repacking of Solution and Hardener, Repacked Solution and Hardener, and clubbing of clearances with M/s. Saroth Bonds. Arguments were made regarding the valuation methodology and applicability of Chapter Note 3 of the CETA Schedule.

3. The Counsel argued against the demand of Rs. 24.69 lakhs, claiming errors in the adjudicating authority's findings and pointing out the manual repacking process without pilfer-proof sealing. The Counsel relied on instructions and circulars, but the Tribunal found no substantial basis for the appeal. However, a plea of time-bar against this demand was considered forceful due to the extended period beyond normal limits.

4. Concerning demands of Rs. 53.92 lakhs and Rs. 43.90 lakhs, the Counsel contested the clubbing of clearances of M/s. TES and M/s. Saroth Bonds. The Tribunal noted a previous order where clearances of the two units were not clubbed, indicating a strong case for waiver of pre-deposit and stay of recovery for these amounts.

5. Given the strong prima facie case for a major part of the demand, the Tribunal decided to dispense with the requirement of pre-deposit for the penalty amounts. Compliance was ordered by a specified date, and waiver of pre-deposit and stay of recovery were granted for the duty amounts demanded by the Commissioner, except for a specific sum to be deposited within a month.