2004 (4) TMI 448 - AT - Central Excise

Summary

Issues:
Waiver of duty demands and penalties imposed under Order-in-Original, invocation of extended period under Section 11A of the Central Excise Act for clandestine production and removal of excisable goods, prima facie merit and financial hardship for pre-deposit, opposition by the learned SDR, reliability of expert opinion, financial hardship plea, evidence of clandestine activities, credibility of the claim of financial hardship, pre-deposit amounts for the two companies.

Analysis:
The judgment dealt with applications seeking waiver of duty demands and penalties imposed under Order-in-Original due to alleged clandestine production and removal of excisable goods by two manufacturing units. The duty demands, penalties, and extended period under Section 11A of the Central Excise Act were invoked based on the accusation of evading Central Excise duty during a specific period. The appellants sought waiver of pre-deposit on grounds of prima facie merit and financial hardship, arguing that the excess goods sold were purchased from traders and not manufactured beyond recorded quantities. They also presented expert certificates to support their claim that excess production was beyond their plant's capacity. Financial hardship was claimed by demonstrating insufficient present-assets compared to bank dues.

The learned SDR vehemently opposed the waiver, presenting evidence of clandestine activities including unaccounted purchase of inputs, sale of finished products, and misappropriation of funds from clandestine sales by the Managing Director and his wife. The SDR discredited the expert opinion, highlighting the unreliability of experts and the calculation of production at 50% of installed capacity. Additionally, the SDR argued against the plea of financial hardship, asserting that it was not valid in cases involving clandestine activities where funds were misappropriated by company officials.

Upon review of the evidence, the Tribunal found grave offenses of clandestine production and clearance of goods, supported by material on clandestine purchase, falsification of accounts, and unrecorded sale proceeds. The claim of financial hardship was dismissed due to mismanagement of funds by the Managing Director. Consequently, the Tribunal directed one company to make a pre-deposit of Rs. 20 Lakhs and the other to deposit Rs. 10 Lakhs within six weeks, ruling that full waiver was not justified in the circumstances.