2004 (6) TMI 485 - AT - Central Excise

Summary

Issues:
1. Whether the direction for pre-deposit of an amount of over Rs. 66 lakhs under Section 35F of the Central Excise Act, 1944 should be withdrawn due to the absence of a demand of duty in the show cause notice (SCN).
2. Whether the penalty imposed on the appellant is justified in the absence of default in payment of duty.

Analysis:
1. The appellants sought modification of a stay order directing them to pre-deposit over Rs. 66 lakhs under Section 35F of the Central Excise Act, 1944. They argued that the relevant SCN did not demand duty but only proposed a penalty. The Asst. Commissioner's order withdrawing the fortnightly payment facility did not quantize the demand of duty. The appellants contended that this order, issued without an SCN, violated natural justice. Upon the appellants' request, a fresh SCN was issued superseding the earlier order, proposing only a penalty without any demand for duty. The Tribunal found merit in the appellants' plea, recalling the stay order and granting a waiver of pre-deposit of duty and stay of recovery.

2. Regarding the penalty, the Counsel argued that the duty for the 2nd fortnight of May, 2001 was paid on 6-6-2001, a day after the due date of 5-6-2001, which was a bank holiday. The penalty proposed in the SCN was based on the alleged default in payment within the fortnightly system. However, the Tribunal observed that there was no prima facie evidence of default for the 2nd fortnight of May, 2001. Therefore, the penalty appeared unwarranted. Consequently, the Tribunal granted a waiver of pre-deposit and stay of recovery concerning the penalty as well.