2004 (12) TMI 473 - AT - Central Excise

Issues:
1. Confirmation of duty and penalty by the Commissioner of Central Excise.
2. Admissibility of duty payment on a fortnightly basis.
3. Allegations of breach of provisions and lack of opportunity for explanation.
4. Clearance of goods without payment of duty.
5. Applicability of penalty and waiver conditions.

Confirmation of duty and penalty by the Commissioner of Central Excise:
The case involved stay applications arising from the Commissioner's order confirming a duty amount and penalties against the applicants. The duty amounts were confirmed at Rs. 49.05 lakhs and Rs. 57,71,186/-, with corresponding penalties of Rs. 49,00,000/- and Rs. 1,85,95,907/-. The applicants, engaged in manufacturing cotton and manmade fabrics, faced allegations of default in duty payment and were directed to pay duty by debiting the CENVAT account. Subsequently, a show cause notice was issued demanding payment for deferred duties and interest, along with questioning the wrongful utilization of CENVAT credit. The applicants contested the adjudication process, claiming lack of opportunity to explain their circumstances during the relevant period.

Admissibility of duty payment on a fortnightly basis:
The applicants availed the facility of paying excise duty on a fortnightly basis under Rule 8(1) of the Central Excise Rules, 2001. However, they faced challenges due to fund shortages, leading to the debiting of duty amounts in the CENVAT account for consignment clearances. The Assistant Commissioner directed them to pay duty through account current, but the applicants resorted to clearing goods by debiting the CENVAT account during a forfeiture order, which was deemed impermissible under the Central Excise Rules. This action resulted in goods being cleared without the proper payment of duty, raising concerns about compliance and duty evasion.

Allegations of breach of provisions and lack of opportunity for explanation:
The applicants contended that the adjudication process lacked a reasonable opportunity for them to clarify the circumstances surrounding their inability to discharge duty obligations during a specified period. They argued against any breach of Rule 173G of the Central Excise Rules and denied any suppression or intentional misstatements. The applicants maintained that the extended period for invoking penalties was not warranted in their case, emphasizing their compliance with the rules and regulations.

Clearance of goods without payment of duty:
The Tribunal found that the applicants had cleared goods without proper duty payment during the forfeiture order, contrary to the prescribed procedures. Despite citing fund shortages as a reason for debiting the CENVAT account, the Tribunal deemed this justification untenable. Consequently, the Tribunal directed the applicants to deposit a specified amount towards duty to rectify the non-compliance and lack of a strong prima facie case in their favor.

Applicability of penalty and waiver conditions:
In light of the findings regarding duty clearance irregularities, the Tribunal imposed conditions for the applicants to deposit a specific duty amount by a set deadline. Failure to comply would result in the continuation of penalties and obligations. However, upon meeting the deposit requirement, the Tribunal waived further duty deposits, penalties on the company, and penalties on the Managing Director. Compliance with the directives was expected by a specified date to address the duty payment discrepancies and regulatory violations.

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