2005 (4) TMI 377 - AT - Central Excise

Modvat credit - sale invoices - Stay/Dispensation of Pre-deposit - Power of Tribunal - Quantum of - Penalty - HELD THAT - In the present case, the appellant has made out a strong prima facie case for staying the impugned order because the Appellate Authority has not at all considered the case in the context of the penalty imposed on the respondent as dealt with by the Original Authority in the order-in-original. The power to stay the order-in-appeal, which appears on the face of it wholly unjustified and unwarranted, is ancillary to power of entertaining and deciding the appeal conferred on the Appellate Tribunal by Section 35B of the Act. We, therefore, hold that this is a fit case for staying the impugned order to the extent it sets aside the penalty imposed on the respondent under the Order-in-original. The impugned order-in-appeal is, therefore, stayed to the extent that it has set aside the penalty imposed on the respondent under the order-in-original and this application is allowed accordingly.

Issues:
1. Stay application filed by the Commissioner for the penalty imposed on the respondent.
2. Consideration of penalty imposition without proper reasoning in the order-in-appeal.
3. Interpretation of statutory provisions regarding the Tribunal's power to grant stay.
4. Disproportionate penalty amount compared to the duty involved.
5. Prima facie case for staying the order-in-appeal due to lack of consideration for penalty imposition.

Analysis:
1. The Stay Application was filed by the Commissioner seeking a stay on the penalty imposed on the respondent by the impugned order-in-appeal. Despite the appeal being listed before a Single Member Bench, it was directed to be placed before a two-member Bench due to connected appeals. The application specifically targeted the penalty of Rs. 30,000/- imposed on the respondent.

2. The order-in-appeal lacked proper reasoning and findings from the Assistant Commissioner's assessment regarding the penalty imposed on the respondent. The Assistant Commissioner had detailed the intentional issuance of fake invoices by the dealers to misuse Cenvat facility. However, the Appellate Commissioner failed to consider these crucial aspects in reaching the decision to set aside the penalty.

3. The Tribunal's power to grant a stay was discussed, citing relevant statutory provisions. Reference was made to Section 35F of the Act and the Tribunal's inherent power to grant a stay pending an appeal. Precedents were cited to establish that the Tribunal has the authority to use all reasonable means to make such grants effective within its jurisdiction.

4. The respondent argued that the penalty of Rs. 30,000/- was disproportionate to the duty involved, which was only Rs. 6,679/-. However, it was clarified that under Rule 173Q, a penalty not exceeding three times the value of the excisable goods could be imposed for contraventions, as in this case. Therefore, the penalty amount was justified based on the nature of the contravention.

5. It was concluded that a strong prima facie case existed for staying the order-in-appeal as the Appellate Authority had not properly considered the penalty imposition as detailed in the Original Authority's order. The power to stay the order-in-appeal was deemed ancillary to the Tribunal's power to entertain and decide appeals under Section 35B of the Act. Consequently, the impugned order-in-appeal was stayed to the extent that it set aside the penalty imposed on the respondent under the order-in-original.

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