2004 (12) TMI 605 - AT - Central Excise

Summary

Issues:
1. Denial of benefit under Notification No. 8/97-C.E.
2. Imposition of penalty on the company and its Director.
3. Validity of duty recovery under Section 3(1) of the Act.
4. Consideration of financial hardship for duty payment.

Analysis:

1. Denial of benefit under Notification No. 8/97-C.E.: The appellant, a 100% EOU, faced denial of benefits under Notification No. 8/97-C.E. for DTA sales due to alleged non-genuine transactions. The Counsel argued that the benefit could not be denied even if raw materials were purchased from other EOUs. Citing legal precedents like Favourite Industries, the Counsel contended for benefit allowance. However, the Tribunal rejected these arguments, emphasizing that the raw material was not indigenous, thus disqualifying the appellant from claiming benefits.

2. Imposition of penalty on the company and its Director: The company faced a substantial penalty alongside the duty amount, with the Director also penalized separately. The Tribunal noted that the company sold goods at throwaway prices to non-existent buyers, raising serious doubts about the genuineness of transactions. The Tribunal dismissed the plea that the goods were damaged, highlighting the lack of evidence. The Director was held accountable for facilitating duty evasion, leading to the imposition of penalties.

3. Validity of duty recovery under Section 3(1) of the Act: The Tribunal addressed the duty recovery issue under Section 3(1) of the Act for goods cleared without permission. While the Counsel referenced judgments like Sam Spintex Ltd., the Tribunal cited the Himalya International Ltd. case, emphasizing the duty payable under Section 3(1). The Tribunal found the sales to be unauthorized and lacking genuineness, further discrediting the Counsel's arguments.

4. Consideration of financial hardship for duty payment: The Counsel pleaded financial hardship on behalf of the company, citing precedents like Swadeshi Polytex Ltd. However, the Tribunal underscored the need for the company to make the required pre-deposit, considering the government's revenue requirements. The Tribunal directed specific pre-deposit amounts for the company and its Director, stressing compliance within the stipulated timeframe to avoid dismissal under Section 35F of the Act.

In conclusion, the Tribunal upheld the duty denial under Notification No. 8/97-C.E., imposed penalties on the company and its Director for non-genuine transactions, clarified duty recovery under Section 3(1) of the Act, and mandated pre-deposit to address financial hardship concerns. Compliance with the pre-deposit requirements was crucial to prevent dismissal of the appeals.