2006 (3) TMI 349 - AT - Central Excise

Summary

Issues: Compliance with Section 35F of the Central Excise Act, 1944; Interpretation of Rule 174 of the Central Excise Rules, 1944; Alleged violation of Rule 51A of the Central Excise Rules; Pre-deposit of penalty amounts under Section 35F of the Central Excise Act, 1944.

In this case, the appellants were directed by the Commissioner (Appeals) to deposit 50% of the duty demands and penalty to comply with Section 35F of the Central Excise Act, 1944. However, the appellants failed to make the deposit and instead filed a modification application. The Commissioner dismissed the modification application and, for non-compliance with the pre-deposit requirement, dismissed the appeals without granting a hearing. The issue at hand was the failure to deposit the required amount as ordered by the Commissioner (Appeals) in accordance with Section 35F of the Act.

The Tribunal analyzed Rule 174 of the Central Excise Rules, 1944, which mandates a single registration for both traders and manufacturers. It was noted that there was no allegation or finding of the appellants availing Modvat credit in RG 23A beyond any other Modvat rules violation. The Tribunal considered that the absence of such credit entry in the dealer's account book would be a technical violation if the appellants were deemed solely as dealers. Moreover, Rule 51A, which restricts dealing in goods not manufactured by the assessee, was found not to have been violated prima facie in this case. Therefore, the Tribunal concluded that there was no apparent breach of Rule 51A of the Central Excise Rules.

Regarding the pre-deposit of penalty amounts under Section 35F of the Central Excise Act, 1944, the Tribunal decided to allow a partial deposit of the penalty amounts. Considering the facts of the case and the apparent availment and reversal of credit, the Tribunal found it reasonable to order a pre-deposit of Rs. 1 lakh. The appellants were instructed to make this deposit and demonstrate compliance to the Commissioner (Appeals) by a specified date. Upon compliance, the Commissioner (Appeals) would then hear the appellants and reassess the issues of penalty liability and duty liability. The application and appeal were disposed of under these terms, providing a pathway for further proceedings in the case.