2006 (2) TMI 395 - AT - Central Excise

Summary

Issues Involved: Application for waiver of pre-deposit of duty and penalty under Central Excise Act due to acquisition of a unit by a new owner.

Analysis:

1. Issue of Waiver of Pre-deposit: The applicant sought waiver of pre-deposit of duty amounting to Rs. 15 lakhs and penalty of an equal amount. The applicant's argument was based on the acquisition of a unit previously owned by M/s. Vaibhav Steels Ltd., which had a demand of duty and penalty confirmed against it. The unit was acquired by the applicant after being sold by the U.P. Financial Corporation, which explicitly stated that the unit was free from any charges or encumbrances. The applicant contended that when the unit was purchased in 2003, there was no provision in the Central Excise Act or Rules similar to Rule 230, which allowed recovery from the purchaser. The Tribunal acknowledged the absence of such provisions at the time of purchase by the applicant and found merit in the applicant's case, leading to the waiver of the entire duty and penalty for the appeal hearing.

2. Legal Precedent and Interpretation: The Revenue relied on the decision of the Hon'ble Supreme Court in the case of Macson Marbles Pvt. Ltd. v. UOI, where it was held that units acquired by Financial Corporations and subsequently sold are liable to pay central excise duty. However, the Tribunal distinguished the present case by emphasizing that the acquisition by the applicant occurred when no provisions akin to Rule 230 of the Central Excise Rules were present in the Central Excise Act or Rules. This distinction formed the basis for granting the waiver of pre-deposit to the applicant, indicating a favorable interpretation of the legal framework in the context of the specific timeline of the unit's acquisition.

3. Decision and Order: The Tribunal, through the order pronounced by Vice-President S.S. Kang, allowed the stay petition and directed the waiver of the entire duty and penalty for the appeal hearing. The decision was grounded in the absence of relevant provisions at the time of acquisition by the applicant, strengthening the applicant's position and justifying the waiver. The appeal was scheduled for listing in the specified week, signifying the Tribunal's recognition of the applicant's strong case and the need for a comprehensive hearing on the matter. This detailed analysis of the issues involved in the judgment highlights the legal intricacies and contextual considerations that influenced the Tribunal's decision to grant the waiver of pre-deposit for the duty and penalty amounts.