2006 (2) TMI 556 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty imposition for default in payment.
2. Applicability of different High Court judgments on penal liability.
3. Financial hardship plea and predeposit of penalty amount.

Issue 1: Demand of duty and penalty imposition for default in payment
The lower authorities demanded duty of Rs. 24,17,655/- from the appellants for default in payment during April and May 2001, along with a penalty of Rs. 1 lakh. The appellants had availed the facility of fortnightly payment of duty, which was withdrawn when they defaulted. The relevant provisions required duty payment by debit in PLA during the period of forfeiture, not from the Cenvat account. However, the appellants chose to pay duty in the Cenvat mode, leading to objections by the Department and the impugned order.

Issue 2: Applicability of different High Court judgments on penal liability
The appellant's consultant cited the Bombay High Court's decision in Lloyds Steel Industries Ltd. v. Union of India to support their case, while the SDR referred to Vidushi Wires Pvt. Ltd. v. Union of India. The Tribunal noted that the later judgment emphasizing penal liability for default in duty payment prevailed over the earlier decision. A stay order from the Tribunal was cited by the consultant, but the SDR highlighted that predeposit of duty and penalty amounts had been ordered in similar cases, indicating the stay order might be an exception.

Issue 3: Financial hardship plea and predeposit of penalty amount
The consultant raised financial hardships supported by documents like the BIFR order declaring the unit sick and the audited financial statements showing significant losses. Despite acknowledging the company's financial status, the Tribunal directed the appellants to predeposit the penalty amount of Rs. 1 lakh within 6 weeks for compliance with Section 35F of the Central Excise Act, following the precedent of a previous stay order.

This judgment by the Appellate Tribunal CESTAT, CHENNAI addressed issues related to duty demand, penalty imposition, the impact of different High Court judgments on penal liability, and the consideration of financial hardship pleas in the context of predeposit requirements. The Tribunal emphasized the importance of following precedents and relevant provisions while balancing the interests of the appellants with statutory requirements.