2006 (2) TMI 568 - AT - Central Excise

Summary

Issues:
Demand of over Rs. 2.4 crores under Rule 57CC/Rule 57AD/Cenvat Credit Rules, 2001, and imposition of a penalty of Rs. 1 crore by the Commissioner of Central Excise.

Analysis:
The Commissioner of Central Excise demanded over Rs. 2.4 crores and imposed a penalty of Rs. 1 crore on the party for the clearance of two products, Phosphoryl A and Phosphoryl B, during specific periods. The application sought waiver of pre-deposit and stay of recovery for both amounts. The appellants argued that the provisions were not applicable to them as Hydrochloric acid, a key input, was not used in the manufacture of the exempted products. The process of manufacturing Phosphoryl A & B involved Hydrochloric acid significantly. The Tribunal examined the submissions and found that Hydrochloric acid played a direct role in converting bones into Phosphoryl A & B, the final products. As a result, the assessee was directed to pay 8% of the sale price of the exempted products for the relevant period.

Analysis:
The appellants referred to a stay order granted by the West Zonal Bench of the Tribunal in a similar case. However, the Tribunal found that the stay order did not establish a prima facie case. The appellants also relied on decisions in other cases but the Tribunal noted that the facts of the present case indicated Hydrochloric acid's integral role in the manufacturing process. The appellants failed to establish a prima facie case or financial hardships. Despite this, the Tribunal directed them to pre-deposit Rs. 50 lakhs within a specific period. Due to the significant amount involved, the Tribunal aimed to expedite the appeal process for the benefit of both parties, scheduling the appeal for a specific date.

End of Analysis