2008 (7) TMI 796 - AT - Central Excise

Summary

Issues:
1. Limitation for issuance of show cause notice.
2. Financial hardship of the appellant.

Analysis:
1. Limitation for issuance of show cause notice:
The case involved a demand of Rs. 4,01,693 against a company for clandestine removal, with a penalty imposed on the director. The appellant argued that the show cause notice issued on 9-5-2005 was beyond the 5-year limitation period, considering the investigations were completed by 19-12-2003. The advocate relied on a Tribunal decision for a similar situation to support the claim of limitation. The Department contended that the 5-year period for issuing the notice starts from the date of clandestine removal, allowing the notice issued in 2005 to be within the limitation period. The Tribunal noted conflicting decisions and held that the appellant had established a prima facie case in their favor regarding limitation. The Tribunal emphasized that the show cause notice must be issued within a reasonable time from the completion of investigations to avoid being barred by limitation.

2. Financial hardship of the appellant:
The appellant's financial position was a crucial aspect considered by the Tribunal. The factory had been closed for five years, rented out for Rs. 55,000 per month, with negative net current assets of around Rs. 35.53 lakhs. The appellant's inability to deposit any amount due to financial constraints was a significant factor in granting an unconditional stay. The Tribunal recognized the undue financial hardship that would be imposed on the appellant if directed to make any payment. Considering the prima facie merits in favor of the appellant regarding limitation and the severe financial condition, the Tribunal allowed the stay petitions unconditionally, scheduling the appeals for final disposal on 20-8-2008.

In conclusion, the Tribunal's judgment addressed the issues of limitation for the issuance of the show cause notice and the financial hardship faced by the appellant. The decision highlighted the importance of issuing notices within a reasonable time frame from the completion of investigations to avoid being time-barred. Additionally, the Tribunal's consideration of the appellant's dire financial situation led to the grant of an unconditional stay, recognizing the undue financial burden that would result from immediate payment.