2009 (4) TMI 677 - AT - Central Excise

Summary

Issues:
1. Confirmation of central excise duty, interest, and penalty.
2. Waiver of pre-deposits based on natural justice and financial hardship.
3. Availing exemption under Notification No. 8/2003.
4. Allegations of clandestine removal of finished goods.
5. Imposition of penalty on directors.

Confirmation of Central Excise Duty, Interest, and Penalty:
The impugned order confirmed the demand for central excise duty, interest under Section 11AB, and penalty imposed under Section 11AC read with Rule 25 of the Central Excise Rules, 2002. Additionally, individual penalties were imposed on the two Directors and a Manager. The Tribunal found that the appellants failed to establish a prima facie case for the exercise of discretion under Section 35F to grant relief regarding the duty deposit and penalty imposed on the appellant company.

Waiver of Pre-Deposits based on Natural Justice and Financial Hardship:
The appellants argued for the waiver of pre-deposits citing failure of the Department to comply with natural justice principles and financial hardship. However, the Tribunal found that the documents demanded by the appellants were actually furnished to them, contradicting the appellants' claims. Regarding financial hardship, the Tribunal noted that the absence of cash deposits in the bank cannot be a ground for exercising discretionary power under Section 35F.

Availing Exemption under Notification No. 8/2003:
The appellants sought exemption under Notification No. 8/2003, claiming their turnover was below the specified limit. However, it was revealed that the appellants did not disclose the turnover from their second unit, which was a condition for availing the exemption. The Tribunal held that the appellants' failure to disclose relevant facts disentitled them from seeking relief under Section 35F.

Allegations of Clandestine Removal of Finished Goods:
The records indicated clandestine removal of finished goods by the appellants, supported by evidence of supplying goods to strangers with related bill books found on the appellants' premises. The Tribunal concluded that the appellants had attempted to evade excise duty through such actions, justifying the demand and penalty imposed in the impugned order.

Imposition of Penalty on Directors:
While the impugned order did not elaborate on how each director could be liable for the imposed penalties, the Tribunal determined that the directors could not be absolved of liability. Therefore, the Managing Director and two directors were directed to deposit a specified sum each, considering the circumstances of the case.

In conclusion, the Tribunal allowed the applications for stay subject to the deposit of the entire amount of duty and penalty demanded from the appellant company, along with specific amounts from the directors and managing director within a designated timeframe. Compliance was required by a specified date for the appellants.