2013 (9) TMI 1007 - AT - Central Excise

Waiver of pre deposit - Penalty u/s 11AC - processing was being done by them on job work basis on the grey fabrics supplied by the customers - Non supply of documents - Difference of opinion - Majority order - Held that - While appellant says that documents were not given for which appellant was prevented to lead defence Revenue says all documents were given - Therefore it would be preferable to hear the appeal agreeing with ld. Technical Member who was of the view that appellant has already deposited 19, 08, 321/- and considered to be a measure protecting Revenue. - appellant having grievance of no copies of documents supplied by Revenue Hon ble High Court repeatedly on same issue of violation of principle of natural justice directed for supply of copies of relevant documents. If appeal is heard both sides shall be able to guide the Bench in the course of regular hearing. - Stay granted.

Issues Involved:
1. Confirmation of duty demand and imposition of penalties.
2. Alleged clandestine clearance of processed fabrics.
3. Evidence and statements from buyers and company representatives.
4. Non-receipt of documents and denial of cross-examination.
5. Financial hardship and pre-deposit requirements.
6. Discrepancies in duty calculation and supporting documents.

Issue-wise Detailed Analysis:

1. Confirmation of Duty Demand and Imposition of Penalties:
The Commissioner (Appeals) confirmed a demand of Rs. 1,73,36,275/- against the appellant company along with an identical penalty under Section 11AC of the Central Excise Act. Additionally, a penalty of Rs. 1 crore was imposed on the Managing Director under Rule 209A of the Central Excise Rules. The appellants had already deposited Rs. 19,08,321/- and sought to dispense with the pre-deposit of the remaining amount.

2. Alleged Clandestine Clearance of Processed Fabrics:
The appellants, engaged in the manufacture of processed fabrics on a job work basis, were found to be maintaining two sets of invoices: duty-paid and duty-free. Investigations revealed that they were clearing processed fabrics under the guise of processed embroidered fabrics to evade excise duty. Statements from around 24 buyers indicated that the grey fabrics sent were not embroidered, although invoices mentioned them as such.

3. Evidence and Statements from Buyers and Company Representatives:
The investigation included statements from buyers and company representatives. Buyers' statements and records indicated discrepancies between the actual fabrics sent and the invoices issued. Company representatives, including the Managing Director, admitted to issuing invoices for embroidered fabrics when the goods were not, intending to evade duty.

4. Non-receipt of Documents and Denial of Cross-examination:
The appellants argued that not all documents were provided and that buyers were not produced for cross-examination, questioning the reliability of their statements. The Revenue countered that all relevant documents were provided, and the buyers' statements were corroborative and supported by seized documents. The Tribunal noted that while most documents were supplied, the appellants did not procure evidence to support their claims.

5. Financial Hardship and Pre-deposit Requirements:
The appellants claimed financial difficulty in depositing the disputed amount, asserting that their factory was closed. However, no evidence of financial hardship was provided. The Tribunal emphasized safeguarding Revenue's interest and directed a pre-deposit of Rs. 50 lakhs, adjusted against the earlier deposit, with the balance amount's recovery stayed during the appeal's pendency.

6. Discrepancies in Duty Calculation and Supporting Documents:
The appellants contended that the method of calculating the duty demand was incorrect and lacked clarity. The Tribunal observed discrepancies in the duty calculations and supporting documents, noting that different rates and values were used without proper explanation. The lack of material evidence during searches and the reliance on statements without cross-examination further weakened the case.

Separate Judgments:
One member (Judicial) ordered a pre-deposit of Rs. 50 lakhs, while the other member (Technical) found the existing deposit of Rs. 19,08,321/- sufficient, citing undue hardship and sketchy evidence. The third member (Judicial) agreed with the latter, resolving the difference in favor of waiving further pre-deposit.

Final Stay Order:
The majority order concluded that the existing deposit of Rs. 19,08,321/- was sufficient for the purpose of Section 35F of the Central Excise Act, and the pre-deposit of the balance amount of duty and penalty was waived, staying its recovery during the appeal's pendency.

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