2015 (6) TMI 1037 - AT - Central Excise

Waiver of pre-deposit - Demand of duty and imposition of penalty - Section 11AC of the Central Excise Act, 1944 - Demand is based on one invoice book recovered in the premises of M/s. Sainath Industries, another manufacturer of the ceiling fans for VAPL and no notice has been issued to M/s. Sainath Industries, Also demand made on the basis of ceased records from M/s. Sainath Industries. Held that - no evidences have been placed by the appellant to show that they have not supplied fans and they have not received amounts from VAPL. In the absence of any evidence to show that appellant had manufactured the fans in the rural area in the premises shown by them, prima facie, the demand is sustainable. It is also noted that even though appellants received show-cause notice and acknowledgement was available on record, no reply was given by them. It was submitted by the appellant that they did not receive the personal hearing notices. In the absence of reply to the show-cause notice, the personal hearing notice could have been sent only to the address available with the Revenue and therefore it shows that appellant seems to be not bothered to pursue or reply to the show-cause notice which is another factor which goes against them. Needless to say that in case like this it would be necessary to go into all details and statements recorded and it will require lot of time and at this stage, we therefore consider that it would be sufficient if the appellant deposits 50% of the duty demanded. - Partial waiver granted and stay granted

Summary

Issues:
- Central excise duty demand on ceiling fans
- Liability to pay duty in rural area
- Validity of demand based on records from another manufacturer
- Lack of notice to another manufacturer
- Waiver of pre-deposit and grant of stay

Central excise duty demand on ceiling fans:
The appellant, engaged in manufacturing ceiling fans affixed with a brand name, faced a demand for central excise duty amounting to &8377; 68,95,916/- for supplies made to another entity. The penalty under section 11AC of the Central Excise Act, 1944 was also imposed. The appellant argued that being located in a rural area, there was no duty liability. However, the investigating officers found the correct premises and records indicated purchases made by the other entity without payment of duty due to the rural area claim. The Managing Director of the purchasing firm confirmed the purchases and non-payment of duty based on the rural area status claimed by the appellant.

Liability to pay duty in rural area:
The appellant contended that being in a rural area exempted them from duty liability. However, the investigating officers identified the correct premises and found evidence contradicting the rural area claim. The Managing Director of the purchasing firm confirmed the purchases made without payment of duty based on the appellant's rural area status claim, indicating a prima facie sustainable demand for duty.

Validity of demand based on records from another manufacturer:
The demand for duty was based on records recovered from another manufacturer supplying to the same entity. The appellant argued lack of notice to this manufacturer and discrepancies in the investigation. However, the tribunal found no evidence to support the appellant's claim of not supplying the fans or not receiving payments, thereby upholding the demand based on the recovered records.

Lack of notice to another manufacturer:
The appellant raised the issue of lack of notice to the other manufacturer whose records formed the basis of the duty demand. However, the tribunal noted the appellant's failure to provide evidence contradicting the records or payments received, leading to a decision in favor of sustaining the demand.

Waiver of pre-deposit and grant of stay:
The tribunal directed the appellant to deposit 50% of the duty demanded within a specified period, considering the lack of response to the show-cause notice and the need for further investigation. The appellant's claim of financial difficulties was noted, but without documentary evidence, the tribunal deemed the partial deposit sufficient to hear the appeal, granting a stay against recovery pending compliance.

In conclusion, the tribunal upheld the central excise duty demand on ceiling fans, dismissed the rural area exemption claim, validated the demand based on records from another manufacturer, and granted a waiver of pre-deposit with a stay against recovery subject to partial payment by the appellant.