2009 (4) TMI 465 - AT - Central Excise

Waiver of Pre-deposit - wrongful availment of Cenvat credit - documents pertaining to non-existing transport company - appellants had asked for cross-examination of the departmental officers before finalising the matter - Held that - no case made out of any financial hardship for deposit of the amount - pre-deposit of the amount of duty and penalty shall stand waived and recovery thereof is stayed till disposal of the appeals

Summary

Issues:
- Stay application for deposit of demanded amount under Section 35F of the Central Excise Act, 1944.
- Failure to provide copies of documents relied upon in the show cause notice.
- Allegations of undue hardship due to lack of documents for defense.
- Compliance with principles of natural justice.
- Request for waiver of pre-deposit requirement.
- Cross-examination of departmental officers.
- Financial hardship for deposit of balance amount.
- Waiver of penalty amount pre-deposit.

Analysis:

The judgment addresses applications for a stay related to the deposit of the amount demanded under Section 35F of the Central Excise Act, 1944. The Commissioner's order directed recovery of wrongly availed Cenvat credit, interest, and penalties totaling Rs. 1,01,50,225, along with a penalty of Rs. 50 lakhs on the Managing Director. The appellants had paid a portion of the demanded amount already.

The appellants argued that the department's failure to provide essential documents before passing the order violated principles of natural justice. They claimed that without these documents, they couldn't respond adequately to the charges. However, the tribunal noted that the appellants had not promptly requested these documents, and their actions suggested a delay tactic rather than genuine hardship.

The tribunal emphasized the importance of providing copies of documents relied upon in a show cause notice to the assessee. It highlighted the need for the department to follow natural justice principles in every case. The tribunal found that the appellants had not taken necessary steps promptly to obtain the required documents for their defense.

Regarding financial hardship, the tribunal observed that the appellants had already paid a significant portion of the demanded amount. The tribunal declined to waive the pre-deposit requirement, considering the detailed analysis supporting the Commissioner's findings on wrongful availment of Cenvat credit.

The judgment also addressed the request for cross-examination of departmental officers, stating that such a request is only relevant if statements are relied upon by the authority, which was not the case here. The tribunal ordered the appellants to deposit the balance amount of duty demand within a specified timeframe.

In terms of the penalty amount, the tribunal granted a partial waiver for the Managing Director but required the appellant-company to deposit Rs. 10 lakhs. Upon this deposit, the pre-deposit of the balance amount of duty and penalty was waived, and recovery was stayed pending appeal disposal.