2010 (7) TMI 425 - HC - Central Excise

Waiver of pre-deposit clandestine removal admittedly two panchnamas were drawn by the department at the factory premises of the appellants on 8th December 2005 and 12th December 2005, why the department failed to take cognizance of the results recorded in the panchnama dated 8th December 2005 and only took cognizance of the results of the panchnama dated 12th December 2005. It was also not explained on behalf of the respondent why, after allowing one of the witnesses of the respondent to be cross-examined by the appellants, the other witnesses were not produced for cross-examination. In view thereof, the Tribunal is not justified in passing an order directing the appellants to deposit an amount of Rs. 1,00,000/- as pre-deposit. pre-deposit reduced - Appeal is disposed of accordingly

Summary

Issues involved:
- Appeal under Section 35G of the Central Excise Act, 1944 questioning the direction to deposit Rs. 1,00,00,000 under Section 35F of the Act.
- Allegations of clandestine removal of goods and imposition of duty, penalty, and interest.
- Dispute regarding power consumption for manufacturing steel ingots.
- Cross-examination of witnesses and fairness of proceedings.
- Validity of the order of pre-deposit by the Appellate Tribunal.

Analysis:
1. Appeal under Section 35G: The case involved an appeal under Section 35G of the Central Excise Act, 1944, challenging the direction to deposit a substantial amount under Section 35F. The appellant, a company engaged in manufacturing steel ingots, contested the justification of the Tribunal's order to deposit Rs. 1,00,00,000.

2. Allegations of Clandestine Removal: The appellant faced allegations of clandestine removal of goods, leading to a duty demand of Rs. 3,96,21,849, along with penalties and interest. The appellant disputed the findings and the process followed by the authorities in determining the duty demand, penalties, and interest.

3. Dispute over Power Consumption: A significant issue revolved around the power consumption for manufacturing steel ingots. Discrepancies were noted in the power consumption recorded during visits by Central Excise Officers, raising questions about the accuracy of the calculations and the methodology used to determine the actual power consumption per metric ton of steel ingots produced.

4. Cross-Examination and Fairness: The appellant raised concerns regarding the fairness of the proceedings, specifically challenging the respondent's conduct in allowing cross-examination of witnesses. The appellant argued that the respondent's actions were unfair and highlighted inconsistencies in the treatment of witnesses during the adjudication process.

5. Validity of Pre-Deposit Order: The Appellate Tribunal's order directing the appellant to pre-deposit Rs. 1,00,00,000 was contested by the appellant as being unsustainable in facts and law. Both parties presented arguments regarding the fairness and reasonableness of the pre-deposit amount in relation to the duty assessed and the overall circumstances of the case.

In the judgment, a consensus was reached between the parties, leading to a modification of the pre-deposit amount. The appellant was allowed to deposit Rs. 50,00,000 within a specified period, and the Tribunal was directed to hear the appeal on its merits without influence from the previous order. The judgment disposed of the appeal while keeping all contentions open for further consideration.