2010 (5) TMI 491 - AT - Central Excise

Waiver of pre-deposit penalty Separate show cause notice issued on main issue demanding short paid duty and same is yet to be adjudicated Adjudication of show cause notice demanding penalty should have been done only after adjudication of main SCN as only when allegation against the appellant that clearance should have been clubbed for determining their eligibility for SSI exemption is upheld, the allegation of clearance of excisable goods without payment of duty and without observing Central Excise formalities could be upheld Requirement of pre-deposit of penalty waived

Issues:
1. Waiver from the requirement of pre-deposit of penalty.
2. Clubbing of clearances for determining eligibility for SSI exemption.
3. Confiscation of seized goods and imposition of penalty.
4. Adjudication of penalty without waiting for the main show cause notice.
5. Condonation of delay in filing appeals.
6. Stay application for recovery of penalty.

Waiver from the requirement of pre-deposit of penalty:
The appellants, engaged in manufacturing corrugated boxes, were found clearing excisable goods without payment of duty and lacking Central Excise registration. A penalty of Rs. 4,000/- was imposed, upheld by the Commissioner. The main show cause notice for duty exemption and short paid duty is pending adjudication. The Tribunal considered the payment of Rs. 35,00,000/- towards duty liability by the appellants and the fact that the penalty was imposed before adjudication of the main show cause notice. Consequently, the Tribunal waived the pre-deposit of penalty and stayed its recovery until the final disposal of the appeals.

Clubbing of clearances for determining eligibility for SSI exemption:
The units involved were claiming full exemption from duty under the SSI exemption Notification. However, they were found clearing goods without payment of duty and lacking Central Excise registration. The Tribunal noted that the clearances of the units should have been clubbed to determine their eligibility for SSI exemption. The main show cause notice for duty exemption and short paid duty is pending adjudication, and the Tribunal emphasized the need for adjudicating it before deciding on the penalty issue.

Confiscation of seized goods and imposition of penalty:
A show cause notice was issued for confiscation of goods seized at the factory premises and imposition of penalties on the units and their directors. The order-in-original confiscated the goods with an option for redemption on payment of a fine. Penalties of Rs. 4,000/- each were imposed on the units and their directors. The Commissioner (Appeals) upheld the order-in-original. The Tribunal considered the seriousness of the allegations and evidence of duty evasion but decided to waive the pre-deposit of penalty pending the final disposal of the appeals.

Adjudication of penalty without waiting for the main show cause notice:
The Tribunal observed that the penalty was imposed on the basis of allegations that were yet to be adjudicated in the main show cause notice. It was noted that the penalty should have been adjudicated after the main show cause notice to determine the eligibility for SSI exemption. The Tribunal emphasized the importance of adjudicating the main show cause notice before deciding on penalties.

Condonation of delay in filing appeals:
The appellant requested condonation of a two-day delay in filing the appeals, citing bona fide reasons. The Tribunal reviewed the reasons and granted condonation of the delay, allowing the appeals to proceed.

Stay application for recovery of penalty:
The Tribunal considered the arguments from both sides regarding the imposition of penalties on the appellants. While the Departmental Representative highlighted the seriousness of duty evasion allegations, the Tribunal noted the payment made by the appellants towards their duty liability. Consequently, the Tribunal waived the pre-deposit of penalty and stayed its recovery until the final disposal of the appeals, linking the appeals to the adjudication of the main show cause notice.

This detailed analysis of the judgment covers the issues involved comprehensively, providing insights into the Tribunal's decision-making process and considerations for each aspect of the case.

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