2011 (7) TMI 829 - AT - Central Excise

Waiver of pre-deposit - Application for stay - Clandestine removal - Suppression of facts - Held that the modus operandi adopted by the assessee for the period of dispute is materially the same as what they adopted in the past and considered by the Tribunal in stay order dated 28/02/2011 - Tribunal s stay order dated 28/02/2011 can be followed as a precedent in the present case also - Decided in favor of the assessee by way of directing to deposit 50% whether they should be asked to make any pre-deposit towards the penalty imposed on them under Rule 25 - Held that assessee should pre-deposit an amount of Rs.10.00 lakhs towards Rule 25 penalty also - Appeals are allowed by way of remand

Summary

Issues:
Seeking waiver of pre-deposit and stay of recovery in relation to Central Excise duty, education cess, and penalties imposed on the company and its director. Non-compliance with Section 35F of the Central Excise Act. Violation of natural justice in rejecting appeals due to non-compliance with pre-deposit requirements.

Analysis:

Issue 1: Waiver of Pre-deposit and Stay of Recovery
The appeals sought waiver of pre-deposit and stay of recovery concerning Central Excise duty, education cess, and penalties. The Tribunal, after examining records and hearing both sides, decided to dispose of the appeals at that stage, dispensing with the pre-deposit requirement. The appeals were directed against the appellate Commissioner's order, which rejected them based on non-compliance with Section 35F of the Central Excise Act. The original authority had demanded a substantial amount towards duty and penalties for clandestinely manufacturing and clearing MS ingots. The appellants argued that the Ld. Commissioner should have entertained their appeals without insisting on pre-deposit, citing a violation of natural justice.

Issue 2: Examination of Submissions
The Tribunal examined submissions made by both sides, including a stay order from a previous batch of applications involving similar manufacturers. The Counsel attempted to establish a prima facie case for waiver of pre-deposit and stay of recovery, seeking a remand of the case to the lower appellate authority. The JCDR opposed the plea for waiver, suggesting a remand with directions for pre-deposits in line with the previous stay order.

Issue 3: Assessment of Penalties
It was noted that there was no penalty under Section 11AC of the Act, with penalties imposed under Rule 25 and Rule 26 instead. The penalty on the director of the company amounted to over Rs.6.00 lakhs. The demand of duty against the assessee fell within the normal period of limitation, and the Tribunal found the modus operandi adopted by the assessee to be similar to previous cases.

Issue 4: Decision on Pre-deposit Amounts
After considering the submissions and records, the Tribunal directed the assessee to pre-deposit 50% of the duty amount and Rs.10.00 lakhs towards Rule 25 penalty with the lower appellate authority within four weeks. Compliance was to be reported by a specified date for the appeals to be taken up for disposal on merits, emphasizing adherence to the principles of natural justice.

Conclusion:
The impugned order was set aside, and the appeals were allowed by way of remand, with specific directions regarding pre-deposit amounts and compliance timelines.