2011 (10) TMI 440 - HC - Central Excise

Application for waiver of pre-deposit - CESTAT had before it a batch of matters in which the allegation is that the assessees who manufacture and sell M.S. ingots had clandestinely cleared manufactured goods by suppressing the actual production - Ordinarily in a matter such as the present a Division Bench of this Court would be inclined to follow the view taken by a co-ordinate Bench particularly at the interim stage on an application for waiver of pre-deposit - The Revenue implications for the Union Government are significant and as we have noted earlier in the table extracted herein above the total amount of duty in each of the cases is Rs. 11.51 Crores Rs. 7.99 Crores Rs. 101 Crores Rs. 2.65 Crores Rs 1.97 Crores and Rs. 2.02 Crores respectively - Held that an issue of an ad interim protection to the effect that the Appeals before the Tribunal shall not be dismissed for want of compliance with the order of pre-deposit in the meantime

Issues Involved:
1. Allegation of clandestine clearance of M.S. ingots by suppressing actual production.
2. Demand for duty based on suppressed electricity consumption.
3. Tribunal's order for pre-deposit of duty and penalty.
4. Consistency in Tribunal's orders regarding pre-deposit waivers in similar cases.
5. Reconsideration of the Aurangabad Bench's decision.

Analysis:

1. Allegation of Clandestine Clearance:
The assessees, who manufacture and sell M.S. ingots, were accused of clandestinely clearing manufactured goods by suppressing actual production. Notices to show cause were issued to the assessees, alleging suppressed production and clearance of goods.

2. Demand for Duty Based on Electricity Consumption:
The main demand for duty was based on the consumption of electricity, which was allegedly suppressed by the parties. The norm of electricity consumption in the manufacture of one ton of M.S. ingots was applied to determine the duty. Differing amounts of duty and penalty were demanded in six cases upon adjudication.

3. Tribunal's Order for Pre-Deposit:
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed the deposit of 50% of the duty and 25% of the penalty imposed. In one case, a different order was passed. The orders were challenged by one assessee before the Aurangabad Bench of the High Court.

4. Consistency in Tribunal's Orders:
The Aurangabad Bench noted that the Tribunal should take a consistent view regarding pre-deposit when the facts and circumstances are similar. It referred to earlier CESTAT orders in Nasik Strips Pvt. Ltd. and Mithulal Gupta Bhavshakti Steelmines Pvt. Ltd., where full waivers of deposit were granted. The Aurangabad Bench remanded the matter to the Tribunal for reconsideration, emphasizing the need for consistency.

5. Reconsideration of the Aurangabad Bench's Decision:
The High Court at Bombay disagreed with the Aurangabad Bench's decision, noting that the Tribunal had already considered the earlier decision in Nasik Strips Pvt. Ltd. and distinguished it. The Tribunal also referred to the Supreme Court's judgment in Triveni Rubber and Plastics, which upheld a demand of duty based on electricity consumption. The High Court formulated a question for consideration by a Larger Bench, questioning whether the Aurangabad Bench's decision required reconsideration, particularly since the Tribunal had followed Supreme Court decisions involving similar issues.

Conclusion:
The High Court at Bombay issued an ad interim protection, ensuring that the appeals before the Tribunal would not be dismissed for non-compliance with the pre-deposit order. The registry was directed to place the papers before the Learned Chief Justice for appropriate administrative directions.

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