2011 (4) TMI 1129 - HC - Central Excise

Waiver for pre-deposit of Cenvat credit demand and penalty - bogus invoices - Held that - appellant have not been able to establish prima facie case in their favour and as such it is the Department, which has a strong case against them. As regards the conduct of the appellants, the nature of the allegations against them, which prima facie appear to be supported by concrete evidence on record, are of very serious nature and amount to a massive fraud, this is not a case for total waiver from the requirement of predeposit, In the application only a bald statement has been made that the applicant is facing financial hardship and no supportive documentary evidence was filed along with the application, no legal infirmity in the order passed by the Tribunal, appeal fails and is dismissed

Summary

Issues:
Grant of waiver for pre-deposit of Cenvat credit demand and penalty based on Tribunal's order.

Analysis:
The appeal was filed against the Customs and Service Tax Appellate Tribunal's order directing the appellants to deposit Rs.12,00,00,000 within eight weeks. The appellant's counsel argued that the interest of the revenue was safeguarded as the set-off of Cenvat credit had been adjusted towards duty payment on finished goods. However, the Court stated that the authority must consider prima facie case, balance of convenience, and irreparable loss in stay/waiver applications. The Tribunal found that the appellants failed to establish a case for waiver as they fraudulently adjusted Cenvat credit without manufacturing finished goods.

The Tribunal detailed serious allegations against the appellants, involving the misuse of Cenvat credit, non-utilization of raw materials, and fraudulent practices in showing sales. Witness statements and evidence supported the allegations, indicating a massive fraud scheme. The Tribunal held that the appellants did not provide concrete evidence to counter the Department's claims, leading to a strong case against them. Due to the serious nature of the allegations and substantial evidence, the Tribunal directed the appellants to deposit Rs.12,00,00,000 within eight weeks, denying total waiver.

The Court agreed with the Tribunal's decision, emphasizing the clear evidence of fraudulent activities by the appellants. The lack of supportive documentary evidence for financial hardship undermined the appellant's claim for stay/waiver. The Court found no legal infirmity in the Tribunal's order and dismissed the appeal, upholding the requirement for the deposit as directed.

In conclusion, the Court upheld the Tribunal's decision, emphasizing the seriousness of the allegations, lack of evidence supporting the appellant's case for waiver, and the need to safeguard revenue interests. The appellants were directed to deposit the specified amount within the given timeframe, with the Court dismissing the appeal due to the absence of legal flaws in the Tribunal's order.