2013 (5) TMI 653 - HC - Central Excise

Cenvat Credit - fraud - writ petition against the stay order wherein assessee was asked to predeposit rs. 40 lakhs - held that - the appellant was afforded adequate opportunity to submit reply, and its request to supply the documents and cross-examination was accepted by the adjudicating authority. Inspite of several adjournments granted to the appellant, no proper reply was submitted. Several dates were fixed on which the owners of vehicle and transport companies were summoned. The appellant avoided these hearings. The adjudicating authority had sufficient material to record the findings that the appellant had played fraud in preparing documents. The consignments weighing 35 mt. tonnes were shown to be transported on vehicles, which was found to be three wheelers; and consignment of 28.148 mt. tonnes was found to be transported by vehicle, which was found to be a scooter. - stay order of tribunal is not erroneous - decided against the assessee.

Summary

Issues:
Challenge to order on stay application in Central Excise Appeal regarding pre-deposit requirement.

Analysis:
The petitioner challenged an order requiring a deposit of Rs. 40,00,000 as a precondition for adjudication in a Central Excise Appeal. The petitioner argued that the Adjudicating Authority did not provide adequate hearing opportunities and that bank documents were not scrutinized properly. The petitioner relied on legal precedents to support the argument that the demand for duty in violation of natural justice principles should not require pre-deposit.

The CESAT considered the submissions but found that the appellant had been given sufficient opportunities for defense, including requests for document supply and cross-examination. Despite multiple adjournments, the appellant failed to submit a proper reply, and the owners of vehicles and transport companies summoned were avoided by the appellant. The CESAT found evidence of fraud in document preparation, such as misrepresentation of consignment weights and transportation modes.

The adjudicating authority discovered discrepancies in the bank statements, indicating significant amounts cleared to another entity's account. The authority concluded that there was a deliberate plan to defraud the government exchequer, leading to severe penal actions against the company. CESAT upheld the pre-deposit requirement of Rs. 40 lacs, representing half of the total demand, as the appellant lacked a strong prima facie case and failed to demonstrate any hardship in depositing the amount.

Ultimately, the High Court dismissed the writ petition, upholding the pre-deposit requirement. The appellant was granted an additional month to deposit the amount as allowed by the Tribunal.