2013 (9) TMI 820 - AT - Central Excise

Short Payment of Duty - Held that - Assessee had discharged duty on the yarn and did not discharge duty on the fabrics under the mistaken belief that the excise duty is exempted on fabrics - There was no suppression of facts and it was only under bonafide mistaken belief that once the duty was discharged on the yarn, duty not to be paid on the fabrics stage. Penalty u/s 11AC Waiver of Pre-Deposit Held that - The total liability had worked out around Rs.11.30 lakhs against the clearances of fabrics - The applicant has already paid an amount of Rs.8.32 lakhs on 03.04.1998 and requested for adjustment of Rs.3.79 lakhs paid by them on yarn stage - Even though the applicant has discharged duty liability on 3rd April, 1998 - prima-facie they would also be required to discharge interest also Upon such submission rest to be waived.

Summary

Issues: Application for waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The applicant, a composite mill manufacturing yarn and fabrics, sought waiver of predeposit of duty and penalty amounting to Rs.3,79,473/- and Rs.11,30,890/- respectively, imposed under the Central Excise Act, 1944. The duty on fabrics was not discharged under the mistaken belief of exemption, leading to a short payment of duty. The applicant had paid the duty short paid on fabrics by debiting their accounts after already paying a portion at the yarn stage. This was the third round of litigation before the Tribunal, with previous remands for re-quantification of duty, interest, and penalty. The applicant argued no suppression of facts, attributing the error to a bona fide mistaken belief, and offered to deposit Rs.1.00 lakh towards the outstanding amount.

2. The Tribunal noted the total liability of around Rs.11.30 lakhs against fabric clearances during the specified period. The applicant had paid Rs.8.32 lakhs on 03.04.1998 and requested adjustment of Rs.3.79 lakhs paid at the yarn stage. Although the duty on yarn was not in dispute, the Adjudicating Authority did not consider adjusting the yarn payment against the total liability. It was observed that interest would also need to be discharged. Consequently, the Tribunal directed the applicant to deposit Rs.1.00 lakh within eight weeks, failing which the appeal would be dismissed. Upon deposit, the remaining dues would be waived, and recovery stayed during the appeal's pendency.

3. The Tribunal's decision emphasized the need for the applicant to make the specified deposit within the stipulated timeframe to avoid dismissal of the appeal. The case highlighted the importance of proper duty discharge procedures and the consequences of mistaken beliefs leading to short payments. The Tribunal's directive aimed to balance the interests of the applicant and revenue authorities while ensuring compliance with legal obligations and due process.