2013 (11) TMI 291 - AT - Central Excise

Modification of stay order Reduction in Pre-deposit Held that - Following M/s SHIV SHAKTI AGRIFOOD PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE, DELHI-I 2012 (9) TMI 742 - CESTAT, NEW DELHI - There cannot be any reason for exclusion of any part which is covered by the Rule 6 or 10 of the Pan Masala Valuation Rules, which would indicate that the period for which the machines were sealed, not being in production, duty liability therein, prima facie, does not arise. Keeping in mind overall position and that stay order was as an ex-parte order, the order needs to be modified suitably - there are revenue flowing in from the operations of the appellant as on 31.03.13 - Though there is revenue from sales, there is loss which is indicated in the balance sheet - stay order dated 08.04.13 which directs of pre-deposit of entire amount of duty liability needs to be modified to an extent that appellant should be directed to deposit an amount of Rs.15 lakhs Upon such submission rest of the duty to be waived till the disposal partial stay granted.

Summary

Issues:
1. Modification of stay order directing deposit of entire duty liability.
2. Consideration of financial position and previous adjudication orders.
3. Comparison with a similar case regarding duty liability deposit.
4. Decision on modifying the stay order based on financial hardships and previous judicial rulings.

Analysis:
1. The appellant filed an application seeking modification of the stay order requiring the deposit of the entire duty liability amounting to Rs.75,55,915. The appellant's counsel argued that the initial order was ex-parte as no one appeared during the hearing, and the financial position of the appellant was not considered. The counsel referenced a similar case, Shiv Shakti Agrifood Pvt. Ltd., where the High Court modified the deposit amount to Rs.25 lakhs, emphasizing the need to consider Section 3A provisions and the manufacturing activity's deeming fiction. The appellant's financial difficulties, as evidenced by a loss in the balance sheet and factory closure, were highlighted to support the modification request.

2. The Departmental Representative (D.R.) contended that the appellant should be subject to conditions similar to those set by the High Court in the Shiv Shakti Agrifood Pvt. Ltd. case. Upon reviewing the submissions and records, the Tribunal noted the previous order's reliance on the Shiv Shakti Agrifood Pvt. Ltd. case and the direction for the appellant to deposit the entire duty liability. However, the Tribunal acknowledged the High Court's prima facie view in the referenced case that duty liability may not arise for non-operational machines sealed under specific rules. Considering the financial hardships presented by the appellant and the revenue from operations as of a certain date, the Tribunal deemed it necessary to modify the stay order. The Tribunal decided to reduce the deposit amount to Rs.15 lakhs within eight weeks, with a compliance report due on a specified date.

3. The Tribunal's decision to modify the stay order was influenced by the appellant's financial struggles, the High Court's ruling in a similar case, and the lack of revenue despite operational sales. The revised deposit amount and compliance deadline were set to ensure a balanced approach, with a clear warning that non-compliance would result in dismissal of the appeals. The Tribunal emphasized the need for timely compliance and indicated that no further leniency would be granted to the appellant. The case would proceed for merits consideration upon satisfactory compliance.