2014 (2) TMI 502 - AT - Central Excise

Waiver of pre-deposit of penalty - Goods not removed even though invoiced prepared - Cancellation of order - Held that - Prima facie even though the goods were manufactured and accounted for, in the private records maintained by the Applicant and subsequently invoices were also prepared for clearance of the said goods, but due to non-lifting of the said goods by the respective customers, the applicant could not clear the goods from the factory. However, subsequent to the visit of the Central Excise officers on 25/6/2010, the applicant paid appropriate Central Excise duty against 559 invoices again. Prima facie applicants are maintaining proper records from which it could be established the manufacture and clearance of goods, from the factory on payment of duty . Thus, at this stage, the applicants could able to make out a prima facie case for waiver of pre-deposit of penalty imposed against each of the applicants under various provisions of Central Excise Rules. In the result, pre-deposit of penalty against each of the applicants, is waived and its recovery stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
Waiver of pre-deposit of penalty under Rule 25 on the applicant and personal penalties under Rule 26 on individuals. Violation of Rule 10 of the Central Excise Rules, 2002 regarding maintenance of records.

Analysis:
The judgment revolves around the waiver of pre-deposit of penalties imposed on the applicant and individuals under Rule 25 and Rule 26 of the Central Excise Rules, 2002. The applicant, a manufacturing company, faced penalties totaling Rs.18.00 crores and personal penalties on key personnel. The issue stemmed from the non-clearance of goods despite duty payment due to order cancellations by customers. The applicant's advocate argued that there was no intention to evade duty, as evidenced by meticulous record-keeping of raw materials, production, and clearance processes. The duty was paid twice for the same goods, leading to a refund application that was initially rejected but later allowed on appeal by the Commissioner.

The Special Counsel for the Revenue contended that the applicant failed to maintain records as per Rule 10 by not following the required format for the Daily Stock Account (DSA). While acknowledging a technical violation, the Revenue argued that penalties were justified due to the breach of rules. The Revenue filed an appeal against the Commissioner's decision to allow the applicant's refund application.

In response, the applicant's advocate highlighted the unique nature of the product, making it challenging to maintain opening and closing balances, especially for identical finished goods. After hearing both parties and examining the records, the Tribunal found that the goods were manufactured, accounted for, and duty was paid, but non-clearance resulted from customers not lifting the goods. The Commissioner's decision to allow the refund application indicated that duty had been paid twice. The Tribunal observed that the applicant maintained proper records supporting the manufacturing and clearance of goods, justifying a prima facie case for waiving the pre-deposit of penalties. Consequently, the pre-deposit of penalties against the applicant and individuals was waived, with recovery stayed during the appeal process.

Additionally, both parties requested to link the Revenue's appeal with the present case, leading the Tribunal to direct the Registry to do so. The judgment emphasized the importance of maintaining detailed records and compliance with excise rules while considering penalty waivers and appeals in excise matters.