2012 (6) TMI 728 - AT - Central Excise

Waiver of the condition of pre-deposit of duty demand - Penalty under Rule 25 - Held that - It is undisputed that the appellant paid the excise duty within the grace period of 30 days as provided under the rules. The amount paid by the appellant, however, was slightly less in various instances and that shortfall was made good with interest in November 2009. From this, prima facie, it can be inferred that there was no intention on the part of the appellant to evade the payment of excise duty and the defaults occurred due to computation error. This inference gets strengthen from the fact that the amount of shortfall in the payment of excise duty is negligible as compared to the amount of duty paid for respective months. Undisputedly, the shortfall was made good by the appellant after it was brought to his notice - As compared to the amount of default, the amount of duty confirmed against the appellant is too huge, therefore, in our view calling upon the appellant to make pre-deposit of duty demand, interest and penalty would obviously cause him undue financial hardship - Stay granted.

Summary

Issues:
Waiver of pre-deposit of duty demand under Rule 8(3A) of the Central Excise Rules, 2002.

Analysis:
The appellant, engaged in biscuit manufacturing subject to excise duty, faced a duty demand of Rs. 2,10,87,816 due to alleged default in payment beyond the prescribed period. The appellant contended that errors in accounting led to the shortfall in duty payment, not intentional evasion. Despite the appellant's plea, the Commissioner upheld the duty demand, interest, and penalties, citing Rule 8(3A) of the Central Excise Rules.

The appellant sought waiver of the pre-deposit condition, arguing that the defaults were inadvertent, and almost the entire duty was paid through cash and Cenvat credit. The appellant referenced tribunal decisions to support the claim that the errors did not constitute intentional default. The Department, however, opposed the waiver, asserting the clear default in duty payment.

Upon review, the Tribunal acknowledged the timely but slightly deficient duty payments rectified with interest. It inferred the errors as unintentional, given the negligible shortfalls relative to the total duty paid. Noting conflicting tribunal decisions on Rule 8(3A)'s interpretation, the Tribunal found a strong prima facie case for the appellant. Considering the financial burden of the duty demand, interest, and penalties, the Tribunal granted the waiver of pre-deposit and stayed the recovery until further orders.

In conclusion, the Tribunal allowed the stay application, waiving the pre-deposit condition for duty demand, interest, and penalties. The decision was based on the appellant's strong prima facie case, the negligible nature of the defaults, and conflicting interpretations of Rule 8(3A) by different tribunal benches. The appeal was scheduled for further proceedings.