2014 (6) TMI 483 - AT - Central Excise

Waiver of pre deposit - Duty demand - Discharge on sales income - Held that - Demand is based upon the difference of sales income as indicated in ER-1 and the balance sheet. We find that there is no allegation or evidence to support that there was clandestine manufacture and sale of the goods. Prima facie, the claim of the ld. Counsel that the excess sales was shown in balance sheet for availing additional overdraft from bank seems to be supported by the certificate of the Chartered Accountant. At this juncture, we find that demand of the excise duty can be only on the goods manufactured and cleared from registered premises by an assessee which is absent in this case for differential duty. Accordingly, we are of the view that appellant has made out a case for the complete waiver of the pre-deposit of the amounts involved as indicated hereinabove - Stay granted.

Summary

Issues:
Waiver of pre-deposit of central excise duty, penalty, and interest based on differential sales income as per balance sheet.

Analysis:
The appeal involved a petition for the waiver of pre-deposit of significant amounts comprising central excise duty, penalty, and interest. The adjudicating authority had confirmed the demands, citing the appellant's failure to discharge the differential central excise duty on the sales income as reflected in the balance sheet. However, upon reviewing the records, the Tribunal found no evidence supporting allegations of clandestine manufacture or sale of goods. The Tribunal noted that the excess sales income shown in the balance sheet, leading to the demand, was possibly for availing additional overdraft from the bank, a claim supported by the Chartered Accountant's certificate. Importantly, the Tribunal emphasized that excise duty can only be demanded on goods manufactured and cleared from registered premises, which was not the case for the differential duty in question. Consequently, the Tribunal concluded that the appellant had established a case for the complete waiver of the pre-deposit amounts. Therefore, the application for the waiver of pre-deposit of the central excise duty, penalty, and interest was allowed, and recovery was stayed pending the disposal of the appeals.

This judgment highlights the importance of substantiating claims related to differential duty demands and the necessity for evidence to support allegations of clandestine activities in excise duty matters. The decision underscores the specific requirement for excise duty to be levied only on goods manufactured and cleared from registered premises, emphasizing the need for a clear nexus between the duty demand and the actual production and clearance of goods. Additionally, the judgment showcases the significance of professional certifications, such as those provided by Chartered Accountants, in supporting claims and justifications put forth by appellants in excise duty cases. Ultimately, the Tribunal's decision to grant the waiver of pre-deposit underscores the critical role of evidence, legal interpretation, and procedural fairness in excise duty disputes, ensuring that appellants are not unduly burdened pending the resolution of their appeals.