2007 (9) TMI 137 - AT - Central Excise

Appeal dismissed for non-compliance with stay order Applicant company has been declared as sick unit by the BIFR s order Chartered Accountant Certificate certify that net worth of company is negative In view of above, earlier order is being modified, pre-deposit waived & recovery is stayed

Summary

Issues:
1. Pre-deposit of duty confirmed against a company.
2. Appeal dismissal due to non-compliance.
3. Company declared as a 'sick unit' by BIFR.
4. Net worth of the company found to be negative.
5. Waiver of pre-deposit of duty and penalty.

Analysis:
1. The case involved a pre-deposit of Rs. 1.40 crores towards duty confirmed against a company, with a deadline for compliance. The company only deposited Rs. 1.5 lakhs initially, leading to an extension for the balance amount. However, the appeals were dismissed for non-compliance, prompting further legal actions.

2. The matter was taken to the Hon'ble Bombay High Court, which upheld the Tribunal's direction for pre-deposit. Subsequently, a Civil Appeal was filed before the Hon'ble Supreme Court, emphasizing the company's application regarding being under BIFR and pending Modification Application No. ../2005. The Supreme Court directed the Tribunal to decide on the modification application and assess the company's net worth for further proceedings.

3. The Tribunal then considered the company's status as a 'sick unit' as per the Sick Industrial Companies (Special Provisions) Act, 1985, which defines a 'sick industrial company' based on accumulated losses exceeding net worth and cash losses. The company was declared a 'sick unit' by BIFR and presented evidence showing a negative net worth.

4. Upon confirming the negative net worth, the Tribunal modified its earlier order by granting a waiver of pre-deposit of duty and penalty, along with staying the recovery pending appeal. The order of dismissal was set aside, and the appeal was restored to its original number, ensuring a fair consideration of the case based on the company's financial status and legal provisions.