1993 (9) TMI 114 - HC - Central Excise

Summary

Issues:
1. Allegation of clearing dutiable goods in the guise of non-dutiable goods.
2. Determination of duty liability based on quantity of goods produced.
3. Prima facie case and assessment based on probabilities.
4. Financial position of the petitioners' Company and waiver of pre-deposit.
5. Impact of deposit amount on the opportunity to have the appeal heard on merits.

Detailed Analysis:
1. The case involved the petitioners being charged for clearing dutiable goods like eye-brow pencils as non-dutiable items. The first respondent issued a Show Cause Notice based on certain inspections, leading to a demand for duty, redemption fine, and penalties. The Tribunal directed the petitioners to deposit a significant sum for hearing the appeals, failing which the appeal would be dismissed. The writ petition sought to quash this order, leading to the matter being taken up for final disposal by consent of parties.

2. The determination of duty liability was a key issue, with discrepancies in the quantity of "Eye-brow" pencils produced and cleared from the factory. The Tribunal considered the arguments on merits, noting the complexity of the case involving multiple facts and points of law. The Tribunal was not convinced of a strong prima facie case in favor of the petitioners, leading to a detailed analysis of the quantity of goods produced and the duty liability calculated by the first respondent.

3. The concept of a prima facie case was discussed, emphasizing the need for evidence supporting the charge, especially in cases of large-scale irregularities. The assessment based on probabilities was deemed necessary in cases of committed irregularities, even if not mathematically precise. The argument challenging the assessment's correctness was not fully accepted in light of the circumstances.

4. The financial position of the petitioners' Company was considered, acknowledging their profit-making status but highlighting liquidity challenges. The Tribunal applied a previous judgment and directed a partial payment as a condition for waiving the pre-deposit. The court assessed whether undue hardship would result from depositing the entire amount, balancing the interests of the petitioner and the revenue.

5. The impact of the deposit amount on the opportunity to have the appeal heard on merits was a significant concern. It was noted that a substantial deposit could practically deny the opportunity for a fair hearing. Balancing the practical challenges faced by the petitioners, the court modified the deposit amount to Rs. 30,00,000 in two installments, ensuring a balance between the interests of both parties. The writ petition was disposed of on merits, considering all circumstances comprehensively.