1990 (4) TMI 177 - AT - Central Excise

Summary

Issues:
Dispensation of pre-deposit of duty and penalty demanded in terms of the impugned order.

Analysis:
The applicants sought dispensation of the pre-deposit of duty and penalty amounting to Rs. 1,48,448.98 and Rs. 2,500, respectively, as demanded in the impugned order. Initially, a show cause notice dated 17-2-1989 was issued to the applicants regarding 43.50 M.T. of aluminum scrap unaccounted for after removal from the unit under Rule 57F(2). Subsequently, a corrigendum dated 17-3-1989 was issued, altering the grounds for duty demand to 103.946 M.T. of aluminum waste and scrap, based on MODVAT credit utilization. The authorities then reverted to the original position of demanding duty for the unaccounted scrap. The applicants argued that the show cause notice dated 17-2-1989, concerning the shortage, was no longer valid post the corrigendum, which was accepted by the Collector (Appeals). The SDR contended that duty demand was legitimate due to MODVAT credit usage. The Tribunal acknowledged the change in the show cause notice's nature post the corrigendum, finding the applicants' argument plausible. Consequently, the Tribunal waived the pre-deposit of duty and penalty, granting a stay on recovery pending appeal hearing.

The Tribunal noted the significant alteration in the nature of the show cause notice following the corrigendum, emphasizing that the original grounds for duty demand were no longer valid. The Tribunal found merit in the applicants' contention and accepted that the demand based on the unaccounted scrap was the only valid issue post the corrigendum. Additionally, the Tribunal highlighted the Collector (Appeals) acknowledgment of this position, further supporting the applicants' plea for dispensation of the duty and penalty pre-deposit. The Tribunal's decision to waive the pre-deposit and stay recovery pending appeal aligns with the recognition of the altered show cause notice's impact on the validity of the duty demand, emphasizing procedural fairness and legal consistency in the adjudicative process.