1991 (12) TMI 175 - AT - Central Excise

Issues Involved:
1. Legality of the show cause notice and invocation of the extended period of limitation.
2. Allegation of undervaluation and suppression of facts.
3. Financial hardship and request for stay of pre-deposit.

Issue-wise Detailed Analysis:

1. Legality of the Show Cause Notice and Invocation of the Extended Period of Limitation:
The applicant challenged the show cause notice issued on 17th November 1987, which pertained to the period from 1st November 1982 to 31st March 1986, before the Hon'ble Gujarat High Court. The High Court admitted the writ petition and granted an interim stay, allowing the adjudication proceedings to continue. The Collector passed the adjudication order on 17th October 1989. The applicant argued that the extended period of limitation invoked by the revenue authorities was not justified as there were no changed circumstances from the past. The High Court's order on 21st February 1990 granted a stay on the condition of furnishing security of immovable property and paying the amount with 12% interest if the petition was dismissed. The Tribunal noted that the applicants had been filing classification lists and price lists regularly, which were approved by the revenue authorities, and a similar show cause notice issued in 1976 was dropped in 1983.

2. Allegation of Undervaluation and Suppression of Facts:
The revenue alleged that the applicant had been undervaluing compressors and overvaluing accessories, which were exempt from excise duty. The learned JDR argued that the applicants had suppressed facts by undervaluing the compressors five times below the cost and compulsorily selling accessories with compressors. The Tribunal considered the prima facie merits and noted that the pricing pattern was within the department's knowledge, as evidenced by the approval of classification and price lists. The Tribunal also referenced the Supreme Court's decision in Tata Iron and Steel Co. Ltd. v. Union of India, which held that regular filing and approval of classification lists negate the allegation of suppression.

3. Financial Hardship and Request for Stay of Pre-deposit:
The applicant claimed undue hardship in depositing the duty amount of Rs. 1,55,22,150.60 and a penalty of Rs. 40,00,000.00, citing accumulated losses of Rs. 3.21 crores and a profit of Rs. 32,58,000 for the year ending 31st March 1991. The applicant had filed an application before the BIFR, which was not yet registered. The Tribunal considered the financial position, noting the accumulated losses and the annual excise duty payment of Rs. 1,33,47,000.00. The Tribunal referenced the Supreme Court's decision in Spencer and Co. Ltd. v. Collector of Central Excise, which emphasized considering liquidity in determining undue hardship. The Tribunal dispensed with the pre-deposit on the condition that the applicant continues the security of immovable property and pays 12% interest if the appeal is lost, as offered by the applicant.

Conclusion:
The Tribunal allowed the stay application, recognizing the applicant's financial hardship and the prima facie merits of the case. It ordered the matter to be heard on merits on 6th February 1992, emphasizing no adjournments would be granted and the case would be prioritized. The Tribunal also acknowledged the Hon'ble Gujarat High Court's direction for expeditious disposal of the appeal.

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