1993 (10) TMI 150 - AT - Central Excise

Summary

Issues:
1. Stay application for waiver of pre-deposit of duty and stay of recovery proceedings.
2. Denial of Modvat credit.

Analysis:
The case involved a stay application for the waiver of pre-deposit of duty and stay of recovery proceedings, primarily concerning the denial of Modvat credit. The appellants argued that the denial was based on the ground of fictitious gate passes, requesting cross-examination of relevant parties, which was not allowed, leading to a violation of principles of natural justice. They also highlighted their poor financial position. The Revenue, while conceding to a similar remand in a related case, argued against granting the stay, citing the current assets exceeding liabilities. The Tribunal found lapses in the appellants' response filing but decided in favor of granting stay, considering the lack of intimation about the rejection of adjournment and the financial position indicated in the balance-sheet.

In a differing opinion, the Vice President noted the alleged receipt of inputs on fictitious gate passes and the non-existence of firms, supporting the Department's contentions. The Vice President emphasized that cross-examination is not a strict requirement in quasi-judicial proceedings and that repeated adjournments cannot be claimed as a right. The provisional balance sheet indicated a favorable financial position, and the Vice President rejected the stay application based on the balance of convenience favoring the Department.

Due to the difference of opinion, the matter was referred to a third Member for consideration on whether the pre-deposit amount should be waived and stay granted. The third Member, after hearing both sides and reviewing the record, supported the grant of stay. Citing precedents where similar cases were remanded for de novo consideration, the third Member found that the appellants were not allowed to cross-examine witnesses, leading to a violation of natural justice. The majority opinion favored granting the stay, waiving the pre-deposit amount, and staying recovery during the appeal's pendency.

Ultimately, the Tribunal granted the stay and waived the pre-deposit amount, aligning with the majority opinion. The case highlighted the importance of procedural fairness, financial considerations, and consistency in decision-making based on precedents in similar matters.