1997 (4) TMI 220 - AT - Central Excise

Issues Involved:
1. Maintainability of appeal post-dissolution of the partnership firm.
2. Quantum of duty demand and penalty.
3. Evidence supporting the demand.
4. Financial position of the appellants and pre-deposit requirement.

Issue-wise Detailed Analysis:

1. Maintainability of Appeal Post-Dissolution of the Partnership Firm:
The appellants argued that the firm was dissolved during the pendency of the proceedings, and the appeal memorandum was signed by only one partner. The Tribunal referenced the case of Mentha and Allied Products, Sambhal v. CCE, Meerut, where it was held that proceedings could continue notwithstanding the dissolution of a firm. Section 47 of the Partnership Act was cited, which states that the authority of each partner to bind the firm continues for winding up affairs and completing unfinished transactions. The Tribunal concluded that the appeal is maintainable as it is a continuing proceeding, and the objection raised by the department was overruled.

2. Quantum of Duty Demand and Penalty:
The appellants contended that the duty demand should be reduced based on the Modvat credit allowed for the LAB used in manufacturing Acid Slurry. They provided a worksheet indicating that the demand would reduce to Rs. 1,87,85,628/- if Modvat credit is considered. Further, they argued that the duty should be calculated based on cum-duty price, citing the case of CCE v. Pawan Tyre Pvt. Ltd. The Tribunal acknowledged these points and noted that the demand could be reduced based on these abatements.

3. Evidence Supporting the Demand:
The appellants argued that the demand was based on third-party evidence and that the lower authority did not properly consider their rebuttal. They highlighted discrepancies in the vehicle numbers used for transporting LAB, some of which were not goods vehicles. The Tribunal noted that the evidence from M/s. SWC and the transport company supported the lower authority's findings of large-scale evasion. However, the Tribunal acknowledged the appellants' point regarding the use of non-goods vehicles and stated that this would be considered during the final hearing.

4. Financial Position of the Appellants and Pre-Deposit Requirement:
The appellants claimed financial hardship, with fixed assets of Rs. 7.75 Lakhs and Rs. 18 Lakhs for the partners. The Tribunal observed that there was no substantial evidence to support the appellants' financial position and noted the large-scale unaccounted transactions. Considering various abatements and statements, the Tribunal ordered the appellants to pre-deposit Rs. 45,00,000/- towards duty and Rs. 5,00,000/- towards penalty, with the balance amounts stayed pending appeal. Compliance was required by 27th June 1997, with a report due on 30th June 1997.

Conclusion:
The Tribunal held the appeal maintainable post-dissolution, acknowledged potential reductions in duty demand based on Modvat credit and cum-duty price, recognized the evidence supporting the demand, and ordered a pre-deposit considering the appellants' financial claims and the scale of unaccounted transactions.

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