1998 (6) TMI 144 - AT - Central Excise

Summary

Issues:
1. Stay petition filed against the demand of Central Excise duty and penalty imposed by the Commissioner.
2. Discrepancy in pricing of capsules supplied to different buyers.
3. Financial hardship claimed by the appellant.
4. Granting waiver of pre-deposit and stay of recovery during appeal.

Issue 1: Stay petition against Central Excise duty and penalty:
The appellant filed a stay petition against the demand of Central Excise duty and penalty imposed by the Commissioner, challenging the order dated 24-12-1997. The duty demanded was Rs. 25,84,483 with an equal amount imposed as penalty under Section 11AC of the Central Excise Act. Additionally, a penalty of Rs. 5 lakhs was imposed under Rule 173Q. The appellant sought waiver of pre-deposit for the appeal hearing, claiming the demand was based on the value of capsules supplied to a specific vendor at a lower price compared to other buyers.

Issue 2: Discrepancy in pricing of capsules:
The appellant argued that the capsules supplied to a particular vendor were priced lower at around Rs. 55/- per piece, while the same capsules were sold at a much higher price of Rs. 250/- to other buyers. The appellant contended that the lower-priced sales were to an original equipment manufacturer (OE) for use in manufacturing microphones under the appellant's brand, while higher-priced sales were for the replacement market. The Commissioner's observation on pricing practices was disputed by the appellant, asserting that charging higher prices to OE manufacturers is a common trade practice.

Issue 3: Financial hardship claimed by the appellant:
The appellant presented evidence of being in a precarious economic condition, citing the closure of the factory for the last four years and referring to the contents of the last published annual report. The appellant argued an inability to comply with any part of the demand. In response, the respondent highlighted the value of plant and machinery shown in the balance sheet as evidence of the appellant's sufficient resources, contesting the claim of financial hardship.

Issue 4: Granting waiver of pre-deposit and stay of recovery:
After considering the arguments from both sides, the Tribunal acknowledged the appellant's prima facie case of undue hardship due to the financial position. Consequently, the Tribunal granted waiver of pre-deposit for the disputed amounts during the appeal hearing and stayed the recovery process pending the appeal. Additionally, the Tribunal directed the appellant not to alienate plant and machinery exceeding the value of Rs. 30 lakhs during this period.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the arguments presented by the parties and the Tribunal's decision regarding the stay petition and financial hardship claimed by the appellant.