1999 (2) TMI 230 - AT - Central Excise

Summary

Issues:
Prayer for dispensation with pre-deposit of duty and penalty amount during appeal; Effective date of Chapter Note 6 in Finance Bill of 1994-95; Entitlement to benefit of Notification No. 1/93; Confirmation of demand without giving benefit of duty and Modvat credit; Financial position of the applicant company.

Analysis:
The applicants sought dispensation with the pre-deposit of duty and penalty amounts during the pendency of the appeal. The main contention revolved around the effective date of Chapter Note 6 introduced in the Finance Bill of 1994-95. The dispute centered on whether the chapter note would be effective from the date of introduction of the Bill or from the date of assent. The appellant argued that the chapter note should come into effect from the date of enactment of the Finance Bill, citing various judgments, including the Bombay High Court's decision in Metal Box India Ltd. v. U.O.I. The appellant also claimed entitlement to the benefit of Notification No. 1/93, emphasizing that they were only repacking goods and not affixing brand names on them.

Regarding the confirmation of demand without granting the benefit of duty and Modvat credit, the appellant highlighted that the duty amount would significantly reduce if these considerations were taken into account. The financial position of the applicant company was also a crucial aspect of the argument, with details provided about the minimal profit made and the factory being closed since January 1997. The balance sheets for the period from 1994 to 1997 were submitted as evidence of the financial condition.

In response, the respondent argued against the appellant's position, citing a Division Bench decision of the Bombay High Court that the amendment in the definition of manufacture would come into effect immediately from the date of introduction of the Finance Bill. The respondent also contested the appellant's claim regarding the brand name issue, referring to a Tribunal decision in a similar case.

Considering the submissions from both sides and the contentious nature of the issue, the Tribunal directed the appellant to deposit a reduced amount within a specified period, taking into account the lack of benefit of deduction of duty and Modvat credit, along with the financial condition of the company. The Tribunal waived the balance amount of duty and penalty, staying its recovery during the appeal but warned of dismissal if the directed deposit was not made. The compliance date was set for a later hearing.