1998 (7) TMI 366 - AT - Central Excise

Summary

Issues:
Dispensing with pre-deposit of duty and penalty, invocation of Section 11AC for penalty imposition, financial position of the applicants, Modvat credit benefit, lack of documentation supporting duty payment on inputs.

Analysis:
The judgment dealt with applications seeking to dispense with pre-deposit of duty and penalty amounts imposed against the first applicant firm and a partner. The applicants argued that duty confirmation was based on allegations of clandestine removal of products without reflecting production in records. They claimed calculation mistakes and procured raw material from a dealer of the manufacturer, seeking Modvat credit benefit. Financial constraints were highlighted, and penalty imposition under Section 11AC was contested due to the timeline of the appeals.

The Respondent opposed dispensation, citing lack of evidence supporting duty payment on inputs and absence of maintained records. The Respondent argued that even if Section 11AC was not applicable for a period, penalty imposition was justified in cases of admitted clandestine removal. The financial position was challenged due to discrepancies in sales figures resulting from clandestine activities.

Upon consideration, the Tribunal noted minor calculation disputes and lack of documented proof of duty payment on inputs. While acknowledging the non-applicability of Section 11AC for a significant period, the Tribunal directed a partial deposit of duty and penalty, emphasizing the lack of substantial evidence supporting the Modvat credit claim. A specific amount was set for deposit within a specified timeframe, with a provision to adjust previously deposited sums.

Regarding the penalty imposed on the partner, the Tribunal dispensed with pre-deposit and stayed recovery due to his role as a managing partner. Compliance was scheduled for a future date. The judgment balanced the arguments presented, focusing on the absence of concrete documentation supporting duty payment and the limited applicability of Section 11AC, while addressing the financial constraints of the applicants and the partner's involvement in the firm.