1999 (12) TMI 250 - AT - Central Excise

Summary

Issues:
Application for dispensing with pre-deposit of duty and penalty amount, stay of recovery during appeal, disallowance of modvat credit, imposition of penalty, non-compliance with Section 35F, violation of principles of natural justice.

Analysis:
The appellants filed an application seeking to waive the pre-deposit requirement of duty and penalty amounts totaling Rs. 2,84,900/- and Rs. 3 lakhs, respectively, during the appeal process. The Tribunal, after examining the impugned order, found a strong prima facie case to allow the application unconditionally. The appeal was taken up for final disposal due to the possibility of its resolution at this stage.

The appeal involved the disallowance of modvat credit taken by the appellants on imported inputs, leading to a penalty imposition by the Assistant Commissioner of Central Excise. The Commissioner of Central Excise (Appeals) rejected the appeal on the grounds of non-compliance with the pre-deposit requirement under Section 35F, without delving into the case's merits. The Tribunal was presented with this order for appeal.

The Tribunal, after hearing the arguments, noted that the issue had been referred to a Larger Bench but decided to proceed with the present case based on its unique circumstances. The learned advocate highlighted discrepancies in the interim stay order issued by the Commissioner (Appeals), pointing out the lack of reasoning for directing the appellants to deposit the duty amount within a specified period. The Tribunal found the Commissioner's actions to be in violation of natural justice principles, leading to the impugned order being tainted by such irregularities.

The learned JDR attempted to defend the Commissioner's actions but failed to provide substantial legal backing. Consequently, the Tribunal set aside both the interim stay order and the order-in-appeal by the Commissioner, allowing the appeal by way of remand. This decision revived the stay application before the lower appellate authority, directing a fresh speaking order to be passed after a personal hearing with the appellants. The Commissioner was instructed to proceed with the appeal in adherence to legal requirements and principles of natural justice.

In conclusion, the appeal was allowed by way of remand, ensuring no departmental proceedings for recovery of disputed amounts during the pendency of the stay application before the Commissioner (Appeals).