2000 (9) TMI 443 - AT - Central Excise

Summary

Issues:
1. Stay petition seeking waiver of pre-deposit of Central Excise duty and penalty.
2. Allegations of clandestine manufacture and clearance of pan masala.
3. Lack of positive evidence against the appellants.
4. Financial position of the appellants.
5. Balance of convenience.

Analysis:
1. The Stay Petition filed by the appellants requested a waiver of the pre-deposit condition of Central Excise duty and penalty amounting to Rs. 1,01,760/- each. These amounts were confirmed and imposed on the appellants by the Additional Commissioner of Central Excise, Patna, and upheld by the Commissioner of Central Excise (Appeals), Patna through their respective orders.

2. Following a raid on the factory premises, where four bags of Pan Masala were seized due to non-accountal in the RG 1 register, investigations revealed transactions related to pan masala on loose sheets found in the dustbin. This led to suspicions of clandestine manufacture and clearance of pan masala by the appellants. The subsequent adjudication proceedings resulted in the confiscation of the seized bags and a demand for Central Excise duty on 1618.80 kgs. of pan masala, amounting to Rs. 1,01,760/-. A penalty of the same amount was also imposed on the appellants under section 11AC of the Central Excise Act, 1944.

3. The appellants argued that the Department lacked positive evidence to establish clandestine removal and violation of Central Excise Rules. They claimed the duty demand was based on presumption and assumption, solely relying on the transport company's records for calculating the alleged clandestine clearance quantity. The appellants' financial instability was highlighted, with their unit almost closed. The consultant argued that the balance of convenience favored the appellants, requesting a waiver of the pre-deposit condition.

4. The Revenue, represented by the JDR, reiterated the lower authorities' reasoning, opposing the appellants' prayer for waiver.

5. After hearing both parties and reviewing the lower authorities' orders, the judge found that the adjudicating authority primarily relied on the transport company's records to prove clandestine removal, lacking positive evidence against the appellants. The absence of evidence regarding the receipt of other essential ingredients for pan masala manufacture, such as tobacco and essence, indicated a lack of proof for clandestine manufacturing. Consequently, the judge granted a complete waiver of the pre-deposit condition for duty and penalty, noting the appellants had established a prima facie case in their favor. Additionally, the judge ordered that no recovery be made by the Revenue during the appeal's pendency.