2000 (10) TMI 622 - AT - Central Excise

Summary

Issues Involved:
1. Modification of Tribunal's Order on Stay Petition.
2. Nature of goods cleared by HECL.
3. Jurisdiction of the adjudicating authority.
4. Financial hardship and pre-deposit requirement.

Issue-wise Detailed Analysis:

1. Modification of Tribunal's Order on Stay Petition:
The appellants sought modification of the Tribunal's Order dated 17-5-99, which directed them to deposit Rs. 50 lakhs against a total demand of Rs. 2,87,44,007.36 and a penalty of Rs. 50 lakhs. The appellants argued that the Tribunal did not consider certain facts and legal points, including the jurisdiction of the adjudicating authority and the nature of goods cleared by HECL. The Tribunal's Vice President agreed with the appellants, stating that they had a strong prima facie case and that the pre-deposit should be waived. However, the Member (Judicial) disagreed, emphasizing that the original order was based on a prima facie view and should not be disturbed. The Third Member (Technical) concurred with the Member (Judicial), leading to the rejection of the modification application.

2. Nature of Goods Cleared by HECL:
The appellants contended that HECL had cleared a complete dragline machine in a knocked-down condition, paying duty under Tariff Heading 84.28. They argued that assembling the machine at their site did not create a new excisable commodity, and thus, no additional duty was leviable. The Revenue, however, maintained that HECL only supplied parts, and the complete machine was assembled at the appellants' site, making it subject to further duty. The Vice President found merit in the appellants' argument, but the Member (Judicial) and the Third Member (Technical) upheld the Revenue's stance, noting that the case involved factual disputes requiring detailed examination.

3. Jurisdiction of the Adjudicating Authority:
The appellants argued that any change in the assessment of goods cleared by HECL should be made by the Central Excise officer having jurisdiction over HECL, not by the officer overseeing the appellants' factory. They claimed that the show cause notice lacked jurisdiction. The Vice President agreed with this point, but the Member (Judicial) and the Third Member (Technical) rejected it, stating that the adjudicating authority had the jurisdiction to decide on the manufacturing activities at the appellants' factory.

4. Financial Hardship and Pre-deposit Requirement:
The appellants did not plead financial hardship, and their counsel conceded that they could deposit the amount directed by the Tribunal. The Vice President considered the pre-deposit of Rs. 50 lakhs to be disproportionate, given the circumstances. However, the Member (Judicial) and the Third Member (Technical) found no justification for modifying the pre-deposit requirement, emphasizing that the original order balanced the merits of the case and the appellants' financial position.

Final Order:
In view of the majority decision, the application for modification of the Stay Order was rejected. The appellants were directed to deposit Rs. 50 lakhs by 15-12-2000 and report compliance on the said date.