2012 (7) TMI 198 - AT - Income Tax

Credit availed without any duty paying documents/on the strength of xerox copies of invoice Application for waiver of pre-deposit of duty, interest and penalty in view of the financial hardships - Held that - The applicants availed credit of Rs.4362547/- without any duty paying documents and remaining credit on the strength of Xerox copies of invoices which is not a case for total waiver of dues in METAL BOX INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI 2003 (4) TMI 111 (SC) it was held that waiver of pre-deposit covered under Sec.35F of the Central Excise Act does not fall under any of the enumerated categories in Sec.22 of the Sick Industrial Companies (Special Provisions) Act, 1985, protection thereunder not available to the assessee - the applicants are directed to deposit the credit of amount availed without any duty paying documents within a period of eight weeks - on deposit of the aforesaid amount, pre-deposit of the remaining amount of duty, interest and penalty is waived for hearing of the appeal.

Summary

Issues:
Delay in filing appeal, waiver of pre-deposit of duty, availing credit without duty paying documents, financial hardships, remand to adjudicating authority, waiver of dues, compliance with Supreme Court decision.

Delay in filing appeal:
The applicants sought condonation of a 44-day delay in filing the appeal, attributing it to labor problems. The Tribunal accepted the reasons provided and condoned the delay.

Waiver of pre-deposit of duty:
The applicants applied for waiver of pre-deposit of duty amounting to Rs.61,56,011, interest, and penalty. The demand was confirmed due to availing credit without proper duty paying documents. The Tribunal noted that the applicants did not respond to the show-cause notice or appear before the adjudicating authority despite multiple opportunities. The applicants cited labor problems and financial hardships, requesting a remand for reconsideration and waiver of dues.

Availing credit without duty paying documents:
Revenue contended that the applicants availed credit without proper duty paying documents, including using Xerox copies of invoices. The Tribunal found that availing credit without valid documents was not justifiable. It was highlighted that the company's financial losses and factory closure did not exempt them from depositing the disputed dues to protect revenue interests.

Financial hardships and remand to adjudicating authority:
The applicants claimed financial hardships, stating losses of over Rs.23 crores with total liabilities of Rs.474 crores. They argued that labor problems prevented them from appearing before the adjudicating authority. However, the Tribunal found that the financial situation did not warrant a total waiver of dues and directed the applicants to deposit a specified amount within eight weeks.

Compliance with Supreme Court decision:
In line with a Supreme Court ruling, the Tribunal directed the applicants to deposit Rs.43,62,574, representing the credit availed without proper duty paying documents. Upon depositing this amount, the pre-deposit of the remaining duty, interest, and penalty was waived for the appeal hearing. The Tribunal emphasized the importance of complying with the Supreme Court decision and set a deadline for a compliance report.

This judgment underscores the significance of adhering to procedural requirements, valid documentation for availing credits, and the limited scope for total waiver of dues, especially in the context of financial hardships. The Tribunal's decision balanced the interests of the applicants with the need to uphold revenue protection regulations and legal precedents, as highlighted by the Supreme Court ruling referenced in the judgment.