2013 (1) TMI 199 - AT - Central Excise

Exemption under Notification No. 49/2003-C.E - had undertaken substantial expansion of installed capacity by not less than 25% on or after 7-1-2003 and that they have completed the expansion work - assessee opted for provisional assessment under Rule 7 of the Central Excise Rules, 2002 pending the acceptance of their claim for exemption - waiver of predeposit - Held that - Admission of SLP by the Apex Court against the judgment dated 9-4-2010 of the High Court confirming demand against assessee does not mean that the High Court s order has been stayed or has been reversed - all it means is that it is in jeopardy and its correctness or otherwise is under consideration of the Apex Court. In view of the admission of appeal against Hon ble High Court s judgment dated 9-4-2010 while the jurisdictional Central Excise authorities would not be able to take coercive measures for recovery of duty and penalty, this by itself, cannot be the ground for granting dispensation from the requirement of pre-deposit under Section 35F. As held in case of Vijay Prakash D. Mehta (1988 (8) TMI 109 - SUPREME COURT OF INDIA) right to appeal under Section 129A of Customs Act, 1962, (corresponding to Section 35B of Central Excise Act, 1944), is not an absolute right and when it is subject to condition of pre-deposit under Section 129E the conditions prescribed for the same have to be satisfied. Thus, when for maintainability of an appeal filed under Section 35B, the condition of pre-deposit under Section 35F has to be satisfied, the provision of Section 35F would have to be complied with. In term of the provision of Section 35F, the requirement of pre-deposit can be waived only on the ground of undue hardship , for which the appellant have to establish that they have prima facie case in their favour, and there is likelihood of the final decision being in their favour. But in this case on the basis of the evidence on record, the judgments of the Tribunal and Hon ble Utranchal High Court are against the appellant. In view of this, it cannot be said that the appellant have prima facie case in their favour - direct the appellant to deposit the full amount of duty demand confirmed against them within a period of eight weeks from the date of this order.

Summary

Issues:
1. Eligibility for area-based exemption under Notification No. 49/2003-C.E.
2. Adjudication of duty demand, interest, and penalties.
3. Stay application regarding pre-deposit requirements.

Issue 1: Eligibility for area-based exemption under Notification No. 49/2003-C.E.:

The appellant-company, engaged in manufacturing uncoated Kraft paper, applied for area-based exemption under Notification No. 49/2003-C.E. The dispute arose when the Deputy Commissioner rejected their claim, stating that the expansion work was mostly completed before the eligibility date of 7-1-2003. The appeal against this decision was allowed by C.C.E. (Appeals) but later overturned by the Tribunal. The High Court upheld the Tribunal's decision. The appellant then filed a special leave petition (SLP) before the Supreme Court, which was admitted. However, the High Court's order remained unchallenged as there was no stay order. The Tribunal, considering the binding nature of the High Court's decision, ruled that the appellant lacked a prima facie case for waiver from pre-deposit requirements under Section 35F.

Issue 2: Adjudication of duty demand, interest, and penalties:

The Department issued show cause notices for short paid duty, totaling Rs. 13,80,92,705, along with interest, against the appellant for clearances made without payment of duty under Notification No. 49/2003-C.E. The Commissioner confirmed the duty demand, imposed penalties on the appellant-company, and its directors under Section 11AC of the Central Excise Act, 1944. The Tribunal directed the appellant to deposit the full duty demand amount within eight weeks, waiving the pre-deposit requirement for interest and penalties, with recovery stayed until the appeal's disposal.

Issue 3: Stay application regarding pre-deposit requirements:

The appellant sought a waiver from pre-deposit requirements, citing the admission of their SLP by the Supreme Court against the High Court's decision. The Department opposed the stay application, emphasizing that the High Court's judgment was binding until stayed by the Supreme Court. The Tribunal, following the principles laid down in Union of India v. West Coast Paper Mills, held that the mere admission of the SLP did not automatically warrant a waiver from pre-deposit. The Tribunal directed the appellant to deposit the full duty demand amount within a specified period, with the pre-deposit requirements for interest and penalties waived, pending the appeal's disposal.

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