2013 (2) TMI 540 - AT - Central Excise

Waiver of pre-deposit - Clandestine removal of the goods - Applicants are manufacturers of welding electrodes - Inputs used are steel wire rod , rutile and flux - A SCN notice was issued on the basis of excess consumption of steel wire rod - Held that - Prima facie at the stay stage and it is a case of clandestine removal and it is also submitted by the applicants that if the formula adopted by them is to be followed, the demand will come down to Rs.8 lakhs. There is some substance in the impugned order for asking the applicants to make partial deposit of the impugned demands. Partial waiver

Summary

Issues:
1. Clandestine removal of goods leading to demand confirmation.
2. Excess consumption of steel wire rods and rutile.
3. Availability of relevant documents for defense.
4. Calculation of impugned demands and pre-deposit requirement.

Issue 1: Clandestine Removal of Goods
The judgment confirms a demand of Rs. 53,19,377 against the main applicant for clandestine removal of goods during the period from April 1993 to November 1996. Additionally, a fine and penalty have been imposed on the main applicant, while a fine of Rs. 1,00,000 has been imposed on the other applicant.

Issue 2: Excess Consumption of Steel Wire Rods and Rutile
The case involves manufacturers of welding electrodes accused of clandestine removal. The show-cause notice was based on the excess consumption of steel wire rods. The applicants argued that they are also engaged in trading steel wire rods, challenging the sustainability of the demand. The controlled item, rutile, was also a point of contention. The applicants claimed that if the consumption of rutile is calculated as per the ISI formula, the demand would reduce to about Rs. 8 lakhs. The Commissioner considered the formula for rutile consumption and concluded that the applicants' contentions were not sustainable.

Issue 3: Availability of Relevant Documents
The applicants raised concerns about the unavailability of relevant records due to the death of their earlier consultant. They requested the department to provide all relied upon and unrelied upon documents to effectively respond to the show-cause notice. The department contended that all available documents had been provided earlier, and the adjudicating authority had made necessary calculations to confirm the impugned demands.

Issue 4: Calculation of Impugned Demands and Pre-Deposit Requirement
After hearing both sides and considering their submissions, the Tribunal noted the possibility of a reduction in the demand if the formula proposed by the applicants were followed. Thus, a partial pre-deposit of Rs. 20 lakhs was directed in addition to the Rs. 2 lakhs already paid, with a compliance deadline set. Upon this deposit, the balance amount of duty, fine, and penalty for the main applicant, as well as the fine for the other applicant, would be waived, and the recovery stayed during the appeal process.

This comprehensive analysis of the judgment highlights the key issues of clandestine removal, excess consumption, document availability, and the calculation of impugned demands, providing a detailed overview of the legal proceedings and decisions made by the Tribunal.