2013 (11) TMI 1189 - AT - Central Excise

Waiver of Pre-deposit of Penalty under Rule 25 of Central Excise Rules 2002 - Cenvat credit availed to the Job Worker Procedure not followed Reversal of amount not made Held that - The appellant is contesting the confiscation order and also the penalties imposed by the lower authorities - the appellant is contesting the issue on merit as regards confiscation of raw material, the amount of Rs.5 lakhs which has been paid by the appellant when they sought clearance of the confiscated goods, can be considered as enough deposit to hear and dispose the appeal, where there is a penalty of Rs.7.5 lakhs Relying upon J.J. Packgers (P) Ltd. Vs CCE Allahabad 2005 (12) TMI 333 - CESTAT, NEW DELHI - the application filed by the appellant for waiver of pre-deposit of balance amount of penalty allowed and recovery stayed till the disposal of appeal stay granted.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of penalty under Rule 25 of Central Excise Rules, 2002.
2. Imposition of penalty for removal of raw material without following procedure.
3. Contesting confiscation order and penalties imposed by lower authorities.

Analysis:
1. The appellant filed a Stay Petition seeking waiver of pre-deposit of penalty amounting to Rs.7.5 lakhs upheld by the first appellate authority under Rule 25 of the Central Excise Rules, 2002.
2. The penalty was imposed on the appellant for removing raw material, on which CENVAT Credit was availed, to job workers without following the required procedure and not reversing the duty amount involved in the raw material. The lower authorities concluded that the appellant was liable for penalty under Rule 25, as the raw material was ordered to be confiscated with a redemption fine imposed.
3. The appellant's Chartered Accountant argued that the redemption fine paid by the appellant was reduced from Rs.17 lakhs to Rs.12 lakhs by the first appellate authority. He contended that the amount of Rs.5 lakhs paid at the time of clearance of confiscated raw material should be considered as a deposit towards the penalty imposed.
4. Upon reviewing the submissions, it was noted that the appellant had also filed appeals against the confiscation order of raw material. The Tribunal observed that the confiscation might not hold legal scrutiny as the goods were raw material with CENVAT Credit. Citing a relevant precedent (J.J. Packgers (P) Ltd. Vs CCE Allahabad), the Tribunal acknowledged the appellant's contestation of the confiscation order and penalties imposed by the lower authorities.
5. Considering the appellant's challenge to the confiscation order and penalties on merit, the Tribunal deemed the Rs.5 lakhs paid during the clearance of confiscated goods as a sufficient deposit to hear and dispose of the appeal, where a penalty of Rs.7.5 lakhs was in question.
6. Consequently, the Tribunal allowed the application for waiver of pre-deposit of the remaining penalty amount, staying the recovery until the appeal's disposal. The decision was influenced by the Tribunal's earlier ruling in the case of J.J. Packgers (P) Ltd., which appeared to favor the appellant on the issue.
7. The application for waiver of the remaining penalty amount was granted, and the recovery was stayed pending the appeal's resolution. The Registry was instructed to consolidate all related appeals for joint disposal in the future.