2014 (1) TMI 680 - AT - Central Excise

Additional activity undertaken by appellant on contract basis Waiver of Pre-deposit Held that - The production register for job-work does not appear to reflect number of sacks produced at all - The register shows receipt, issue and balance and receipt quantity and the issue quantity and the balance - The register does not have any indication of the production of sacks manufactured nor appellants have any evidence to show that sacks were manufactured by them on job work basis - the honest mistake commited in maintenance of stock register etc. was frankly admitted by the Managing Director of the respondent-assessee - There is no finding to the effect that there was a fraud or willful mis-statement or suppression of facts - it is very clear that the notice was issued after expiry of the period of limitation - the appellants have not been able to make out a prima facie case in their favour appellant directed the appellants to deposit an amount of Rupees Ten lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
1. Failure to account for a total number of HDPE sacks in the RG1 register.
2. Time-barred demand and penalty imposition.
3. Discrepancy between the production register and RG1 register.
4. Prima facie case establishment and financial difficulty proof.

Analysis:
1. The appellant, engaged in manufacturing HDPE fabrics and sacks, was found to have failed to account for 2280692 HDPE sacks in their RG1 register. This discrepancy was identified during an audit by department officers, leading to the initiation of proceedings through a show-cause notice for duty demand and penalty imposition.

2. The appellant argued that they had informed the Central Excise Superintendent about undertaking job work in addition to manufacturing, and the excess quantity was related to this job work. They contended that the demand was time-barred due to a delayed show-cause notice issued after more than 3 years. The Superintendent argued that the job work explanation did not justify the discrepancy and that the extended time limit calculations differed from the appellant's claims.

3. The Production Register provided by the appellant to support their job work argument was found inadequate as it did not reflect the number of sacks produced. The register lacked essential production details, and the appellant failed to provide evidence of manufacturing sacks on a job work basis. The time limit issue was addressed, excluding the month of November from the calculations.

4. The appellant cited legal precedents to support their argument that the show-cause notice was time-barred. However, the Tribunal found that these decisions did not align with the appellant's case. As the appellant failed to establish a prima facie case in their favor or demonstrate financial difficulty, they were directed to deposit a specified amount within a given timeframe to stay the recovery of the remaining duty, interest, and penalties during the appeal process.