2014 (8) TMI 815 - AT - Central Excise

Waiver of pre-deposit of penalty - suppression or mis-statement of fact - Held that - Duty for Dec. 07 amounting to ₹ 2905658/- was paid by 5.1.2008 except for an amount of ₹ 495617/- out of which ₹ 487872/- was paid on 11.2.2008 and only a paltry amount of ₹ 7795/- remained unpaid (due to inadvertence/accounting error according to the Appellants) upto 7.12.2009. It is reasonable to believe that the default of mere ₹ 7745/- would have been inadvertent/due to accounting error because no assessee whose liability to duty for December, 07 was of the order of ₹ 29 lacs would knowingly short pay ₹ 7745/- to potentially face such consequences. Further it is not a case where goods were not duly accounted for - Prima facie, the show cause notice in this case was issued (on 8.12.2011) more than one year after the default was made good - default had already been made good by the Appellants much before the show cause notice was issued. Thus, prima facie, the contents of this para are harmoniously applicable to the present case - stay granted.

Summary

Issues:
Stay application against Order-in-Original confirming Central Excise duty demand, interest, and penalty.

Analysis:
1. The Appellants challenged the Order-in-Original confirming a demand of Rs. 2,06,33,144 under Section 11A of the Central Excise Act, 1944, without utilizing Cenvat Credit, along with interest and penalty. The stay petition sought to stay the operation of the impugned order, waive pre-deposit of penalty, grant a personal hearing, and requested appropriate orders.
2. The Appellants, engaged in manufacturing castings, faced an audit revealing a duty liability for December 2007. A portion of the duty remained unpaid beyond the due date, with a small amount paid later. The Appellants argued that the shortfall was due to an accounting error and cited precedents to support their case.
3. The Commissioner invoked Rule 8(3A) to demand payment without utilizing Cenvat Credit, along with interest and penalty. The Appellants contended the default was unintentional, rectified promptly, and did not involve willful suppression or misstatement.
4. The Tribunal considered the submissions and noted the minor default amount compared to the total duty, indicating inadvertence. Citing relevant case law, the Tribunal found the Appellants had a strong arguable case and waived the pre-deposit condition due to undue financial hardship.
5. The Tribunal emphasized that the default had been rectified before the show cause notice was issued, indicating no intention to evade duty payment. The Commissioner's justification for invoking the extended period lacked sufficient evidence of suppression or willful misstatement by the Appellants.
6. Ultimately, the Tribunal allowed the stay petition, waived the pre-deposit condition of duty, interest, and penalty, and stayed their recovery in accordance with Section 35F of the Central Excise Act, 1944.