2000 (12) TMI 324 - AT - Central Excise

Summary

Issues:
- Consideration of Stay Application
- Dismissal of appeal for default in pre-deposit
- Commissioner's order without considering relevant factors
- Violation of principles of natural justice
- Merits of the duty demand based on shortage of raw material
- Financial hardship of the appellant
- Remand of the case for decision on merits without pre-deposit

Analysis:
The case was initially posted for the consideration of a Stay Application, but the presiding judge decided to dispose of the appeal itself after granting a waiver of pre-deposit. The appeal challenged Order-in-Appeal No. 9/CE/CHD/2000 of the Commissioner of Central Excise (Appeals), Chandigarh, which dismissed the appellant's appeal due to default in making the pre-deposit amount ordered under Section 35F of the Central Excise Act. The appellant had been directed to pay duty of Rs. 3,29,114.47 and a penalty of Rs. 30,000 under Order-in-Original No. 169/CE/ADC/97. The Commissioner had initially directed the appellant to pre-deposit Rs. 3 lakhs, leading to a subsequent appeal by the appellant citing financial hardship and seeking reconsideration of the pre-deposit. The appellant argued that the duty demand was based on a shortage of raw material, emphasizing that no detailed stock verification had been conducted before the show cause notice was issued. The appellant claimed a strong prima facie case and financial hardship, urging the Commissioner to waive the pre-deposit and consider the case on its merits.

During the hearing, the appellant's counsel contended that the Order-in-Appeal was passed without considering relevant factors and without giving the appellant an opportunity to be heard on the petition for reconsideration of the Stay Order. The appellant argued for setting aside the Order on the grounds of a violation of principles of natural justice. The appellant's counsel highlighted that the duty demand was solely based on a shortage of raw material, with no evidence of clandestine manufacture and sale of ingots using the alleged short stock. The appellant's financial difficulties were also emphasized. The Departmental Representative (DR) argued that the shortage of raw material was confirmed on physical verification, indicating clandestine removal of finished products.

Upon reviewing the submissions and records, the judge found that the case of clandestine manufacture and removal was solely based on the alleged shortage of raw material, without due consideration of the appellant's prima facie case and financial hardship. Consequently, the judge remanded the case to the Commissioner (Appeals) for a decision on merits without requiring pre-deposit of the duty demanded. The impugned Order-in-Appeal was set aside, and the matter was referred back to the Commissioner for a fresh decision on merits without insisting on pre-deposit of duty or penalty.