Pre-deposit under central excise law held inapplicable to Rule 57CC amount and associated penalty.

Pre-deposit under section 35F of the Central Excise Act was held not to extend to amounts demanded under Rule 57CC, because that levy was treated as an amount equal to 8% of exempted clearances rather than duty. On the same reasoning, the Tribunal view was applied that section 35F covers duty and penalty, not such other amounts, so the pre-deposit requirement was also held inapplicable to the penalty imposed under Rule 173Q. The Rule 57CC amount and penalty were therefore waived from pre-deposit, and recovery of the penalty was stayed pending appeal.

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Issues: Whether pre-deposit under section 35F of the Central Excise Act, 1944 was required in respect of the amount demanded under Rule 57CC of the Central Excise Rules, 1944 and the penalty imposed under Rule 173Q of the Central Excise Rules, 1944.

Analysis: The amount demanded under Rule 57CC was treated as an amount equal to 8% of the value of the exempted clearances and not as duty. On that basis, and following the Tribunal view that section 35F applies to duty and penalty and not to other amounts, the requirement of pre-deposit was held not to extend to the Rule 57CC amount. The same reasoning was applied to the penalty amount.

Conclusion: The pre-deposit of the Rule 57CC amount and the penalty was waived and recovery of the penalty was stayed till disposal of the appeal.

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