2012 (11) TMI 380 - AT - Central Excise

Tribunal orders deposit for duty evasion appeal, stresses fair hearing

Indian Oxalate Ltd. Versus Commissioner of Central Excise, Kolhapur

Indian Oxalate Ltd. Versus Commissioner of Central Excise, Kolhapur - TMI Issues:Waiver of pre-deposit of dues for total duty, interest, and penalties; Allegation of duty evasion by clearing goods to related concerns; Mutuality of interest between the applicants and their sister concern; Compliance with Section 35F of the Central Excise Act.Analysis:1. The applicants sought a waiver of pre-deposit of total duty, interest, and penalties amounting to Rs.35,68,523/- due to the initiation of proceedings by show cause notices alleging duty evasion in clearing goods to related concerns. The adjudicating authority confirmed the demands and imposed penalties, leading to appeals before the Commissioner (Appeals) along with applications for waiver of dues. However, the applicants failed to comply with the stay order conditions, resulting in dismissal of the appeals for non-compliance with Section 35F of the Central Excise Act.2. The contention of the applicants was based on the argument that clearing goods to their sister concern was revenue-neutral as the sister concern was entitled to credit of duty for the goods cleared. They emphasized that there was no evidence of intent to evade duty payment, as they were not related to the buyer and paid duty on the transaction value. Conversely, the Revenue argued for a mutuality of interest due to both units being controlled by the same individual, suggesting a lack of independence in the transactions.3. The Tribunal found that the applicants were indeed clearing goods to their sister concern, managed by the same person, without paying duty based on cost construction as required by Rule 8 of the Valuation Rules. Consequently, the Tribunal held that the applicants had not established a strong case for a total waiver of duty. In light of the circumstances, the applicants were directed to deposit Rs.10,00,000/- within six weeks, with the remaining amount of dues waived for the appeals' hearing.4. The appeals were dismissed by the Commissioner (Appeals) without delving into the merits, prompting the Tribunal to set aside the impugned order and remand the matter for a decision on the appeals' merits upon the deposit of the specified amount. The Tribunal emphasized the need for a fair hearing and directed the Commissioner (Appeals) to reconsider the appeals after affording the appellants an opportunity to present their case.In conclusion, the judgment addressed the issues of duty evasion, mutuality of interest, compliance with statutory provisions, and the appropriate pre-deposit amount, providing a detailed analysis of the facts and circumstances to arrive at a balanced decision.