Pre-deposit waiver and stay of penalty recovery granted where excise dues were fully paid and Rule 8(3A) was challenged.

Pre-deposit of penalty was waived where the assessee had already paid the entire default amount in proceedings arising from delayed payment of central excise dues. The challenge also questioned issuance of the penalty show-cause notice after one year under Section 11A of the Central Excise Act, 1944, and relied on the Gujarat High Court view that Rule 8(3A) of the Central Excise Rules, 2002 was ultra vires. On those facts, the Tribunal considered that the appeal could have succeeded at that stage and stayed recovery of the penalty during pendency of the appeal.

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Issues: Whether the requirement of pre-deposit of penalty deserved to be waived in proceedings arising from delay in payment of central excise dues, and whether recovery of the penalty should be stayed during pendency of the appeal.

Analysis: The appellant had already made good the default and the entire amount stood paid. The challenge raised also invoked the contention that issuance of show-cause notice for penalty after one year was inconsistent with Section 11A of the Central Excise Act, 1944, and relied on the view of the Gujarat High Court that Rule 8(3A) of the Central Excise Rules, 2002 was ultra vires. In these circumstances, the Tribunal found that the appeal could have been allowed at that stage, but a final decision on the merits was not taken because the Department had filed an appeal.

Outcome: Pre-deposit of penalty was waived and recovery of the penalty was stayed during the pendency of the appeal.

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