Tribunal grants waiver of pre-deposit for duty & penalty with reduced amount, sets compliance deadline

The Appellate Tribunal CESTAT KOLKATA considered a stay application seeking waiver of pre-deposit of duty and penalty amounting to Rs. 3.56 Crores. Initially, the Tribunal directed a pre-deposit of 25% of the confirmed duty with a compliance deadline. The matter was referred back to the Tribunal by the Calcutta High Court, upholding the Single Judge's order and instructing the applicant to pay a cost of Rs. 50,000. Ultimately, the Tribunal directed the applicant to deposit Rs. 25.00 Lakhs, less than 7.5% of the total duty confirmed, to waive the balance dues and stay their recovery during the appeal's pendency, with a compliance deadline set for 30th November, 2015.

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Issues:
Stay application for waiver of pre-deposit of duty and penalty - Reconsideration by Tribunal after High Court orders - Condonation of delay in deposit - Nature of activities carried out by the applicant - Liability amount - Admissibility of CENVAT Credit - Deposit amount directed by Tribunal - Compliance deadline

Analysis:
The Appellate Tribunal CESTAT KOLKATA dealt with a case involving a stay application seeking waiver of pre-deposit of duty and penalty amounting to Rs. 3.56 Crores. Initially, the Tribunal directed a pre-deposit of 25% of the confirmed duty and set a compliance deadline of 2nd January, 2014. Subsequently, the matter was taken to the Calcutta High Court, which referred it back to the Tribunal for reconsideration, imposing a cost of Rs. 50,000 on the applicant. The Division Bench of the High Court upheld the Single Judge's order, instructing the applicant to pay the cost by 22nd January, 2015.

Regarding the nature of activities carried out by the applicant, the consultant argued that they were primarily engaged in trading and not manufacturing, although they had briefly declared themselves as manufacturers. The consultant contended that even if considered as manufacturers, their total liability would be around Rs. 57.00 Lakhs after accounting for CENVAT Credit on inputs used in manufacturing. Despite this, the applicant offered to deposit Rs. 25.00 Lakhs.

On the contrary, the Revenue's representative asserted that the applicant's activities fell within the definition of manufacturing under Section 2(f) of CEA, 1944, supported by evidence considered by the adjudicating authority. The admissibility of CENVAT Credit was deemed dependent on various factors and the verification of relevant input documents. Given the potential liability of Rs. 57.00 Lakhs, the Revenue argued for the full deposit of this amount by the applicant.

After hearing both sides and examining the records, the Tribunal acknowledged the issues raised, including the nature of the applicant's activities and the liability amount. Considering financial constraints expressed by the applicant and the interests of the Revenue, the Tribunal directed the applicant to deposit Rs. 25.00 Lakhs, which was less than 7.5% of the total duty confirmed. This deposit would waive the balance dues adjudged and stay their recovery during the appeal's pendency, with a compliance deadline set for 30th November, 2015. Failure to make this deposit would lead to the dismissal of the appeal without further notice.

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