1990 (9) TMI 160 - AT - Central Excise

Tribunal orders partial fee relief for Jai Vijay Metal Udyog Pvt. Ltd.

The Tribunal ordered partial dispensation for M/s. Jai Vijay Metal Udyog Pvt. Ltd., requiring a cash deposit of Rs. 18,00,000 and a bank guarantee for Rs. ... Demand — Show Cause Notice Issues Involved:1. Dispensation with pre-deposit of duty amount.2. Jurisdiction of the Assistant Collector to issue the show cause notice.3. Financial hardship of the applicant.4. Prima facie merits of the case.Issue-wise Detailed Analysis:1. Dispensation with Pre-deposit of Duty Amount:The applicant, M/s. Jai Vijay Metal Udyog Pvt. Ltd., sought dispensation with the pre-deposit of the duty amounting to Rs. 36,32,451.30. The period involved was from 1st March 1988 to 19th May 1988, with the show cause-cum-demand notice issued on 9th August 1988. The applicant argued that the revenue reclassified their product from aluminium wire rods under Heading 7604.10 to aluminium wire under Heading 7605.11, and that the notice should have been issued by the Collector in cases of misdeclaration or suppression as per Section 11A, amended from 27th December 1985. The Tribunal concluded that the applicant's request for full dispensation would amount to undue hardship. Therefore, the Tribunal ordered a partial dispensation: the applicant was required to deposit Rs. 18,00,000 in cash and furnish a bank guarantee for Rs. 10,00,000 within 12 weeks.2. Jurisdiction of the Assistant Collector to Issue the Show Cause Notice:The applicant contested the jurisdiction of the Assistant Collector to issue the show cause notice, arguing that in cases of misdeclaration or suppression, the notice must be issued by the Collector. The Tribunal referenced the case of Partap Rajasthan Copper Foils and Laminates Ltd. v. Collector of Central Excise, which distinguished between cases of short-levy due to fraud or suppression and other reasons. The Tribunal noted that the show cause notice did not explicitly invoke the proviso to Section 11A and that mere mentioning of 'misdeclared the facts' did not imply misdeclaration. The Tribunal held that jurisdiction is conferred by statute and cannot be assumed or taken away. The applicant had submitted to the jurisdiction of the Assistant Collector, and thus, the order was not vitiated.3. Financial Hardship of the Applicant:The applicant argued that depositing the duty amount would cause undue hardship, supported by their balance-sheet showing a net profit of Rs. 6,01,896.84 for the year ending 31st March 1989. The Tribunal examined the financial position, noting a net profit of Rs. 9,06,381 after adding back depreciation, a turnover of Rs. 7,19,01,635, and sundry debtors amounting to Rs. 35,36,667. The Tribunal concluded that the applicant's financial position was reasonably sound, but requiring the full deposit would still cause undue hardship.4. Prima Facie Merits of the Case:The Tribunal considered the prima facie merits of the case, referencing the judgment in Partap Rajasthan Copper Foils and Laminates Ltd. v. Collector of Central Excise, which emphasized the distinction in Section 11A between cases of fraud or suppression and other reasons. The Tribunal noted that the show cause notice was issued within the limitation period and did not explicitly invoke the extended period for fraud or suppression. The Tribunal found the merits of the case arguable and thus justified partial dispensation of the pre-deposit.Conclusion:The Tribunal ordered the applicant to deposit Rs. 18,00,000 in cash and furnish a bank guarantee for Rs. 10,00,000 within 12 weeks, with the condition that the revenue authorities would not pursue recovery for the balance amount during the appeal's pendency. The applicant was required to keep the bank guarantee alive and report compliance within 14 weeks, failing which the stay order would be vacated.