1992 (1) TMI 212 - AT - Central Excise

Tribunal rules in favor of applicants, requiring bond and deposit to avoid appeal rejection

STARWARS TEXTILES PVT. LTD. Versus COLLECTOR OF C. EX. & CUSTOMS

The Appellate Tribunal CEGAT, BOMBAY ruled in favor of the applicants, directing them to provide a bond covering the duty amount and deposit a specified ... Stay/Dispension of predeposit of duty and penalty Issues:1. Whether the applicants processed fabrics with the aid of power, leading to duty evasion allegations.2. Financial soundness of the appellants to meet the duty demand.Analysis:The judgment by the Appellate Tribunal CEGAT, BOMBAY involved the appeal of the applicants who were required to deposit a significant sum towards duty, penalty, and face confiscation of their plant and machinery. The applicants, represented by Shri Willingdon Christian, argued that they processed cotton fabrics manually without using power, despite an electric motor being present near the mercerising machine. They contended that the motor was for removing machine jams and not for commercial use. The Tribunal noted the lack of evidence showing fabric production with power during the period under scrutiny. The appellants' financial instability was highlighted, with incurred losses and inadequate liquidity.On the other hand, Mrs. Lipika Majumdar Roy Choudhury, representing the respondents, alleged that the applicants failed to disclose the motor's purpose in advance, suggesting a false declaration. She argued that the duty amount should be secured due to this discrepancy. After considering both arguments, the Tribunal acknowledged the plausibility of the appellants' claim that a motor near the machine on a single day did not prove continuous power use over two years. However, the duty-related issues remained debatable. Considering the appellants' financial constraints, the Tribunal directed them to provide a bond covering the entire duty amount and deposit a specified sum within a set timeframe. Failure to comply would result in appeal rejection. Compliance would lead to a stay on duty and penalty recovery, with the plant and machinery not to be disposed of by the Department.In conclusion, the judgment balanced the evidentiary aspects of power usage in fabric processing with the appellants' financial circumstances. The decision to require a bond and deposit aimed to ensure duty coverage while providing relief upon compliance, safeguarding the appellants' production operations.