1998 (10) TMI 194 - AT - Central Excise

Tribunal grants stay, waives penalties for non-recorded stock & duty evasion, sets compliance conditions

Forty-four stay applications were filed seeking waiver of pre-deposit of penalties and fines following the detection of non-recorded stock and duty ... Stay/Dispensation of pre-deposit of penalty Issues:44 stay applications arising from the same impugned order seeking waiver of pre-deposit of penalty and fine, as well as stay on recovery thereof.Analysis:1. Detection of Non-Recorded Stock and Duty Evasion:- Central Excise officers detected unrecorded finished stock during a factory visit, leading to the discovery of non-recording of a significant quantity of grey fabrics for processing, resulting in less duty payment.- Statements of involved parties were recorded, and duty not paid by the Mills was calculated at Rs. 40,26,799.2. Show Cause Notice and Impugned Order:- A show cause notice was issued seeking recovery of short levied duty, confiscation of unaccounted goods, and penalties on the company, individuals, and dealers.- The Commissioner's order confirmed duty, confiscated excess goods and assets, imposed penalties equal to the evaded duty, and imposed specific penalties on individuals and manufacturers.3. Waiver of Pre-Deposit and Stay Application:- Applicants sought waiver of pre-deposit of penalties and fines through 44 stay applications.- The advocate clarified that contested duty was paid before the notice, withdrawing the prayer regarding duty.- Arguments were made for waiving penalties based on precedents and to stay confiscation orders to maintain business operations.4. Legal Considerations and Tribunal's Decision:- Section 11AC mandates penalties equal to the determined duty, but Section 35F allows for the discretion to dispense with deposit during appeals.- The Tribunal considered past cases where full waiver of penalties was granted when duty was voluntarily paid.- The Tribunal ruled to waive pre-deposit of penalties for all applicants due to the duty being paid, and ordered a stay on the confiscation of assets pending appeal with specific conditions.5. Conclusion:- The Tribunal granted the waiver of pre-deposit of penalties, stayed the confiscation order, and required an undertaking and bank guarantee from the applicants to ensure compliance during the appeal process.- The decision aimed to balance legal requirements with practical considerations to ensure fairness and procedural adherence in the case.