1998 (3) TMI 491 - AT - Central Excise

Tribunal orders Rs. 5 lakh deposit during appeal, dissent stresses higher amount.

RATHI SUPER STEELS LIMITED Versus COMMISSIONER OF C. EX., MEERUT

RATHI SUPER STEELS LIMITED Versus COMMISSIONER OF C. EX., MEERUT - 2000 (126) E.L.T. 687 (Tribunal) Issues Involved:1. Waiver of pre-deposit of duty and penalty.2. Liability of the appellants for duty prior to the acquisition of the manufacturing unit.3. Applicability of Rule 173Q and imposition of penalty.4. Availability of deemed Modvat credit.5. Financial hardship as a ground for waiver.Detailed Analysis:1. Waiver of Pre-deposit of Duty and Penalty:The applicants sought a waiver of pre-deposit of duty amounting to Rs. 57,68,933/- and a penalty of Rs. 40 lakhs. The primary argument was that the major duty amount related to a period before they acquired the manufacturing unit. The Tribunal directed the applicants to deposit Rs. 5 lakhs by 12-6-1998, considering the prima facie case and financial hardship.2. Liability of the Appellants for Duty Prior to Acquisition:The applicants argued that they should only be liable for the duty from the date they took over the unit (16-8-1993). They cited the case of Bhuvaneswhari Chemicals v. CCE, which held that the liability to pay duty is on the actual manufacturers of the goods. The Tribunal noted that the demand for duty for the period from April 1993 to October 1993 should be limited to the quantity of goods related to the applicants (144.260 MT) and not the entire quantity (6,188.390 MT). However, the dissenting opinion by another Member highlighted that the appellants had not raised this point earlier and had admitted liability in their statements and replies.3. Applicability of Rule 173Q and Imposition of Penalty:The applicants contended that Rule 173Q, which pertains to penalties for manufacturers, producers, registered persons, or dealers, could not be invoked against them for the period before 16-8-93. They argued that there was no charge of collusion or connivance in the show cause notice, and the Commissioner's order had extended beyond its scope. The Tribunal acknowledged this as a disputed item.4. Availability of Deemed Modvat Credit:The applicants argued that the deemed Modvat credit, which was denied by the Commissioner, should be available to them. They asserted that if the duty was paid by M/s. Novo Udyog, they would be entitled to the Modvat credit. The Tribunal noted that the disallowance of Modvat credit and Notification No. 202/88 was an arguable matter and required further examination.5. Financial Hardship as a Ground for Waiver:The applicants claimed financial hardship and requested a waiver of the pre-deposit. The Tribunal considered this argument and directed a reduced pre-deposit amount of Rs. 5 lakhs, taking into account their financial condition.Separate Judgments:- Majority Decision: The majority directed the appellants to deposit Rs. 5 lakhs, considering the prima facie case and financial hardship.- Dissenting Opinion: One Member disagreed, suggesting a higher deposit of Rs. 35 lakhs, arguing that the appellants had not sufficiently established their plea of non-liability for the period before the acquisition.Conclusion:The Tribunal, by majority decision, directed the appellants to deposit Rs. 5 lakhs and stayed the recovery of the balance amount of duty and penalty during the appeal's pendency. The dissenting opinion emphasized the need for a higher deposit due to the appellants' failure to raise their non-liability plea earlier and the substantial evidence against them.