2006 (2) TMI 375 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty based on alleged misrepresentation of clearances.
2. Claim for waiver of pre-deposit and stay of recovery due to financial difficulties.
3. Interpretation of circulars affecting exclusion of export clearances from aggregate value.

Analysis:
1. The case involved a demand of duty amounting to Rs. 4,48,589/- for the period 2001-02 and 2002-03, along with a penalty under Section 11AC of the Central Excise Act. The dispute arose from the allegation that a portion of the appellants' clearances was falsely attributed to another entity, "Lotus Enterprises," to comply with SSI Notifications. The appellants sought waiver of pre-deposit and stay of recovery for the disputed amounts. The appellants argued that certain clearances for export should be excluded from the aggregate value of clearances, significantly reducing the duty payable. However, the SDR contested this argument, emphasizing the inapplicability of relevant circulars supporting the exclusion.

2. The Tribunal noted that the appellants had combined their clearances with those of "Lotus Enterprises," indicating an acknowledgment of the latter's status as a dummy unit. Despite the appellants' financial difficulties, as evidenced by a significant loss in their audited Profit & Loss Account, the Tribunal found that they had not established a prima facie case. Considering the financial constraints, the Tribunal directed the appellants to pre-deposit Rs. 2,00,000/- under Section 35F of the Central Excise Act, with the amount already paid considered as part of this sum. One of the appellants was instructed to deposit Rs. 1.5 lakhs within 8 weeks, with compliance to be reported by a specified date. Upon compliance, there would be a waiver of pre-deposit and stay of recovery for all penalties.

3. Regarding the interpretation of circulars impacting the exclusion of export clearances from the aggregate value, the Tribunal sided with the SDR's argument, stating that the circulars in question only validated Sales Tax documents for export proof, without supporting the appellants' position. This decision further reinforced the Tribunal's ruling on the financial obligations and waiver conditions imposed on the appellants.