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2008 (5) TMI 527 - AT - Central Excise
Issues:
1. Requirement of pre-deposit under Section 35F of the Central Excise Act. 2. Dispute related to clandestine removal of goods described as 'work-in-progress.' 3. Absence of positive evidence on clandestine removal and invocation of extended period for demand. 4. Loss of work-in-progress due to leakage of water and adverse inference drawn. 5. Time-bar implications in case of clandestine removal. 6. Company's financial condition under rehabilitation scheme and waiver of pre-deposit. 7. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 to pre-deposit under Section 35F of the Central Excise Act. Analysis: 1. The appellant was required to pre-deposit a significant amount under Section 35F of the Central Excise Act based on the order of the Commissioner (Appeals). An application seeking waiver of pre-deposit was filed, leading to a hearing on the matter. 2. The dispute revolved around the clandestine removal of goods categorized as 'work-in-progress.' The appellant argued that there was no concrete evidence supporting the claim of clandestine removal. Additionally, they contended that the absence of goods, leading to adverse inference, was due to a loss caused by water leakage, as reflected in the balance sheet. 3. The Tribunal found it challenging to accept the appellant's explanation regarding the substantial loss of work-in-progress, considering the production levels throughout the year. The balance sheet, combined with the circumstances, was deemed as positive evidence indicating the possibility of clandestine removal of goods. 4. Regarding the time-bar issue, in cases of clandestine removal, suppression, wilful misstatement, or fraud are inherent, justifying the application of the extended period of five years. The contention raised by the appellant regarding the time-bar was not found to be substantial. 5. The appellant highlighted the company's financial constraints due to being under a rehabilitation scheme, citing a Supreme Court case to support the waiver of pre-deposit. However, the Tribunal did not find a strong prima facie case in favor of full waiver but directed a partial deposit and waiver of the remaining amount. 6. The applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 to the pre-deposit under Section 35F of the Central Excise Act was discussed, emphasizing that the protection under Section 22 does not extend to the pre-deposit requirement, as clarified in a previous Supreme Court decision. 7. Ultimately, the Tribunal directed the appellant to make a partial deposit within a specified time frame, with the remaining amount waived, and recovery stayed until the appeal's disposal, considering the financial condition of the company. Compliance was required to be reported by a specified date.
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