2009 (6) TMI 771 - AT - Central Excise

Stay/Dispensation of pre-deposit - Penalty - Personal penalty - Held that - It is settled principle of law that the law existing on the date of lis shall govern the breach of law alleged. When no law exists on the date of lis and nothing can be called as a breach on the basis of law in existence, penalty proceeding being quasi criminal proceedings, sub-rule (2) does not embrace the case of the Appellant. The appellant should not, therefore, suffer undue hardship at this stage - pre-deposit waived during the pendency of appeal.

Summary

Issues:
1. Applicability of Rule 26 of Central Excise Rules, 2002 to the appellant.
2. Interpretation of sub-rule (2) of Rule 26 in relation to the alleged violation.
3. Consideration of duty realization and legal aspects in the case.
4. Dispute over factual findings in the order-in-original.
5. Application of law existing at the time of the alleged breach.
6. Decision on penalty proceedings and waiver of pre-deposit.

Analysis:

1. The appellant's counsel argued that the allegation in the show cause notice dated 5-3-08, covering the period from 1-2-03 to 28-2-05, should not be governed by Rule 26 of Central Excise Rules, 2002. He contended that sub-rule (2) of the rule, which deals with violations, should only apply after 1-3-07. The counsel emphasized that the proceeding is legally barred due to the nature of the violation described in sub-rule (2). Additionally, he highlighted that any unrealized duty has been addressed at the buyer's end. The counsel referenced a specific order to support his argument and pointed out that another court had already waived pre-deposit in a similar case.

2. The Departmental Representative (DR) did not contest the factual findings in the original order and acknowledged the clarity of the legal position under sub-rule (2) of Rule 26 of Central Excise Rules, 2002.

3. After hearing both sides and examining the records, the tribunal emphasized the principle that the law in force at the time of the alleged breach governs the case. Since there was no law in existence at the time in question that could constitute a breach, the tribunal concluded that the penalty proceedings, being quasi-criminal in nature, did not apply to the appellant. Therefore, the tribunal directed the waiver of pre-deposit to prevent undue hardship during the appeal process.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi, highlights the legal arguments, interpretations of rules, consideration of factual findings, and the ultimate decision on penalty proceedings and pre-deposit waiver.