Judgment:
1. These are applications by the appellants praying for waiver of pre-deposit of the amounts of penalties imposed on them, and for stay of recovery thereof, pending the appeals. I have examined the records and heard both sides.
2. It appears from the record that the Department framed a case of clandestine removal of excisable goods against M/s. R. Kumar Spun Tex (P) Ltd. [Appellant in Appeal No. E/2306/01-NB(S)] and, by show cause notice, proposed to impose penalty on them under Section 11AC of the Central Excise Act, 1944 as also penalty on the Company's Director Sh.
Rajendra R. Ahuja under Rule 209A of the Central Excise Rules, 1944.
The Central Excise duty of Rs. 1,43,606/- on the goods in question having been paid by the Company prior to issuance of the show cause notice, the Department, in the show cause notice, proposed to confirm the duty against them. The proposals in the notice were contested. The adjudicating authority confirmed the demand of duty against the Company and imposed on them a penalty of Rs. 1,43,606/-under Section 11AC read with Rule 173Q of the Central Excise Rules, 1944. That authority also imposed a penalty of Rs. 40,000/- on the Director [Appellant in Appeal No. 2309/01-NB(S)] under Rule 209A of the Central Excise Rules. The appeals preferred by the aggrieved parties against the order of the adjudicating authority did not succeed. Hence the appeals before this Tribunal against the order of the Commissioner (Appeals), and the instant applications.
3. Ld. Advocate Sh. Ramesh Singh points out that it is the consistent view of this Tribunal that, where any duty of Excise confirmed by the departmental authorities against an assessee has been paid prior to issuance of the show-cause notice, complete waiver of pre-deposit of any penalty imposed on such assessee should be granted along with stay of recovery thereof for purposes of Section 35F of the Central Excise Act. Ld. Counsel has cited a previous stay order of this Tribunal, which was passed in a case involving a similar factual situation.
Counsel further submits that the duty demand confirmed against the Company is for a period prior to 28-9-96 and, therefore, no penalty equal to such duty could have been imposed on the party under Section 11AC which came into force only on 28-9-96. He, therefore, prays for complete waiver of pre-deposit of the mandatory penalty. As regards the penalty imposed on the Director of the Company, ld. Counsel submits that there was no allegation whatsoever in the show cause notice to support such a penalty. According to him, the penalty imposed on the Director under Rule 209A is not founded on any evidence against him.
He, therefore, seeks waiver of pre-deposit of this penalty as well. He further points out that the case law, already cited, supports the prayer for waiver of pre-deposit of the penalty imposed under Rule 209A on the Director.
4. Ld. SDR, Sh. A.S. Bedi opposes the above prayer. He submits that the penalty of Rs. 1,43,606/- was imposed not merely under Section 11AC but cumulatively under both Section 11AC and Rule 173Q and, therefore, complete waiver of pre-deposit of the penalty amount is not warranted.
As regards the penalty imposed on the Director, ld. SDR submits that the applicant had, in his statement given under Section 14 of the Central Excise Act to the officers of Central Excise, clearly submitted that he was looking after the day-to-day affairs of the Company and that the goods in question had been cleared without payment of duty or complying with other Central Excise formalities. That statement has not been retracted by the applicant. Therefore, ld. DR submits, the admission of the applicant was enough for the authorities to invoke Rule 209A of the Central Excise Rules against him. He submits that none of the applicants has any prima facie case.
5. I have examined the submissions. The entire duty amount has, admittedly, been deposited prior to issuance of the show cause notice and that was not 'under protest'. The penalty of equal amount was imposed on the Company under Section 11AC read with Rule 173Q as proposed in the show cause notice. The authorities below have not given any break-up of the quantum of penalty and, consequently, it is not possible to ascertain as to what quantum of penalty was determined under Section 11 AC and what measure under Rule 173Q. As regards penalty under Section 11AC, as rightly pointed out by ld. Counsel, it does not appear to be sustainable against the applicant-Company inasmuch as Section 11 AC came into force only subsequent to the period of dispute. Nevertheless, the extent of penalty imposed under Rule 173Q is not ascertainable from the impugned orders. As regards the penalty imposed on the Director, I find that there is a statement by that applicant on record, which shows that he had admitted that he was looking after the day-to-day affairs of the Company and that the goods in question had been cleared without payment of duty or complying with other Central Excise formalities. It is also an admitted fact that the payment of duty was not under protest. The Director was apparently aware of the duty liability. In my view, he has not been able to establish a strong prima facie case, though, of course, there may be an arguable case. It further appears that the Director has not pleaded any financial hardships for himself. Therefore, Sh. Rajendra R. Ahuja is directed to deposit an amount of Rs. 25,000/- within six weeks from today and report compliance on 4-3-2002. Waiver of pre-deposit and stay of recovery are granted to the Company in respect of the penalty imposed on them.