Judgment:
1. In these 4 applications the applicants have requested for waiver of pre-deposit of Central Excise duty and penalties as imposed as under :(1) M/s. Indl. Gases Ltd. - Rs. 1,59,05,075/- Duty - Rs. 1,59,05,075/- Penalty(2) Shri P.K. Biswas - Rs. 1 lac Penalty(3) Shri T. Maitra - Rs. 1 lac Penalty(4) Shri L.R. Garg - Rs. 1 lac Penalty 2. Shri Harish Chander, learned Advocate, submitted that the applicant No. 1 M/s. Industrial Gases Ltd. have been directed to pay the duty in respect of Oxygen Gas, Nitrogen Gas, and Liquid Nitrogen for the period from October, 1995 to July, 2000 by confirming the show cause notice dated 25-10-2000; that they are not manufacturer of the impugned goods as they had leased out their Plant with facility of staff for maintenance for giving the safety to Hindustan Zinc Ltd.; that agreements with Hindustan Zinc Ltd. (HZL) were executed from time to time and perusal of the said agreement will reveal that HZL has been described as owner of the factory and the applicant company has been described as a Contractor; that they were only collecting rental charges from HZL; that their relationship was of leaser and lessee. He relied upon the decision in the case of Jaishree Insulator Ltd. v. CCE, Calcutta [1987 (28) E.L.T. 279 (Tribunal)] wherein it was held that when the applicants case is so strong that it is apparent without laboured exposition it may well be a case where the balance of convenience, and over and above a mere prima facie case, calls for waiver of pre-deposit not withstanding that financial hardship is not established or has not been pleaded. Reliance was also placed on the decision in the case of V.I.P. Seafoods v. Collector of Customs [1989 (44) E.L.T. 606 (Kerala)] wherein it was held that discretion to dispense with deposit should be exercised judiciously based on relevant facts and circumstances and prima facie case is one such factor. The learned Advocate, further, submitted that the demand is time barred as right from the day one the activity was very well known to the department; that HZL have stated in their statement that copy of the agreements with applicant No. 1 were duly given to the department; that the Range Supdt. Under letter dated 20-9-95 directed the applicant No.1 to furnish figures relating to Oxygen Gas. Nitrogen Gas and Liquid Nitrogen produced and cleared till date; that they were also directed to intimate whether the production and clearance were looked after by their staff only or otherwise, status of their company was also required to be intimated to the Range Supdt.; that the applicant No. 1 in reply dated 25-9-95 informed the Supdt. that they had given Air Separation Plant to HZL on rental basis; status of the factory of HZL is manufacturer of Oxygen, Nitrogen and Liquid Nitrogen gases; that HZL is availing the exemption under Notification No. 217/86-C.E.; that again the Supdt. under letter dated 5-10-95 directed them to furnish the information as to the date of starting of production at their factory site, date of shifting of plant from their factory site to the factory site of HZL, copy of rent contract entered between them and HZL and whether entire product is supplied through pipeline in the Zinc plant or there is a storage facility; that applicant No. 1 under their letter dated 25-10-95 informed the Supdt. that there has been no production of Oxygen gas at their site since February, 1992 from liquid Oxygen tank; that they intended to manufacture oxygen gas from atmospheric air; that due to lack of electricity they did not install or commissioned the plant; that in the meantime HZL issued their work order in February, 1992 for renting the plant and as such the same was given to HZL on rental basis; that they also enclosed a copy of the work order in terms of thereto HZL relocated the plant from their site to HZL factory. The learned Advocate also referred to one of the copies of work order which clearly provides rent of Rs. 4,01,850/- per month which was inclusive of operation and maintenance expenses borne by them. The learned Advocate submitted that in the light of exchange of this correspondence the department was well aware of the entire facts and extended period of limitation is not invocable. He relied upon the decision in the case of Upper Doaba Sugar Mills v. CCE, Meerut, 1987 (32) E.L.T. 124; Kamal Plywood and Allied Inds. P. Ltd. v. CCE, Meerut, 1996 (82) E.L.T. 323. Finally the learned Advocate pleaded the financial hardship by submitting that the applicant unit is a closed unit for the last one year; that they had suffered loss of Rs. 24,67,843/- in the financial year ending 31st March, 2001.
3. Opposing the prayer Shri A.K. Jain, learned SDK, submitted that the examination of various contracts and work orders given by HZL reveals that the applicant No. 1 is the manufacturer. In this regard learned SDR referred to Para 14 of the show cause notice in which it was mentioned inter alia, that the plant for manufacturing the impugned goods was owned by applicant No. 1 and was under their control and being operated by their employees; cost of premium of insurance for the plant was borne by them; that they had furnished bank guarantee for Rs. 10 lakhs as security deposit-cum-performance guarantee for oxygen gas and bank guarantee for Rs. 70,000/-for Nitrogen gas; that Para 3.2 of the contract dated 13-12-90 stipulated that excise duty/taxes would be paid extra by HZL; that cost of accessories, equipments, lubricating oil, etc. which were required for day to day working of the plant were borne by applicant No. 1; work order contained penalty clauses for reduction of the amount from the bills pertaining to supply of gases in case of variation of purity of gases was found; that no rental was payable in the event of breakdown of the plant; there existed clause for price escalation due to power rate. He, therefore, contended that it is evident that applicant No. 1 was actually manufacturer of gases and was liable to discharge central excise duty; that the extended period of limitation is invocable as the applicants had not disclosed any information to the department; that the copy of work order dated 4-2-92 which was to expire on 12-12-95 was given to the department under their letter dated 25-10-95; that the agreement was amended from time to time but no evidence have been produced that the copies of the same have ever been produced to the department; that their financial condition is also no so bad that they cannot make pre-deposit as in the year 2001 they had sales amounting to Rs. 65.65 lakhs and other income was to the extent of Rs. 86.34 lakhs.
4. We have considered the submissions of both the sides. The issue whether the plant was given on rent by the appellants to HZL and whether they were manufacturer or HZL are arguable questions and as such the applicants have not made out a strong prima facie case on this aspect. However, we are of the view that in view of the exchange of correspondence in 1995 the department was made aware of the facts that the plant was installed in the premises of HZL and was given to them on rent by the applicants. Thus they have made out a strong prima fade case on the aspect of time limit in their favour. We observe that the show cause notice was issued on 25-10-2000 for demanding the duty for the period from October, 95 to July, 2000 and as such some period was within the normal period of time limit specified in Section 11A of the Central Excise Act. Taking into consideration all the facts and the financial position of the applicants we direct them i.e. Industrial Gases Ltd. to deposit Rs. 20 lakhs towards duty within 8 weeks from the date of receipt of this Order. On complying with this direction there will be waiver of pre-deposit of the remaining amount of duty and the entire amount of penalties on all the applicants and the recovery of the same will be stayed during the pendency of the appeals. The matter will come up for reporting compliance on 3-5-2002.