@JUDGMENTTAG-ORDER
1. These two appeals are filed against the order dated 13th September, 2010 passed by the Customs, Excise & Service Tax Appellate Tribunal
(CESTAT). By means of that order. Tribunal has directed the appellants to make pre-deposit of 25% of the respective penalties imposed upon
them as a condition of hearing the appeals filed by them, on merits. It may be noted that show cause notice was issued by the Excise Department
against one M/s. Minda HUF Ltd. (for short ""MHL""), the manufacturers of automobile locks on the ground that they had escaped the payment of
excise duty. In the said show cause notice, these two appellants along with two others were co-noticee. Allegation in the show cause notice was
that paper credit was issued by these appellants through their concern to enable MHL to enjoy that credit at the cost of Revenue and the Revenue
was defrauded. The said MHL (main noticee) approached the Settlement Commission u/s 32(E) of the Central Excise Act and offered to deposit
the entire excise duty of Rs. 2,20,00,975/-, which was demanded in the show cause notice. The Settlement Commission passed order dated 30th
May, 2007 on the application of MHL thereby settling the matter by confirming the total amount of duty demanded'' along with interest at the rate
of 10%. The Settlement Commission, at the same time, passed orders u/s 32(K) of the Act granting full immunity from fine, penalty and
prosecution to M/s. MHL. It is an admitted position that since the allegations against these appellants were that they helped and conspired with the
MHL in evading payment of central excise and these two appellants were not to pay themselves any such excise duty, they could not have
approached the Settlement Commission. The appellants filed reply to the show cause notice requesting that the notice against them be withdrawn in
view of the order dated 30th May, 2007 passed by the Settlement Commission in respect of MHL (main noticee) and more particularly full
immunity from fine, penalty and prosecution was also granted to the main noticee. This contention of the appellants was not accepted by the
Commissioner/Adjudicating Authority, who imposed a penalty of Rs. 66,55,075/- and 47,80,983/- respectively on these appellants vide order
dated 27-8-2008. It is against this order of the Commissioner that the appellants have filed appeals before the CESTAT, which are pending
adjudication. Along with the appeals, the appellants also moved stay application for dispensing pre-deposit u/s 55F of the Act and stay of
recovery. In these applications, aforesaid impugned order dated 13th September, 2010 had been passed. While directing the appellants to make
pre-deposit of 25%, Tribunal has given the following reasons :
3. Prima facie we are of the view that these appellants not being before Settlement Commission have no right to pray for similar treatment as that
was given to M/s. Minda HUF Ltd. by Settlement Commission, we surprise how Revenue could not bring to the notice of the Settlement
Commission about the fact that huge penalty was outcome of the adjudication against several notices while disposing the settlement application.
When we find such a sad state of affairs, we are helpless to come to rescue of revenue to direct pre-deposit of entire penalty levied on the four
appellants before us. The gravity of the matter shall be looked into in depth while appeal is held extensively in due course. As an interim measure,
we direct all the four appellants to make pre-deposit of 25% (Twenty five percent) of the respective penalties imposed on them, as stated
aforesaid, within eight weeks from today and make compliance on 19th November, 2010, Subject to compliance, realization of the balance
demand shall be stayed during pendency of the appeal.
Excise Stay Application No. 1988 of 2009 in Appeal No. 1933 of 2009
Sh. Sunil Kumar Gupta, Proprietor Appellants
M/s. A.S. Steels & M/s. Shiv Udyog
And Controlling Affairs of M/s. S.S.
Enterprises
Versus Respondent
C.C.E. Noida
Although the matter also in the list of 8-9-2010, that was adjourned for hearing today to get full detail of paper credit issued by the appellant.
None appeared for this appellant today nor there is any adjournment application. The adjudication order reveals that this appellant had faced
penalty of Rs. 4,82,092/- in terms of order of adjudication dated 27-8-2008, which dealt the case M/s. Minda HUF Ltd. also. This appellant
alongwith other four appellants in appeal case No. E/2178 of 2009, E/2179 of 2009, E/2180 of 2009 and E/2181 of 2009 having faced penalty in
the similar manner, a common order has been passed today in respect of those, four appellants. We consider it proper to pass similar such order in
this case also. Having appreciated prima facie case of revenue, we direct this appellants also to make pre-deposit of 25% (Twenty five percent) of
the penalty amount levied on him within eight weeks from today and make compliance on 19th November, 2010, Subject to compliance,
realization of the balance demand shall be stayed during pendency of the appeal.
2. It is clear from the above that the Tribunal has expressed its anguish on the conduct of the Revenue in not bringing to the notice of the Settlement
Commission about the fact that huge penalty was outcome of the adjudication against several noticees. At the same time, the Tribunal has still
directed the appellants to make pre-deposit of 25% of the penalty without giving any cogent reasons. The issue that the main defaulter/MHL has
been granted immunity and is not to pay any penalty and, therefore, these appellants should not be called upon to pay the penalty has not been
addressed at all. Learned counsel for the appellant has referred to three orders passed by the CESTAT which held that in these circumstances,
where against main noticee/defaulter, the Settlement Commission has granted immunity from payment of any penalty, no penalty can be imposed
upon other co-noticees. The particulars of these cases are as under :-
(i) S.K. Colombowala v. Commissioner of Customs (import), Mumbai, 2007 (220) E.L.T. (TM)
(ii) 2005 (183) ELT 21
(iii) Pearl Polymers Ltd. v. Commissioner of Central Excise, Raigad, 2008 (226) E.LT. 566 (Tribunal - Mumbai).
On the strength of these orders passed by other Coordinate Benches of the Tribunal itself, we are of the opinion that the appellants have made out
a strong prima facie case in their favour and in the given circumstances, they were entitled to the waiver of pre-deposit of the penalty. We, thus, set
aside the order of the Tribunal insofar as it relates to directing appellants to make pre-deposit of 25% of the respective penalties imposed upon
them and direct the Tribunal to hear the appellants without such pre-deposit. Since, short question of law is involved, we also expect the Tribunal
to decide these appeals expeditiously.
