2012 (12) TMI 975 - HC - Central Excise

Waiver of pre deposit - Opportunity of hearing not granted - Whether the Tribunal was justified in imposing the condition of deposit of ₹ 30 lakhs, in para 8 of impugned order, while allowing the assessee s appeal and setting aside the order, passed by the Commissioner of Central Excise & Customs, Raipur (Adjudicating Authority), impugned in the said appeal - Held that - having regard to the controversy involved in the case and the fact that the matter was remanded back to the adjudicating authority, there was apparently no justification on the part of the Tribunal to direct the appellant (assessee) to deposit a sum of ₹ 30 lakhs, in cash, with the adjudicating authority. It was not in dispute that adjudication order was yet to be passed and the matter was remanded only for the purpose of holding enquiry as to whether the assessee was liable to pay the amount demanded from them pursuant to the show cause notice issued by the adjudicating authority. - Let the adjudicating authority give opportunity to appellant (assessee) to file reply to show cause notice under consideration. The reply shall be filed by the appellant (assessee) within two weeks from the date of parties appearance before the adjudicating authority on a date fixed by this Court. The Adjudicating authority shall decide the case within three months from the date of filing of reply. No adjournment shall be granted to the appellant (assessee), in case, if they do not file reply to show cause notice within time fixed by this Court. - Decided in favour of assessee.

Summary

Issues Involved:
Appeal under Section 35G of the Central Excise Act, 1944 against the order of Customs, Excise & Service Tax Appellate Tribunal, New Delhi involving two substantial questions of law: 1. Imposition of a pre-deposit of Rs. 30 lakhs by the Tribunal, and 2. Remanding the case without setting aside the Commissioner's order.

Analysis:

Issue 1: Imposition of Pre-deposit by the Tribunal
The appellant (assessee) was served with a show cause notice demanding central excise duty, but failed to file a reply, leading to an adverse order by the adjudicating authority. The Tribunal set aside this order, remanding the case for the appellant to file a reply. However, the Tribunal directed the appellant to deposit Rs. 30 lakhs as a pre-condition to file the reply. The High Court found no justification for this direction, as the matter was remanded for enquiry without any adjudication order determining the liability. The Court held that the appellant must only furnish solvent security to the satisfaction of the dues proposed to be recovered from them, which can be used if the appellant fails to pay the demanded amount after an adverse order.

Issue 2: Remanding the Case without Setting Aside Commissioner's Order
The Tribunal remanded the case to the adjudicating authority due to the appellant not being given an opportunity to be heard. The High Court agreed with this decision but disagreed with the imposition of a cash deposit. The Court directed the appellant to furnish solvent security instead. The Court also set a timeline for the appellant to file a reply to the show cause notice and for the adjudicating authority to decide the case within three months from the date of filing the reply, emphasizing no adjournments if the reply is not filed timely.

In conclusion, the High Court allowed the appeal in part, modifying the impugned order by directing the appellant to provide solvent security instead of a cash deposit. The Court also set clear timelines for further proceedings and directed the adjudicating authority to pass appropriate orders in accordance with the law based on the reply filed by the appellant.