2017 (2) TMI 1264 - HC - Central Excise

Maintainability of petition - alternative remedy - Held that - It is true that as against any order passed by the Tribunal the petitioner has an alternative remedy of an appeal under Section 35G on a substantial question of law. But the present writ petition arises out of the order dated 18-11-2014 which is in the nature of an order passed on an application for stay and waiver of pre-deposit conditions. An appeal under Section 35G could only be on a question of law. When matters are decided on interlocutory applications such as applications for condonation of delay etc. no substantial question of law may actually arise. Therefore the remedy under Article 226 cannot be stated to have been completely kept out. It is true that under Section 11D the period of limitation cannot be held against the department whenever duty is collected but not paid. But the question as to whether the duty was in fact collected or not and the question as to whether what happened during the period of six years after search are all questions that should be addressed to by the Tribunal when the appeal is taken up on merits - From 6-8-2014 the Tribunal has no discretion to grant a total waiver in view of the mandatory requirement to deposit 7.5%. The Tribunal did not even address itself to this question. Therefore we are of the considered view that the condition imposed upon the petitioner is onerous warranting our interference. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to conditional order for deposit, alternative remedy of appeal under Section 35G, pre-deposit conditions, failure to pass excise duty, plea of limitation, mandatory deposit requirement, interference with Tribunal's order.

Analysis:

The petitioner challenged a conditional order by the Tribunal to deposit a specific amount pending appeal. The petitioner failed to comply, resulting in dismissal of the appeal. The issue raised was whether the petitioner could directly approach the High Court through a writ petition or if the alternative remedy of appeal under Section 35G should have been pursued first.

The High Court acknowledged the availability of the appeal remedy under Section 35G but noted that the present writ petition stemmed from an order related to a stay and waiver application, not a substantial question of law. The Court held that in such cases, where no substantial question of law arises, the remedy under Article 226 cannot be entirely excluded.

The Department contended that the petitioner had collected excise duty but failed to remit it. The Court observed a significant delay between the search conducted and the issuance of the show cause notice, highlighting a potential limitation defense. The Court emphasized the need for the Tribunal to address the issues of duty collection and the events post-search when the appeal is heard on merits.

Regarding the mandatory deposit requirement effective from 6-8-2014, the Court found the Tribunal had not properly considered the matter. The Court deemed the initial deposit condition excessively burdensome and interfered with the Tribunal's order, directing the petitioner to deposit a reduced amount for the appeal to be reopened and disposed of accordingly.

In conclusion, the High Court allowed the writ petition, set aside the Tribunal's order, and instructed the petitioner to make a reduced deposit within a specified timeframe for the appeal to proceed. The Court closed any pending miscellaneous petitions and made no order regarding costs.