2010 (12) TMI 477 - HC - Central Excise

Waiver of pre-deposit - sick unit -Tribunal did not take into consideration the financial hardship of the petitioner-company - The provisions of proviso to Section 35F of the Central Excise Act, 1944 the learned Tribunal was under obligation to consider the prima facie case as also the hardship of the petitioner-company - The learned Tribunal did not take into consideration the provision of Section 11A of the Central Excise Act, 1944 at the time of passing the impugned order - It is also evident that the question of taking into consideration the price difference in between the factory gate sale and consignment sale was not taken into consideration by the learned Tribunal. Held that Tribunal passed the impugned order without adhering to the provisions of the proviso to Section 35F of the Central Excise Act, 1944 - Therefore, there was procedural impropriety - Hence,the learned Tribunal has been quashed and set aside with a direction upon the learned Tribunal to pass a reasoned order on the basis of the observation made in connection with the application filed by the petitioner with the prayer for waiver of requirement of pre-deposit of duty and penalty .

Summary

Issues involved:
Challenge to order for waiver of pre-deposit of duty and penalty in an appeal.

Analysis:
The writ application challenged an order regarding the waiver of pre-deposit of duty and penalty in Appeal No. EV-335/2001. The petitioner received a show-cause notice in 1999 for central excise duty payment from 1994 to 1997. The Tribunal directed the petitioner to deposit Rs. 25 lacs. The petitioner argued that the Tribunal failed to consider the prima facie case and the company's hardship. They contended that the show-cause notice was issued beyond the 6-month limit and deviated from established legal principles. The financial hardship of the petitioner, declared a 'sick unit' by BIFR, was also highlighted with substantial losses. The Court noted the failure of the Tribunal to consider relevant provisions and aspects, leading to procedural impropriety.

The Court observed that the Tribunal did not adhere to the proviso to Section 35F of the Central Excise Act, 1944, while passing the impugned order. Due to procedural impropriety, the Court quashed the order and directed the Tribunal to pass a reasoned order considering the observations made. The respondents were restrained from enforcing the previous order until the new application was disposed of. The Court disposed of the application without any cost order. A certified copy of the order was to be provided to the parties upon request, subject to necessary formalities.