2011 (9) TMI 503 - HC - Central Excise

Waiver of Pre-Deposit under 35F - Appellant submitted that the financial condition was very poor was facing acute financial hardship - Held That - Section 35-F has given ample power to appellate authority to dispense with the deposit of duty demanded or penalty levied. Once the Appellate Authority has exercised the discretion and directed the Appellant to make deposit of duty demanded or penalty levied, the tribunal is not justified in taking a contrary view. Thus no substantial question of law arises.

Issues Involved:
1. Interpretation of Section 35F of the Central Excise Act, 1944.
2. Compliance with the pre-deposit requirement under Section 35F.
3. Discretion of the Appellate Authority in waiving the pre-deposit requirement.
4. Legal consequences of non-compliance with the pre-deposit requirement.

Detailed Analysis:

1. Interpretation of Section 35F of the Central Excise Act, 1944:
The primary issue in the appeal was the interpretation of Section 35F of the Central Excise Act, 1944, which mandates the deposit of duty demanded or penalty levied pending an appeal. The Appellant argued that the provision is not mandatory, while the Respondent contended that it is.

2. Compliance with the Pre-Deposit Requirement under Section 35F:
The Appellant was engaged in the manufacture of goods and was found to have committed irregularities under excise law, leading to a demand and penalty confirmed by the Assistant Commissioner. The Appellant's appeal to the Commissioner (Appeals) included a request to dispense with the pre-deposit requirement, which was partially granted, requiring a 50% deposit of the penalty. The Appellant failed to comply, citing financial hardship, leading to the dismissal of the appeal by the Commissioner (Appeals) and subsequently by the Tribunal.

3. Discretion of the Appellate Authority in Waiving the Pre-Deposit Requirement:
The Tribunal held that the Appellate Authority has the discretion to waive the pre-deposit requirement under the proviso to Section 35F, provided it does not cause undue hardship and safeguards the interest of revenue. The Tribunal found that the Commissioner (Appeals) had exercised this discretion appropriately by partially waiving the deposit requirement and that the Appellant failed to make a satisfactory case for further modification.

4. Legal Consequences of Non-Compliance with the Pre-Deposit Requirement:
The Tribunal and the High Court both held that non-compliance with the pre-deposit requirement under Section 35F results in the dismissal of the appeal. The High Court emphasized that the natural consequence of not depositing the duty demanded or penalty levied is the dismissal of the appeal without entering into the merits of the case. The Court referred to the Supreme Court's judgment in Shyam Kishore v. Municipal Corporation of Delhi, which supports the mandatory nature of such provisions, though it allows for some discretion by the Appellate Authority.

Conclusion:
The High Court concluded that the Tribunal's decision did not suffer from any impropriety or illegality. The Appellant was given six weeks to comply with the pre-deposit requirement, failing which the dismissal of the appeal would stand. The judgment underscores the mandatory nature of Section 35F, while also recognizing the Appellate Authority's discretion in cases of undue hardship, provided the interest of revenue is safeguarded.

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