2012 (3) TMI 39 - HC - Central Excise

Plea for waiver of pre-deposit manufacture of Asbestos Cement Sheets denial of exemption under Notification No.6/2002 Revenue denied the plea on ground that no prima facie case has been made out by the petitioner and no supporting documents had been furnished to substantiate existence of financial hardship Held that - While dealing with the application twin requirements of considerations i.e., consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. In present case, it could be inferred that the petitioner has a strong prima facie case in the said appeal. Tribunal ought to have waived condition of pre-deposit, even if financial hardship had not been shown to exist or proved by acceptable evidence, as held by the Supreme court, in RAVI GUPTA Vs. COMMISSIONER OF SALES TAX, DELHI. However, in order to safeguard interests of the revenue, petitioner is directed to furnish a bank guarantee for a sum of ₹ 4.50 crores for hearing of the appeal by Tribunal.

Issues Involved:

1. Validity of the pre-deposit condition imposed by the Customs, Excise, and Service Tax Appellate Tribunal.
2. Compliance with exemption Notification No.6/2002-CE.
3. Allegations of bogus/excess fly ash receipts.
4. Existence of financial hardship for waiver of pre-deposit.
5. Prima facie case for waiver of pre-deposit.

Issue-wise Detailed Analysis:

1. Validity of the pre-deposit condition imposed by the Customs, Excise, and Service Tax Appellate Tribunal:

The petitioner challenged the Tribunal's order requiring a pre-deposit of Rs.4,50,00,000/- as a condition for hearing the appeal. The Tribunal's decision was based on differing views between the Judicial Member and the Technical Member, with the third member concurring with the Technical Member. The Tribunal directed the petitioner to pre-deposit the amount within six weeks and report compliance. The petitioner argued that the existence of a strong prima facie case should suffice for waiver of pre-deposit, citing various judicial precedents.

2. Compliance with exemption Notification No.6/2002-CE:

The petitioner claimed exemption under Notification No.6/2002-CE, which exempts goods containing not less than 25% fly ash by weight. The department alleged that the petitioner had wrongly availed of this exemption by accounting for bogus/excess fly ash receipts. The petitioner contended that they had complied with all conditions stipulated in the notification and had fully accounted for the procurement and usage of fly ash.

3. Allegations of bogus/excess fly ash receipts:

The department's investigation revealed discrepancies in the petitioner's records, suggesting bogus purchases of fly ash. The petitioner argued that these allegations were based on presumptions and assumptions, and that all relevant records had been scrutinized by departmental officers. The petitioner maintained that they had purchased fly ash from various thermal power stations and had recorded these transactions in their books of accounts.

4. Existence of financial hardship for waiver of pre-deposit:

The petitioner claimed financial hardship but failed to provide supporting documents to substantiate this claim. The Tribunal noted that the petitioner merely stated their liquidity position was bad without providing evidence. The Tribunal emphasized that financial hardship must be demonstrated with proof, as per judicial precedents.

5. Prima facie case for waiver of pre-deposit:

The petitioner argued that they had a strong prima facie case, which should warrant a waiver of pre-deposit. The Tribunal, however, found that the petitioner had not established a prima facie case for waiver. The third member noted discrepancies in the petitioner's records and the failure to provide evidence for procurement of fly ash from third parties.

Conclusion:

The High Court concluded that the Tribunal should have granted interim stay without the condition of pre-deposit, given the strong prima facie case made out by the petitioner. However, to safeguard the revenue's interests, the petitioner was directed to furnish a bank guarantee for Rs.4,50,00,000/-. The Tribunal was instructed to hear the appeal on merits and dispose of it expeditiously within six months. The writ petition was disposed of with these directions, and no costs were imposed.

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