2011 (10) TMI 444 - HC - Central Excise

Stay of demand - commissioner (appeals) granted 50% stay - writ petition for 100% stay - loan licensees being manufactures - held that - The Commissioner (Appeals) therefore, cannot be said to have committed an error in the facts of the present case, while recording a finding that the loan licensee were only performing job work for the assessee. The judgment in the case of Pawan Biscuit Company (2000 -TMI - 45451 - SUPREME COURT OF INDIA) does not lay down any binding legal precedent, which the Commissioner (Appeals) can be said to have ignored while considering the impact of the order of the Tribunal passed in respect of the assessee for the previous years, specifically in the circumstance when the issue which was considered in the interim order of the Tribunal qua previous year proceedings was entirely on different ground vis-a-vis the one, which had been canvassed before the Commissioner (Appeals) at the time of consideration of the application under Section 35F of the Central Excise Act giving rise to this petition. However, order of predeposit modified as, Assessee may deposit Rs. 20 lacs in cash within one month from today and for the remaining amount in terms of the order of the Commissioner (Appeals), he may furnish security other than cash or bank guarantee to the satisfaction of the Commissioner (Appeals) within the same period.

Summary

Issues:
1. Consideration of application under Section 35F of the Central Excise Act
2. Compliance with judgments in support of prima facie case
3. Challenge of order based on grounds of Tribunal's previous decision and misreading of judgments
4. Examination of loan licensees' status as manufacturers
5. Distinction of judgments and legal precedent in Commissioner's decision
6. Deposit of disputed amount and furnishing security

Issue 1: Consideration of Application under Section 35F
The petitioner approached the Court regarding the consideration of their application under Section 35F of the Central Excise Act. The Court previously held that the Tribunal should have considered the judgments relied upon by the petitioner to establish a strong prima facie case. The Commissioner (Appeals) was directed to reconsider the waiver application in light of the Court's observations and a Division Bench judgment.

Issue 2: Compliance with Judgments for Prima Facie Case
The petitioner challenged the order on the grounds that the Tribunal had previously granted 100% stay for the deposited amount in an earlier assessment year. The Commissioner (Appeals) was accused of misreading judgments and not considering a specific judgment of the Apex Court. The Court emphasized the importance of establishing a strong prima facie case supported by legal judgments.

Issue 3: Examination of Loan Licensees' Status
The petitioner attempted to establish that loan licensees were independent manufacturers, not performing job work for the assessee. However, the Court found that the agreements showed the assessee maintained control over manufacturing activities, concluding that the licensees were only performing job work.

Issue 4: Distinction of Judgments and Legal Precedent
The Commissioner (Appeals) distinguished the judgments relied upon by the petitioner, including the Apex Court judgment, stating they were not binding legal precedents. The Court noted that the Commissioner's decision was based on the merit of the case and the specific agreements between the parties.

Issue 5: Deposit of Disputed Amount and Security
The Court allowed the petitioner to deposit 50% of the disputed amount in cash and permitted the remaining amount to be secured by means other than cash or bank guarantee. Failure to comply would result in the petitioner losing the benefits of the order.

In conclusion, the Court dismissed the writ petition, subject to the conditions set regarding the deposit and security for the disputed amount.