2012 (5) TMI 450 - HC - Central Excise

Whether the Learned Tribunal not err in dismissing the Appellant s Appeal even though the issue of pre-deposit was pending before the Hon ble Court - Tribunal vide order dated 19th July, 2010 dismissed the appeal of the appellant on the ground of non-compliance of the order dated 15th February, 2010 - Held that - Tribunal erred in dismissing the appeal of the appellant vide order dated 19th July, 2010. Time upto 16th May 2011 is granted to the appellant to make deposit of the entire tax amount and in case the said deposit is made, the appeals filed by the appellant will be heard by the Tribunal. - However stay order not to be interfered.

Issues Involved:
1. Reference to allegations in the third Show Cause Notice.
2. Requirement of pre-deposit causing undue hardship.
3. Waiver of pre-deposit under the Rehabilitation Scheme.
4. Dismissal of appeal due to non-compliance with pre-deposit order.

Issue-wise Detailed Analysis:

1. Reference to Allegations in the Third Show Cause Notice:
The appellant contended that the Tribunal erred by referring to allegations in the third Show Cause Notice, which was struck down by the Supreme Court. The Supreme Court had previously ruled that each Show Cause Notice must be limited to the case made out therein by the Revenue. The Tribunal's reliance on the third Show Cause Notice was challenged as it was beyond its jurisdiction and contrary to the Supreme Court's directive.

2. Requirement of Pre-deposit Causing Undue Hardship:
The appellant argued that the requirement to pre-deposit the tax amount would cause undue hardship. The Supreme Court in Benara Valves Ltd. v. C.C.E. and Indu Nissan Oxo Chemicals Industries Ltd. v. Union of India had elucidated that 'undue hardship' means excessive hardship, not warranted by the circumstances. The appellant claimed that the demand was confirmed in violation of the principles of natural justice and the Supreme Court's directions.

3. Waiver of Pre-deposit Under the Rehabilitation Scheme:
The appellant asserted that under the Rehabilitation Scheme formulated by BIFR, the Respondent had agreed not to insist on pre-deposit for any appeal. The Tribunal, however, rejected this contention, noting that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) does not entitle a 'sick company' to claim waiver of pre-deposit on the ground of undue hardship. The Tribunal also observed that the BIFR order pertained to past demands and could not relate to future demands. The appellant's claim that the Excise Department had agreed not to impose pre-deposit conditions was disputed by the Respondent.

4. Dismissal of Appeal Due to Non-compliance with Pre-deposit Order:
The appellant's appeal was dismissed by the Tribunal for failure to comply with the pre-deposit order dated 15th February, 2010. The High Court noted that the appeal No. 5/2010 was filed in May 2010, and the Tribunal dismissed the appeal on 19th July, 2010. The High Court partially allowed appeal No. 14/2010, granting the appellant time until 16th May 2011 to make the deposit. The Tribunal was directed to hear the appeals on merits if the deposit was made within the stipulated time.

Conclusion:
The High Court dismissed appeal No. 5/2010, finding no merit in the appellant's contentions. The Tribunal's order directing the appellant to deposit the principal tax amount was upheld. However, the High Court partially allowed appeal No. 14/2010, granting an extension for the deposit and directing the Tribunal to hear the appeals on merits if the deposit was made by 16th May 2011. The observations made were specific to the disposal of the present appeals and not binding on the Tribunal for the merits hearing.

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