2012 (8) TMI 53 - HC - Central Excise

Direction to 15% of the duty demanded is unreasonable - Held that - The petitioner has in no way claimed that the direction to pay 15% of the duty demanded which works out to Rs.one crore is unreasonable that results in substantial hardship so as to cause prejudice its right to be heard - no ground to interfere.

Summary

Issues:
1. Alleged duty evasion by the appellant in claiming Cenvat benefit.
2. Reasonableness of the order directing payment of 15% of the duty demanded.
3. Interference with the interlocutory order of the CESTAT on pre-deposit.

Analysis:

1. The judgment addresses the issue of alleged duty evasion by the appellant in claiming Cenvat benefit. The appellant, a manufacturer of finished menthol products, claimed the benefit based on purchases from a particular supplier. However, investigations revealed that the supplier was not actually manufacturing the intermediate product but only supplying crude oil. The Commissioner of Central Excise upheld the allegations, leading to the present petitioner being accused of involvement in duty evasion. The court examined the contentions raised by the appellant's counsel but ultimately found the findings against the appellant to be reasonable and not meritless. Consequently, the court dismissed the appeal against the order.

2. The second issue pertains to the reasonableness of the order directing the appellant to pay 15% of the duty demanded, amounting to Rs.1,00,00,000. The appellant argued that this amount was unreasonable given the circumstances and the findings of the CESTAT. However, the court held that unless the direction to pay the amount caused excessive hardship or incapacity, there would be no grounds for interference. In this case, the court found that the appellant had not demonstrated that the payment would result in substantial hardship prejudicing its right to be heard. Therefore, the court upheld the order directing the payment of 15% of the duty demanded.

3. The final issue addressed in the judgment concerns the interference with the interlocutory order of the CESTAT on pre-deposit. The court clarified that interference with such orders would only be warranted if the conditions imposed caused excessive hardship or incapacity. In this instance, since the appellant did not establish that the direction to pay 15% of the duty demanded resulted in substantial hardship, the court found no grounds to interfere. Consequently, the court dismissed the appeal against the interlocutory order of the CESTAT on pre-deposit.

In conclusion, the judgment dismisses the appeal against the order alleging duty evasion, upholds the order directing payment of 15% of the duty demanded, and rejects interference with the interlocutory order of the CESTAT on pre-deposit based on the reasons discussed above.