2012 (10) TMI 235 - HC - Customs

Whether the Tribunal should have permitted waiver of 100% of the pre-deposit amount as the appellant was a public sector undertaking Held that - Pre-deposit is the rule and waiver is an exception and having regard to the financial ability and undue hardship to be caused to the appellant and not otherwise - appellant is a public sector undertaking and very solvent. If it is so, nothing wrong in depositing amount as is indicated by the Tribunal - Even otherwise when the Tribunal has examined the matter and has exercised its discretion in favour of the assessee to dispense with the requirement of deposit in respect of a part of the amount, we do not find any occasion at all to set aside or in anyway modify that order in an appeal under Section 130 of the Act - appeal is dismissed.

Issues:
1. Interpretation of Section 129E of the Customs Act, 1962.
2. Application of pre-deposit requirements for appeals.
3. Consideration of waiver for public sector undertakings.
4. Compliance with circulars issued by the Central Board of Excise and Customs.
5. Applicability of statutory provisions for waiver of deposit.
6. Practice of the Tribunal in passing orders for waiver.
7. Maintainability of appeal under Section 130A.
8. Examination of substantial question of law.
9. Binding effect of supplementary instructions by the board.
10. Financial ability and undue hardship for pre-deposit.
11. Discretion of the Tribunal in dispensing with deposit requirements.
12. Review of Tribunal's order in appeal under Section 130.

Analysis:

The judgment by the Karnataka High Court, delivered by Justices D.V. Shylendra Kumar and H.S. Kempanna, primarily deals with the interpretation and application of Section 129E of the Customs Act, 1962. The Court notes that orders issued by the Customs, Excise, and Service Tax Appellate Tribunals under this provision have been a source of ongoing litigation. The case involves a public sector undertaking appealing against an order by the Tribunal regarding the pre-deposit requirement for maintaining the appeal. The Tribunal had directed the appellant to deposit a specific amount within a set timeframe, leading to the appeal challenging the decision.

A key issue raised in the appeal was the consideration of waiver of 100% of the pre-deposit amount due to the appellant's status as a public sector undertaking. The appellant argued that the Tribunal overlooked circulars issued by the Central Board of Excise and Customs, which should have influenced the decision. The Tribunal's order, allowing the deposit of a reduced amount compared to the total demand, was contested as not aligning with the board's circulars, prompting the appeal.

The Court observed that the appellant's application to the Tribunal primarily sought a stay in the pending appeal, without explicitly requesting a waiver of the pre-deposit amount as per Section 129E. While acknowledging the common practice of combining stay and waiver requests in applications, the Court emphasized the importance of clearly indicating the request for waiver in such cases to enable proper consideration by the Tribunal.

Regarding the practice of treating waiver requests as the norm rather than the exception, the Court highlighted that Section 129E establishes pre-deposit as the rule, with waiver being an exception. The Court expressed concern over the growing trend of assuming waiver requests as routine, contrary to the statutory provisions.

The Court also addressed the issue of the appeal's maintainability under Section 130A, emphasizing that such appeals should involve substantial questions of law decided erroneously by the Tribunal. In this case, the Court found no substantial question of law warranting examination under Section 130A, despite references to supplementary instructions from the Central Excise Law Manual.

Additionally, the Court clarified that while supplementary instructions from the board may be binding on department officials, they do not hold the same authority over the Tribunal, which operates as a quasi-judicial body. The Court emphasized the Tribunal's discretion in dispensing with pre-deposit requirements, considering factors such as financial ability and undue hardship to the appellant.

Ultimately, the Court upheld the Tribunal's order, stating that there was no basis for interference or modification in the appeal under Section 130 of the Act. The appeal was dismissed, affirming the Tribunal's decision regarding the pre-deposit amount and highlighting the importance of adhering to statutory provisions and established practices in such matters.

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