2013 (1) TMI 73 - HC - Central Excise

Pre-deposit of ₹ 35 lacs for the purposes of hearing the appeal on merits - Held that - Order directing the petitioner to deposit of ₹ 35 lacs is non-speaking order as it does not consider and/or examine submission made by the petitioner in support of its prima facie case to take a prima facie view. At the time of disposing of the stay application directing the petitioner to deposit or not deposit any amount for the purposes of entertaining the petitioner's appeal on merit, the same is required to be exercised by showing that he has at least prima facie considered the submissions of the parties before him. Merely because the petitioner has not pleaded any financial hardship, it would not follow that the amount of duty and/or penalty adjudicated by the lower authority has to be pre-deposited for the purposes of hearing of the appeal on merits. Thus quash the order dated 18.10.2012 passed by the Commissioner (Appeals) Central Excise, Pune-I and remand the matter to him for fresh disposal of the stay application after considering the submission of the petitioner.

Summary

Issues:
Challenge to order of Commissioner (Appeals) Central Excise, Pune-I directing pre-deposit under Section 35F of the Central Excise Act, 1944 for hearing appeal on merits.

Analysis:
The petitioner, engaged in manufacturing, sold goods at Nil rate of duty under a specific notification. A show cause notice was issued for recovery of Excise Duty and penalty, alleging non-fulfillment of notification conditions. The petitioner contended satisfaction of conditions and time-barred notice. The Additional Commissioner confirmed the demand. The petitioner appealed and sought stay without pre-deposit, citing exemption under customs notifications and project certificates. The Commissioner (Appeals) directed pre-deposit of Rs.35 lacs out of total demand of Rs.69.88 lacs, stating lack of prima facie case for complete waiver.

Analysis Continued:
The petitioner challenged the order, alleging breach of natural justice as their submissions were not considered before the pre-deposit directive. The Revenue defended the order, stating no financial hardship plea by the petitioner. The Court found merit in the petitioner's argument, deeming the order non-speaking and lacking consideration of submissions for a prima facie view. The Court emphasized the quasi-judicial nature of the Commissioner (Appeals)'s function, requiring at least a prima facie assessment of parties' submissions before ordering pre-deposit. Financial hardship alone does not mandate pre-deposit if a strong prima facie case exists, especially if the dispute is in favor of the party based on higher forum decisions.

Final Decision:
The Court set aside the order directing pre-deposit and remanded the matter to the Commissioner (Appeals) for fresh disposal of the stay application after proper consideration of the petitioner's submissions and forming a prima facie view. The petition was disposed of with no costs awarded.