2013 (3) TMI 482 - HC - Central Excise

Non payment of excise duty - periods in question May 2010 to December 2010 and January 2011 to October 2011 - SCN demanding duty amounts with interest and also imposed penalty - second respondent ordered pre-deposit of 50% of the duty confirmed and also waived the interest and penalty -the petitioner filed these Writ Petitions on the ground that the financial burden and undue hardship shown by the petitioner have not been considered by the second respondent - Held that - The second respondent-appellate authority has viewed the matter sympathetically and shown lenient approach while reducing the pre-deposit amount to the extent of 50%, apart from waiving the interest and penalty. If such a course is adopted by the second respondent taking note of the principles by waiving 50% of the pre-deposit amount, it is not for this Court to interfere with the same. Therefore, this Court is of the considered opinion that the second respondent-appellate authority has given due consideration of the financial burden and undue hardship pleaded by the petitioner, and hence, the amount of pre-deposit ordered by the second respondent is no way legally infirmed, which is accordingly confirmed, as there is no scope of interference in the same in the light of the settled legal principles. The petitioner is directed to pay the pre-deposit amounts as ordered by the second respondent-appellate authority in the impugned common order, dated 22.2.2013, within a period of three weeks from the date of receipt of a copy of this order to take up the appeals.

Summary

Issues:
Challenge to order for pre-deposit of duty confirmed by first respondent in Order-in-Original, consideration of financial burden and undue hardship by second respondent, maintainability of Writ Petitions, compliance with pre-deposit requirement for entertaining appeals.

Analysis:
The petitioner, a company manufacturing sheet metal components for motor vehicles, contested the order of the second respondent directing a pre-deposit of 50% of the duty confirmed by the first respondent. The petitioner argued that over 85% of the duty for March 2010 was paid on time, highlighting financial crisis and losses incurred. On the other hand, the respondents emphasized the mandatory nature of pre-deposit, citing exceptions for undue hardship and financial burden. The second respondent's order waived interest and penalty but required the pre-deposit, leading to the filing of Writ Petitions challenging this decision.

The Court acknowledged the petitioner's compliance with CENVAT credit rules and the initiation of proceedings for excise duty liabilities for specific periods. It noted the first respondent's order demanding duty, interest, and penalty, against which the petitioner filed appeals and stay petitions with the second respondent. The second respondent, while considering the Revenue's interest and the petitioner's circumstances, ordered a 50% pre-deposit and waived interest and penalty, warning of appeal dismissal for non-compliance. The petitioner argued that their financial crisis and undue hardship were not adequately considered by the second respondent.

The Court reiterated the statutory requirement of pre-deposit before entertaining appeals and the discretion of the appellate authority to consider prima-facie cases, balance of convenience, and financial constraints. It emphasized the need for the appellate authority to weigh undue hardship, financial burden, and Revenue interests before deciding on pre-deposit or waiver. In this case, the Court upheld the second respondent's decision to reduce the pre-deposit to 50% and waive interest and penalty, citing the authority's lenient and sympathetic approach.

The Court declined to interfere with the second respondent's decision, considering it in line with established legal principles. It directed the petitioner to pay the pre-deposit amounts within three weeks, with the second respondent instructed to proceed with the appeals promptly after payment. Both parties agreed to this course of action, leading to the disposal of the Writ Petitions without costs.

This detailed analysis covers the issues raised in the judgment, including the challenge to the pre-deposit order, the consideration of financial circumstances, the legal basis for pre-deposit requirements, and the Court's decision regarding compliance and further proceedings.