2013 (8) TMI 531 - HC - Service Tax

Power u/s 35 Remand of Matter Direction to Deposit - Whether in exercise of powers u/s 35C of the Act and while remanding the matter back to the original adjudicating authority, the Appellate Tribunal can issue direction directing the assesse to deposit some amount before his case was considered on merits by the original adjudicating authority on remand - Held that - No error and/or illegality has been committed by the Appellate Tribunal issuing the direction while remanding the matter back to the original adjudicating authority - There was no bar u/s 35C of the Central Excise Act, 1944 that while referring the case back to the original authority, the Tribunal cannot impose any condition and/or issue any direction of deposit of some amount before any fresh adjudication on remand and it was held that while remanding the case back to the original authority in exercise of powers u/s 35C Appellate Tribunal may issue any direction as it deems fit which can be inclusive of deposit of some amount. It had become necessary to ensure that the assesse cooperated with the Department and in the facts and circumstances of the case, appellant/assessee be required to deposit amount of ₹ 50 lakh - it was required to be noted that the petitioners have never pleaded any financial difficulty/crunch - no error and/or illegality has been committed by the Appellate Tribunal issuing the direction while remanding the matter back to the original adjudicating authority, directing the petitioner assessee to deposit a sum of ₹ 50 lakh, which calls for interference of this Court in exercise of powers under Article 226 of the Constitution of India - Application Dismissed.

Issues Involved:
1. Jurisdiction of the Tribunal to issue a direction for predeposit while remanding the matter.
2. Compliance with principles of natural justice.
3. Conduct and cooperation of the petitioner during adjudication.
4. Interpretation and application of Section 35C of the Central Excise Act, 1944.

Detailed Analysis:

1. Jurisdiction of the Tribunal to Issue a Direction for Predeposit While Remanding the Matter:
The primary issue raised by the petitioner was whether the Customs Excise & Service Tax Appellate Tribunal (CESTAT) had the jurisdiction to direct a predeposit of Rs. 50 lakh while remanding the matter to the original adjudicating authority. The petitioner argued that once an Order in Original (OIO) is set aside by the Tribunal, there is no liability to pay any duty, penalty, or interest until a fresh order of adjudication is passed. Therefore, the Tribunal lacks the jurisdiction to impose a predeposit condition under Section 35C of the Central Excise Act, 1944.

The court, however, held that the Tribunal has wide discretion under Section 35C to pass such orders as it thinks fit, which includes issuing directions for predeposit. The term "directions" in Section 35C is not restricted to procedural guidance but can include conditions such as predeposit, especially when the remand is necessitated due to the assessee's lack of cooperation.

2. Compliance with Principles of Natural Justice:
The petitioner contended that the Commissioner's order was against the principles of natural justice because the Commissioner relied on reports from the Assistant Commissioner without providing copies to the petitioner. The Tribunal, while hearing the stay application, also considered the appeal and remanded the matter back to the original adjudicating authority with a direction to deposit Rs. 50 lakh, citing the petitioner's lack of cooperation.

The court found that the Tribunal's direction for predeposit was justified given the petitioner's failure to cooperate and provide necessary documents during the initial proceedings. The Tribunal's decision to ensure compliance and cooperation by imposing a predeposit condition was within its jurisdiction and did not violate principles of natural justice.

3. Conduct and Cooperation of the Petitioner During Adjudication:
The Tribunal and the Commissioner both noted that the petitioner did not extend full cooperation during the adjudication process. Despite ample opportunities, the petitioner failed to furnish relevant documents to support their claims. The Tribunal's decision to impose a predeposit was influenced by the petitioner's conduct, which contributed to the necessity of remanding the matter.

The court agreed with the Tribunal's assessment, noting that the petitioner's lack of cooperation warranted the imposition of a predeposit condition to ensure compliance and expedite the adjudication process.

4. Interpretation and Application of Section 35C of the Central Excise Act, 1944:
Section 35C of the Central Excise Act, 1944, grants the Tribunal the authority to pass orders confirming, modifying, or annulling decisions or to refer cases back to the original authority with directions. The petitioner argued that the term "directions" should be limited to procedural guidance and not include predeposit conditions.

The court, however, interpreted Section 35C broadly, affirming that the Tribunal has the discretion to issue any directions it deems fit, including predeposit conditions. The court emphasized that restricting the Tribunal's powers would be contrary to the legislative intent and the statutory language of Section 35C.

Conclusion:
The court concluded that the Tribunal acted within its jurisdiction under Section 35C of the Central Excise Act, 1944, by directing the petitioner to deposit Rs. 50 lakh while remanding the matter for fresh adjudication. The Tribunal's decision was based on the petitioner's lack of cooperation and was aimed at ensuring compliance and protecting revenue interests. The petition was dismissed, and the rule was discharged.

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