2014 (1) TMI 425 - AT - Central Excise

Modification of stay order - Reduction in the amount of pre-deposits ordered to be submitted Held that - The directions to deposit an amount of Rs. 10,00,000/- and to give bank guarantee of Rs. 10,00,000/- out of the total confirmed demand of more than Rs. 1,00,00,000/- cannot be held to be harsh Decided against Assessee.

Summary

Issues:
1. Stay order directing deposit and bank guarantee.
2. Financial position of the appellant.
3. Compliance with the directions.

Analysis:
1. The judgment revolves around a stay order requiring the appellant to deposit a specific amount and provide a bank guarantee for the hearing of their appeals. The Tribunal had considered an earlier stay order in the same appellant's case and had directed a substantial deposit. The High Court later reduced this amount based on cash deposit and a bank guarantee. The appellant, facing financial difficulties, requested a similar approach for the current appeals involving a duty amount of over Rs. 1 crore. Despite the appellant's financial constraints, the Tribunal found the directions reasonable and rejected the appellant's application for modification, extending the deadline for compliance by six weeks.

2. The financial position of the appellant was a key aspect of the case. The appellant argued that their poor financial state prevented them from meeting the deposit and bank guarantee requirements. The advocate highlighted the balance sheet showing cash in hand and receivables up to December 2012, while mentioning subsequent losses. Conversely, the Revenue representative pointed out the significant cash holdings and receivables reflected in the balance sheet, indicating a different financial picture than claimed by the appellant.

3. In assessing compliance with the directions, the Tribunal acknowledged the substantial confirmed demand but upheld the deposit and bank guarantee conditions, citing the precedent set by the High Court's criteria and the appellant's own advocate's request. Despite the appellant's financial challenges, the Tribunal deemed the requirements not unduly harsh. However, in a gesture of fairness, the Tribunal extended the deadline by six weeks for the appellant to fulfill the deposit and guarantee obligations, with a follow-up compliance check scheduled for a specific date. The judgment, therefore, balanced the need for financial compliance with considerations of justice and precedent.