2014 (1) TMI 1334 - HC - Central Excise

Waiver of pre deposit - Both the units were running as one single unit and had claimed exemption of small units operating separately - Held that - goods worth Rs.80,13,000/-, which was seized, were directed to be released on payment of redemption fine of Rs.8,50,000/- in one case and Rs.1 lac in another case for redeeming the goods. The appellants could have redeemed the goods on payment of Rs.9,50,000/- and used the sale proceeds for payment of Rs.50 lacs - The balance sheets as the income tax returns filed today support that the firms and their partners do not have sufficient means, but that considering that proprietor of one of the firm was partner in another firm, which was running the business claiming exemption as separate units, the order passed by the Tribunal for a deposit of Rs.50 lacs only by consolidated order in both the cases, has taken into consideration the submission both with regard to prima facie case and the undue hardships, which may be caused to the appellants - No substantial question of law arises - However time limit for deposit extended - Decided partly in favour of assessee.

Issues:
1. Central excise appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal directing deposit of Rs.50 lacs for waiver of duty and penalty.
2. Financial capacity of the appellants to pay the imposed duty and penalty.
3. Consideration of balance sheets and financial arrangements of the appellants.
4. Justifiability of the Tribunal's order for deposit and waiver of duty and penalty.
5. Extension of time for deposit based on the circumstances presented.

Analysis:
1. The central excise appeal was filed against the Tribunal's order directing the appellants to deposit Rs.50 lacs for waiver of duty and penalty. The Tribunal found that both units were operating as one single unit, contrary to the claim of exemption for separate operation. The appellants had already deposited a partial amount during investigation, but the Tribunal's order required an additional deposit within a specified timeframe.

2. The financial capacity of the appellants to pay the imposed duty and penalty was a crucial aspect of the case. The appellants argued that they lacked the financial means to pay the redemption fine required for releasing seized goods. The Tribunal's order for a consolidated deposit of Rs.50 lacs was contested on the grounds of financial hardship faced by the appellants.

3. The consideration of balance sheets and financial arrangements of the appellants played a significant role in the judgment. The appellants were given time to submit updated balance sheets and account statements to demonstrate their inability to pay the redemption fine jointly. The balance sheets and income tax returns supported the contention that the appellants and their partners lacked sufficient means to meet the financial obligations.

4. The justifiability of the Tribunal's order for deposit and waiver of duty and penalty was thoroughly examined. The High Court noted that the Tribunal's order, although seemingly burdensome, had taken into account the prima facie case against the appellants and the potential undue hardships they might face. The Court ultimately found the Tribunal's decision to be just and reasonable, leading to the dismissal of the Central Excise Appeals.

5. In view of the circumstances presented and the financial constraints of the appellants, the High Court decided to extend the time for deposit by another eight weeks. This extension was granted based on the facts and arguments brought before the Court, indicating a consideration of the practical challenges faced by the appellants in meeting the financial obligations imposed by the Tribunal.

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