2014 (1) TMI 1470 - HC - Central Excise

Waiver of pre deposit - Recovery of excise duty - Penalty u/s 11AC - Invokation of section 11A(1) - Held that - neither before the learned Tribunal nor even before this Court the petitioner-original appellant has pleaded any financial hardship and/or undue hardship - merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequence flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens faith in the impartiality of public administration, interim relief can be given - For a hardship to be undue it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it - Following decision in case of Benara Valves Ltd. 2006 (11) TMI 6 - SUPREME COURT OF INDIA - However, extention of time make pre deposit grated - Decided against assessee.

Summary

Issues Involved:
1. Quashing and setting aside the impugned order of pre-deposit.
2. Consideration of undue financial hardship and safeguarding the interest of revenue.
3. Prima facie case for complete waiver of pre-deposit.

Detailed Analysis:

1. Quashing and Setting Aside the Impugned Order of Pre-deposit:
The petitioner sought an appropriate writ under Article 226 of the Constitution of India to quash the impugned order dated 15.7.2013, which directed a pre-deposit of Rs. 20 lakh. The adjudicating authority had confirmed a duty liability of Rs. 1,19,31,668/- and imposed an equivalent penalty under Section 11AC of the Central Excise Act. The petitioner appealed to the Customs, Excise Service Tax Appellate Tribunal (CESTAT), which ordered the pre-deposit. The petitioner argued that the Tribunal erred by not considering the merits of the case in detail and not providing findings on the submissions made.

2. Consideration of Undue Financial Hardship and Safeguarding the Interest of Revenue:
The petitioner did not plead any financial or undue hardship before the Tribunal or the High Court. The Division Bench of the High Court referenced the case of Explosion Proof Electrical Control v. CCE & C, Vapi and the Supreme Court decision in Mehsana District Co-operative Milk U.P. Ltd. v. Union of India, which highlighted the twin requirements of considering undue financial hardship and safeguarding the interest of revenue when directing pre-deposits under Section 35F. The Tribunal must balance these considerations, ensuring fairness and legality.

3. Prima Facie Case for Complete Waiver of Pre-deposit:
The Tribunal's role in considering a prima facie case for a complete waiver of pre-deposit was discussed. The Tribunal reviewed the original order to determine if a complete waiver was justified. The Supreme Court's principles in Benara Valves Ltd. v. CCE were cited, emphasizing that the Tribunal should not provide detailed findings on merits at the pre-deposit stage to avoid pre-judging the appeal. The Tribunal concluded that the petitioner did not establish a prima facie case for a complete waiver, thus directing a pre-deposit of Rs. 20 lakh against the confirmed duty liability and penalty.

Conclusion:
The High Court found no error or illegality in the Tribunal's order directing the petitioner to deposit Rs. 20 lakh. The Tribunal had judiciously considered the prima facie case and the principles laid out by the Supreme Court. The petitioner's argument that the Tribunal failed to address all submissions on merits was not accepted, as detailed findings at the pre-deposit stage could lead to accusations of pre-judging the appeal. Consequently, the petition was dismissed, but the petitioner was granted an additional four weeks to make the pre-deposit to allow the Tribunal to consider the appeal on merits.