2014 (1) TMI 1521 - HC - Central Excise

Waiver of pre deposit - Whether the Hon ble Tribunal was justified in demanding Rs. One lac in compliance of section 35F of the Central Excise Act 1944 on the Application pending before the Commissioner (Appeals) specially when the Commissioner (Appeals) had dispensed with the condition of predeposit prior to remand - Held that - appellant had an order of dispensation of pre-deposit of the amount in its favour during the pendency of the proceedings before the Commissioner (Appeals). The Tribunal found it appropriate to remand the proceedings back to the Commissioner (Appeals) for reconsideration. Save and except recording the submission of the revenue that a direction for deposit should be made, the Tribunal has not furnished any independent ground for modifying the position which obtained during the pendency of the proceedings before the Commissioner (Appeals). Hence, though the Tribunal undoubtedly did have the power under Section 35-C to issue an appropriate direction while remanding the proceedings, no reason has been furnished by the Tribunal for ordering the deposit - Commissioner (Appeals) directed to decides the appeal on merits - Decided party in favour of assessee.

Summary

Issues:
1. Justification of demanding Rs. 1 lac under section 35F of the Central Excise Act 1944.
2. Jurisdiction of the Tribunal to issue a direction for deposit of the amount while remanding the proceedings.

Analysis:

1. The appellant challenged the demand of Rs. 1 lac under section 35F of the Central Excise Act 1944. The Assistant Commissioner had confirmed a duty demand and penalty, which was later upheld by the Commissioner (Appeals). The Tribunal remanded the proceedings back to the Commissioner (Appeals) but directed the appellant to deposit Rs. 1 lac to protect the revenue's interest. The Tribunal rejected the review application. The appellant argued that all sale documents were on record, and there was no service element. However, the Tribunal emphasized the failure to provide evidence led to the defense rejection. The Tribunal justified the deposit to protect the revenue's interest. The High Court upheld the Tribunal's decision, citing Section 35-C's power to issue directions while remanding proceedings.

2. The appellant contended that the Tribunal exceeded its jurisdiction by ordering the deposit. The High Court disagreed, stating that Section 35-C empowers the Tribunal to issue directions to protect the revenue's interest while remanding proceedings. The Court referenced a Punjab & Haryana High Court case supporting this view. However, in this specific case, the Tribunal did not provide independent grounds for ordering the deposit, as the appellant had a dispensation order during the appeal before the Commissioner (Appeals). The Court modified the Tribunal's order, directing the Commissioner (Appeals) to reconsider the pre-deposit requirement before deciding the appeal on merits.

In conclusion, the High Court dismissed the appellant's challenge regarding the deposit requirement under section 35F. The Court upheld the Tribunal's authority to issue directions for protecting the revenue's interest while remanding proceedings. However, the Court modified the order, directing the Commissioner (Appeals) to reassess the pre-deposit necessity before proceeding with the appeal's merits.