2014 (1) TMI 1571 - HC - Central Excise

Waiver of pre-deposit of duty and equivalent penalty - petitioner is manufacturing the chassis of the motor vehicles and getting the body built on the chassis from other parties - Payment of the excise duties on the manufactured body of the said vehicle - Duty to be paid by builders - Held that - petitioner is the manufacturer of the motor vehicle chassis and they sale the chassis of the vehicle on the payment of appropriate excise duty, for which M/s. Tata Motors entered into an agreement with various body builders of the vehicle to pay the duty of the vehicle on the manufactured chassis - merely establishing of 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 on and it would be undesirable to require the assessee to pay full or substantive part of the demand. Petition for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand and then held that 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 - hardship to be undue it must be shown that the particular burden 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. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. Where the petitioner itself knowing about the interim order dated 25-3-2011 passed in its own case and did not just choose to rely upon the said interim order before the Tribunal and invited a detailed order on merits, wherein, in fact the case has been considered on the facts of the case in hand, of the writ petitioner, which is not the position in the order dated 25-3-2011, then no interference is required. However, it is necessary to maintain the judicial discipline by following even the interim order, which has been passed but earlier order had different fat situation, wherein that aspect of the matter has not been taken into consideration and different view also can be taken here in this case. If the Tribunal was not made aware of the order dated 25-3-2011, at the cost of repetition, we would like to observe that the reasons given in the order dated 21-12-2011 are quite different and distinct reasons, which are not be available in the order dated 25-3-2011 - However, Six weeks time is granted for depositing the requisite amount before the Tribunal - Decided against assessee.

Summary

Issues:
Writ petition for waiver of pre-deposit of duty and penalty amount rejected - Interpretation of liability for excise duty on manufactured body of vehicles - Application of Division Bench judgment and statutory deeming clause - Consideration of financial hardship and legal precedents in granting relief - Request for alternative security or bank guarantee.

Analysis:
The writ petition involved a dispute regarding the waiver of pre-deposit of duty and penalty amount by M/s. Tata Motors Limited, where 25% of the duty confirmed was directed to be deposited. The petitioner contended that as per a Division Bench judgment and statutory deeming clause, the duty on manufactured vehicle bodies should be paid by the body builders, not the chassis manufacturer. Reference was made to various legal precedents, including a Supreme Court judgment and a Rajasthan High Court judgment, to support this argument.

The Revenue, however, argued that the authorities had valid reasons for not waiving the complete payment of duty. Citing a Supreme Court case, the Revenue emphasized that interim relief against pre-deposit cannot be granted solely based on consequential hardship. The Revenue highlighted distinctions in the cases relied upon by the petitioner and presented detailed facts to support their stance.

Upon considering the submissions and facts of the case, the Court observed that the transaction between M/s. Tata Motors and the body builders raised doubts on the nature of dealings, especially regarding excise duty payments and Cenvat credit. The Court quoted the Tribunal's order, which emphasized the lack of financial hardship pleaded by the petitioner and directed the deposit of 25% of the duty confirmed within a specified period.

Examining the legal principles further, the Court referred to a Supreme Court judgment cautioning against passing interim orders solely based on a prima facie case without due consideration of circumstances. The Court found no justification to interfere with the Tribunal's decision, which had considered the case on its merits, unlike an earlier interim order. The Court dismissed the writ petition, noting that the reasons given for denying relief were not illegal or unwarranted.

Lastly, the petitioner's request for alternative security or a bank guarantee was denied, as no specific circumstances warranted such relief. The Court granted six weeks for the deposit of the required amount before the appellate authority, maintaining the decision on pre-deposit.

In conclusion, the Court's decision was based on a thorough analysis of legal precedents, factual considerations, and the absence of undue financial hardship, ultimately leading to the dismissal of the writ petition and the denial of alternative relief requests.