2014 (3) TMI 880 - HC - Central Excise

Waiver of pre deposit - Whether in facts & circumstances of the present case the Appellate Tribunal is correct in directing the Appellant to deposit ₹ 40 lacs as a pre-condition to hear the matter on merits when the entire issue is covered by the ruling of coordinate bench in Appellant's own case for the previous period - Held that - Appellant has been required to predeposit ₹ 40 lacs on demand of duty and penalty of ₹ 3 crores which is about 13.33% which cannot be said to be unreasonable. Even otherwise, from the argument of the learned counsel for the appellant, it would emerge that on combined liability of two periods of ₹ 8 crores, the appellant would be depositing ₹ 50 lacs only which cannot be held to be excessive in any manner. The quantum required to be pre-deposited would vary if the total demand increases - no substantial question of law arises - However, time period to make pre deposit extended - Decided partly in favour of assessee.

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against Tribunal's order.
2. Pre-condition of deposit before hearing the appeal.
3. Discrepancy in pre-deposit amount compared to previous case.
4. Legal principles of consistency and binding precedent.
5. Justification of the pre-deposit amount.
6. Application of legal precedents in the current case.
7. Existence of substantial question of law.
8. Extension of time for pre-deposit.

Analysis:

1. The appellant filed an appeal under Section 35G of the Central Excise Act, 1944 against the Tribunal's order directing a pre-deposit of Rs. 40 lacs before hearing the appeal on merits. The substantial question of law raised was whether the Tribunal's directive for the pre-deposit was justified given the circumstances of the case.

2. The appellant, a 100% Export Oriented Unit, faced a duty demand and penalty confirmed by the respondent. The Tribunal's order for the pre-deposit was challenged based on a previous case where a lower amount was required. The appellant argued for consistency in judicial discretion citing the principle of uniformity in similar cases.

3. The High Court, after considering the arguments, found no merit in the appeal. It noted that no strict rules of precedents apply to interim orders. The Tribunal justified the higher pre-deposit amount of Rs. 40 lacs due to the duty-free import of raw materials, which disadvantaged domestic players. The Court referred to legal precedents to support the Tribunal's decision.

4. The Court emphasized that the pre-deposit amount of Rs. 40 lacs, representing about 13.33% of the total demand, was not unreasonable. It clarified that the appellant would only be depositing Rs. 50 lacs for a combined liability of Rs. 8 crores, which was not excessive. The Court highlighted that the pre-deposit amount could vary based on the total demand.

5. Regarding the appellant's reliance on the Vishnu Traders case, the Court explained that the principle of binding precedents did not apply to interlocutory orders. Therefore, the appellant could not derive support from that case. The Court concluded that no substantial question of law arose, and hence, the appeal was dismissed.

6. Finally, the Court granted an extension for the pre-deposit deadline in the interest of justice, allowing the appellant to deposit the amount of Rs. 40 lacs by a specified date to proceed with the appeal on merits as per the Tribunal's order.

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