2014 (4) TMI 506 - HC - Central Excise

Waiver of pre deposit - Duty demand - Held that - On 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 consequences 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 - However, looking to the fact that from 10.5.2008, according to the own submission of the learned counsel for the appellant, duty became payable on Printed Laminated Plastic, the present was not a case of waiver of the entire amount - Order modified by directing assessee to deposit 25% of the duty component assessed by the order passed by the Commissioner and compounding interest under section 11-AB - Decided partly in favour of assessee.

Summary

Issues:
1. Failure of the Central Excise & Service Tax Appellate Tribunal to consider the prima facie case of the appellant.
2. Requirement of pre-deposit of disputed demand of duty for hearing the appeal.
3. Invocation of extended period of limitation by the Tribunal.

Analysis:

Issue 1:
The appellant contended that the Tribunal did not consider the prima facie case, especially regarding the extended period of limitation. The appellant argued that duty became chargeable due to an amendment and there was no suppression on their part. The appellant cited the Metlex case and emphasized the importance of case-specific considerations for stay/dispension of pre-deposit. The Tribunal did not explicitly state that the appellant lacked a prima facie case, as evidenced by the waiver of 50% deposit requirement, indicating some merit in the appeal.

Issue 2:
The appellant argued that the Tribunal should have heard the appeal without requiring any pre-deposit of the disputed duty. The appellant relied on the Benara Valves Ltd. case to support the contention that interim relief should be granted when the demand appears baseless. The Tribunal's order indicated that a partial deposit was deemed necessary, aligning with the principles laid down by the Apex Court. The Tribunal's decision to require a 50% deposit was based on a cursory glance at the case's merits.

Issue 3:
The department invoked the extended period of limitation, which the appellant disputed citing the Nestle India case. The Apex Court in Nestle India clarified that the extended period applies only in cases of deliberate withholding of information. However, since duty became payable post-amendment, the Tribunal found that the entire amount could not be waived. The High Court modified the Tribunal's order, requiring the appellant to deposit 25% of the duty assessed within a specified period to halt recovery proceedings, allowing for an expedited hearing of the appeal.

In conclusion, the High Court favored the appellant on issues 1 and 3, while ruling in favor of the department on issue 2. The appeal was disposed of with modifications to the deposit requirement, ensuring a balance between the interests of justice and the obligations of the appellant in the disputed duty matter.