2014 (4) TMI 1027 - HC - Central Excise

Waiver of pre deposit - Held that - Unit of petitioners was taken over by the concerned authority under the SARFAESI Act and even at the relevant time they could not deposit even 10% of the duty and penalty confirmed and considering the fact that now the petitioners have shown their readiness to deposit 15% of the duty and penalty confirmed - Conditional stay granted.

Summary

Issues:
- Non-compliance with Section 35F of the Central Excise Act
- Dismissal of appeals by the First Appellate Authority
- Dismissal of restoration applications by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
- Financial crisis faced by the petitioners
- Request for restoration of appeals and stay applications
- Arguments by both parties regarding the non-deposit of duty and penalty
- Decision on the deposit amount and further proceedings

Non-compliance with Section 35F of the Central Excise Act:
The petitioners had submitted stay applications and applications for waiver of pre-deposit under Section 35F of the Central Excise Act. The First Appellate Authority initially directed a 50% deposit, later modified to 10%. However, the petitioners failed to comply with the deposit requirements, leading to the dismissal of both appeals by the Authority for non-compliance with Section 35F.

Dismissal of appeals by the First Appellate Authority:
Feeling aggrieved by the dismissal, the petitioners appealed to the CESTAT, but their stay applications were dismissed for non-prosecution. The CESTAT further dismissed the appeals for non-compliance with Section 35F. Subsequently, the petitioners filed restoration applications, citing financial crisis due to their unit being taken over under the SARFAESI Act. The CESTAT, however, dismissed the restoration applications as well.

Financial crisis faced by the petitioners and request for restoration:
The petitioners, through their advocate, highlighted their financial crisis as the reason for non-compliance. They expressed willingness to deposit 15% of the duty and penalty confirmed and requested the Commissioner (Appeals) to decide the appeals on merits.

Arguments by both parties regarding the non-deposit of duty and penalty:
The petitioners' advocate argued that the non-deposit was due to financial difficulties and lack of mala fide intention. The Assistant Solicitor General opposed the petitions, stating that the restoration applications were filed late and suggested additional deposits.

Decision on the deposit amount and further proceedings:
After hearing both parties, the High Court decided to grant the petitioners one opportunity to deposit 15% of the confirmed duty and penalty. The Court ordered the deposit within four weeks, directing the Commissioner (Appeals) to proceed with the appeals upon receipt of the deposit. Failure to comply would result in automatic dismissal of the appeals for non-compliance with Section 35F.

Conclusion:
The High Court disposed of the Special Civil Applications, providing a chance for the petitioners to deposit the required amount and proceed with their appeals before the Commissioner (Appeals) for a decision on merits, emphasizing the importance of complying with Section 35F of the Central Excise Act.