2014 (5) TMI 538 - HC - Service Tax

Extension of stay order - Waiver of pre-deposit - Cenvat credit on the service tax paid on the input services - appellant herein has sent Piston Rings in coil form under material movement challans - appellant availed the credit of service tax paid by the Job Worker - Revenue is seeking to recover the same on the ground that M/s. FMGIL is not liable to pay any service tax - should have availed the benefit of Notification No. 8/05-S.T., dated 1-3-2005 - Held that - The appeal should have been disposed of at any rate before 180 days when there is an order of stay as contemplated under Section 35C of the Act. The contention that due to the stay order, the application is not disposed is not acceptable and there is no substance in the said contention. At any rate as already sufficient time has elapsed, in the circumstances of the case, we deem it proper to direct the Tribunal to dispose off the appeal on or before 30th of September, 2011 positively. The Assessee shall co-operate with the Tribunal in disposing of this appeal. If the assessee does not co-operate and the Tribunal does not dispose off the appeal within 30 days, the impugned order passed in this appeal stands set aside and the assessee shall deposit the amount, which is the subject matter of the appeal before the Tribunal. - Decided partly in favour of Revenue.

Summary

Issues:
Challenge to Tribunal's order for waiver of pre-deposit and stay of recovery till appeal disposal under Section 35F of the Central Excise Act, 1944.

Analysis:
The appeal filed by the revenue challenges the Tribunal's order allowing the assessee's application for waiver of pre-deposit and stay of recovery pending appeal. Section 35F of the Central Excise Act, 1944 mandates the deposit of duty demanded or penalty levied pending appeal, with provisions for dispensation in cases of undue hardship. The first proviso empowers authorities to dispense with the deposit subject to safeguarding revenue interests, while the second proviso requires timely decision on such applications. A harmonious reading of the provisions establishes the deposit as a condition precedent, with discretion to dispense in cases of hardship, subject to imposing suitable conditions to protect revenue interests.

The judgment emphasizes that the deposit of duty or penalty is essential for considering the application on merits, with discretion to waive in cases of hardship. Notably, an order dispensing with the deposit without imposing any conditions is deemed illegal. In the case at hand, the Tribunal's order was issued, and subsequent delays in appeal disposal were addressed. The court directed the Tribunal to dispose of the appeal by a specified date, emphasizing the need for cooperation from the assessee. Failure to cooperate or meet the deadline would result in setting aside the previous order, requiring the assessee to deposit the appeal amount before the Tribunal.

In conclusion, the appeal challenging the Tribunal's order for waiver of pre-deposit and stay of recovery pending appeal under Section 35F of the Central Excise Act, 1944 was disposed of, with directions for timely appeal disposal and cooperation from the assessee. The judgment underscores the importance of deposit requirements, discretionary waivers in cases of hardship, and the need for imposing suitable conditions to protect revenue interests when dispensing with deposits.