2014 (5) TMI 830 - HC - Central Excise

Waiver of pre deposit - Undue hardship - Held that - adjudicating authority has in its order confirmed duty demands totalling into Rs. 27,59,95,034/-. Such order of the adjudicating authority is in appeal before the Tribunal. Various issues have been raised before the Tribunal. Pending the appeal, some of these issues were considered for the purpose of examining whether the petitioners have made out a strong prima facie case as to waive the entire pre-deposit. - before the Tribunal, petitioner has not been able to show any case of financia1 hardship as to waive the entire pre-deposit requirement. Tribunal otherwise also noted that financial condition of the petitioner cannot be stated to be such as would permit waiver of the entire pre-deposit unconditionally. Before us, also no submissions were made on behalf of the petitioner to contend that looked from the financial angle, the conditions imposed by the Tribunal are unjust and not possible for the petitioners to weigh Insofar as the question of extended period of limitation and penalties are concerned, petitioners have made out a strong prima facie case. It may be that the petitioners were required to pay certain excise duty which according to the Department was payable but not paid. That by itself would not ipso-facto amount to any fraud, collusion or any wilful misstatement or suppressing of fact with a view to evading payment of duty. - Pre deposit order modified to the extent of reduction in amount - Decided partly in favour of assessee.

Summary

Issues:
Challenge against Customs, Excise & Service Tax Appellate Tribunal's order on pre-deposit requirement; Petitioner's application for modification of the order; Dispute regarding excise duty on cutting and polishing of natural and agglomerated marbles; Tribunal's order confirming duty demand and penalty imposition; Petitioner's appeal against the Commissioner's order; Financial hardship claim for waiver of pre-deposit; Prima facie case for extended period of limitation and penalties.

Analysis:
The petition challenged the Customs, Excise & Service Tax Appellate Tribunal's order directing a 25% pre-deposit for stay against duty recovery pending appeal. The petitioner contended that cutting and polishing of marbles did not amount to manufacturing activity, citing a Supreme Court decision. The Department argued otherwise, leading to duty demand and penalty imposition by the Commissioner, contested in the Tribunal. The petitioner sought waiver of pre-deposit, emphasizing lack of duty liability and absence of fraud for extended limitation period and penalties.

The Tribunal's discretionary exercise of powers in pre-deposit cases was highlighted, emphasizing undue hardship and revenue interest safeguarding. The financial capacity and prima facie case of the petitioner were crucial factors in determining the pre-deposit requirement, as per legal precedents. The adjudicating authority confirmed a substantial duty demand, subject to appeal, raising questions on manufacturing activity classification for marbles and duty liability, pending Tribunal's final decision.

The Court refrained from a final judgment on the substantive issues pending Tribunal's decision, noting the unresolved nature of manufacturing activity classification for marbles and duty liability disputes. Financial hardship for complete waiver was not substantiated by the petitioner, leading to a partial modification of the Tribunal's pre-deposit order, reducing it to 50% for compliance within an extended period. The Court acknowledged a strong prima facie case for extended limitation period and penalties, modifying the pre-deposit requirement while ensuring the appeal's impartial adjudication without influence from the current order's observations.