2014 (12) TMI 737 - HC - Central Excise

Waiver of pre deposit - Valuation of goods - related party transaction - Department initiated proceedings stating that the price at which the related persons sold the goods at the open market should be the price that is to be taken for computation of duty liability - Whether there is a prima facie case for interference with the order of the Tribunal on merits and also a case for reduction of pre-deposit on the ground of financial hardship - Held that - On perusal of the order of the Tribunal, this Court finds that both the grounds as pleaded by the appellant are totally lacking in the present appeal. On the first ground, this Court is of the opinion that the new plea taken before the Tribunal, as rightly held by the Tribunal, has to be tested, since the same was not before the assessing authority, viz., the Commissioner. In the above backdrop, reduction in pre-deposit, as sought for by the appellant, cannot be justified on prima facie case - order of the Tribunal clearly shows that there is a net profit of ₹ 2.75 Crores, outstanding of ₹ 2.9 Crores and receivables to the tune of ₹ 3.4 Crores and, therefore, there is no justification for the appellant to plead financial hardship. This Court is in full agreement with the view expressed by the Tribunal on the plea of financial hardship - no reason to interfere with the order passed by the Tribunal. This Court is of the considered view that no questions of law, much less substantial questions of law arise for consideration in this appeal. - Decided against assessee.

Summary

Issues:
1. Challenge against the order of the Customs, Excise and Service Tax Appellate Tribunal for pre-deposit.
2. Validity of the pre-deposit amount and impact on the right of appeal.
3. Consideration of undue hardship under Section 35F of the Central Excise Act.

Issue 1: Challenge against Tribunal's Order:
The appellant contested the Tribunal's directive to deposit Rs. 90,00,000 as a pre-deposit condition for hearing the appeal. The appellant raised questions regarding the impact on the right of appeal, arguing that the pre-deposit condition hindered access to the forum meant for addressing grievances and rendered the appeal remedy illusory. The Tribunal's failure to consider the inflated valuation and the lack of findings on 'undue hardship' under Section 35F were also challenged.

Issue 2: Validity of Pre-deposit Amount:
The case involved a dispute where the Department demanded duty on goods sold by the assessee to related persons at allegedly undervalued prices. The Commissioner confirmed the duty demand, interest, and imposed a penalty. The Tribunal directed the appellant to pre-deposit Rs. 90,00,000, rejecting pleas for reduction based on financial hardship and new evidence presented. The Tribunal justified the pre-deposit amount based on the appellant's financial position, showing profits and outstanding amounts, declining to interfere with the order.

Issue 3: Undue Hardship Consideration:
The Tribunal's decision not to reduce the pre-deposit amount was based on the appellant's financial status, including profits, outstanding debts, and receivables. The appellant's plea of financial hardship was dismissed due to the substantial profits and financial stability shown in the balance sheet. The High Court upheld the Tribunal's decision, finding no prima facie case for interference on merits or reduction in pre-deposit amount based on financial hardship.

In conclusion, the High Court dismissed the appeals, finding no substantial questions of law for consideration. The appellant's request for additional time to deposit the pre-deposit amount was partially granted until a specified date, maintaining the Tribunal's order.