2015 (1) TMI 162 - HC - Customs

Waiver of pre deposit - Financial hardship - Held that - At the stage of deciding the question of predeposit , we would not like to dwell deeply into the merits of the case. Prima facie, it appears that against the duty demand of ₹ 1.13 crores with interest and matching penalty, condition of predeposit of ₹ 10 lakhs is imposed. No case for financial hardship was made out before the authority. No documents have been presented before us nor such case argued. Merely because there is prima facie arguable case of assessee, would not warrant total waiver of predeposit . The element of undue hardship, does carry the question of financial hardship as well as issue on merits. However, mere prima facie case would not warrant total waiver of predeposit condition - Decided against assesse.

Summary

Issues:
1. Breach of principles of natural justice in issuing ex parte order
2. Consideration of CBEC circulars and decisions by coordinate benches
3. Reliance on findings in the order of the Development Commissioner
4. Direction for predeposit of duty ignoring a final order of a coordinate bench

Analysis:
1. The appellant filed an appeal against the Tribunal's judgment, questioning the breach of natural justice in issuing an ex parte order. The issue revolved around the predeposit amount insisted upon by the Tribunal for hearing the appeal on merits. The appellant, a 100% export-oriented unit, faced duty demand due to alleged failure in fulfilling export obligations. The Tribunal imposed a predeposit condition of Rs. 10 lakhs for the appeal to proceed. The appellant's counsel argued against the stringent condition, emphasizing the lack of financial hardship justification. The Court noted that while a prima facie arguable case existed, it did not warrant a total waiver of the predeposit condition, dismissing the tax appeal and civil application.

2. The second issue raised was whether the Tribunal erred in failing to consider CBEC circulars and decisions by coordinate benches while passing orders on the stay application. The Tribunal's decision to impose a predeposit condition was challenged by the appellant, who contended that relevant circulars and decisions were not adequately considered. However, the Court's focus remained on the predeposit condition itself, emphasizing the need for a strong justification for waiver beyond a prima facie arguable case.

3. The third issue involved the Tribunal's reliance on findings in the order of the Development Commissioner. The appellant questioned the validity of such reliance when the said order had not attained finality. Despite this contention, the Court's decision primarily centered on the predeposit condition imposed by the Tribunal, leading to the dismissal of the tax appeal and civil application.

4. The final issue pertained to the Tribunal's direction for predeposit of duty, seemingly disregarding a final order of a coordinate bench that duties cannot be demanded in the case of raw materials used for the intended purpose by an Export Oriented Unit (EOU). While this issue raised a significant legal point, the Court's ruling focused on the specific predeposit condition set by the Tribunal, ultimately resulting in the dismissal of the tax appeal and civil application.