2009 (2) TMI 6 - HC - Central Excise

Tribunal declined to grant complete waiver - Suffice it to mention that any observation by this Court on the merit of those issues would prejudice either of the parties and, therefore, it would be prudent for this Court not to touch upon those aspect in this appeal since the pending appeal before the Tribunal is yet to be decided on merits - power of waiver of pre-deposit has to be exercised by the appellate authority considering over all facts and circumstances tribunal s order is modified

Summary

Issues Involved:
1. Waiver of pre-deposit under Section 35B of the Central Excise Act, 1944.
2. Alleged violations of customs notifications and EXIM policy by the appellant.
3. Compliance with principles of natural justice and procedural fairness.
4. Tribunal's discretion in granting waiver based on "undue hardship."
5. Financial hardship and ability to pay.

Detailed Analysis:

1. Waiver of Pre-deposit:
The appellant sought a waiver of the pre-deposit required under Section 35B of the Central Excise Act, 1944. The Tribunal had directed the appellant to deposit Rs. 15 crores in addition to Rs. 1.5 crores already deposited. The appellant argued that the condition precedent for waiver is "undue hardship," which includes the existence of a prima facie case. The court noted that the Tribunal had not committed any error by not granting a complete waiver considering the huge amount of duty and penalty imposed.

2. Alleged Violations:
The Directorate of Revenue Intelligence issued a notice alleging multiple violations:
- Failure to fulfill conditions of Notification No. 53/97-Customs and 52/03-CUS.
- Import of restricted items without necessary registration.
- Misdeclaration of copper recovery contents and illegal removal of copper.
- Misdeclaration of the value of imported goods to reduce export obligations.
- Diversion of recovered materials into the domestic market without payment of duty.
- Failure to comply with conditions of the B-17 bond and EXIM policy.

The Commissioner confirmed these allegations and imposed various penalties and duties, including a revised assessable value of imported scrap, denial of duty exemptions, and penalties under the Customs and Central Excise Acts.

3. Principles of Natural Justice:
The appellant argued that the proceedings were vitiated due to reliance on documents not made available to them and the inability to cross-examine the authors of those documents. The court found no merit in this argument, noting that there was no evidence that the appellant disputed the correctness of the documents or presented contradictory material. The court distinguished the case from precedents cited by the appellant, where the denial of cross-examination was found to violate natural justice principles.

4. Tribunal's Discretion:
The Tribunal's discretion in granting a waiver was challenged. The appellant contended that the Tribunal failed to consider financial hardship. The court observed that the grounds raised before the Tribunal did not include the arguments presented in the appeal. The court emphasized that the Tribunal's order should not be interfered with at this stage, as it did not show any apparent injustice or illegality.

5. Financial Hardship:
The appellant claimed financial incapacity to make the pre-deposit. The court considered the overall facts and circumstances, directing the appellant to deposit a total of Rs. 10 crores (including the Rs. 1.5 crores already deposited) within six weeks. This modification aimed to balance the interests of justice and ensure the appeal could be heard on merits without causing serious prejudice to the revenue.

Conclusion:
The court modified the Tribunal's order, allowing the appellant to deposit Rs. 8.5 crores within six weeks, waiving the balance pre-deposit, and staying the recovery of the remaining amount until the appeal is decided. The Tribunal was directed to expedite the appeal's decision, and the court clarified that its observations should not influence the Tribunal's independent judgment on the merits.