2016 (4) TMI 1073 - HC - Central Excise

Whether the ground of financial hardship needed to be considered by the CESTAT - Effort is made out by the appellant to point out his financial hardship and the cash flow - Appellant submitted that he has been continuously overdrawing from the bankers. Also these grounds were brought to the notice of Commissioner (Appeals). Thus, these events needed appreciation by CESTAT - Held that - While considering the issue of predeposit, CESTAT is not only expected to consider the prima facie case but also balance of convenience and for that purpose financial hardship, if any. If the appellant does not plead the same, CESTAT would not be required to consider it. But if there was any pleading to that effect, CESTAT was bound to go into the same. Impugned order does not show any consideration of financial hardship. Impugned order dated 29.7.2013, therefore, suffers from jurisdictional error. Even if pleadings are deficient or ground is not available on facts, that finding is to be reached by CESTAT only. At this stage, we are not inclined to set aside the order dated 29.7.2013 because in the meanwhile, pre-deposit as envisaged therein, has already been made. We allow the respondents to withdraw the amount deposited with the Registry of this Court along with the interest accrued thereon. In view of this, dismissal of appeal by the later order dated 28.1.2014 is unsustainable. That order is quashed and set aside and the appeal is restored to the file of CESTAT for its adjudication in accordance with law.

Summary

Issues:
Delay in filing appeal under Section 35(g) of Central Excise Act, challenge to orders for pre-deposit of 50%, financial hardship considerations by CESTAT.

Analysis:
The judgment addresses the delay in filing the appeal under Section 35(g) of the Central Excise Act. The applicant sought to condone a delay of 365 days in filing the appeal, which was opposed by the respondents. The court noted that while there were some lapses on the part of the applicant, they did not appear to be with any malicious intent. The court found that the applicant had acted based on legal advice and had deposited the pre-deposit amount. The delay was condoned subject to the payment of costs to the respondents within two weeks, and the appeal was directed to be registered.

The challenge in the appeal was against the orders directing pre-deposit of 50% and dismissing the appeal for non-compliance with the pre-deposit requirement. The court considered the grounds of financial hardship raised by the applicant before the first appellate authority and the CESTAT. The court noted that the CESTAT failed to consider the financial hardship grounds, leading to a jurisdictional error. However, as the pre-deposit had already been made, the court allowed the respondents to withdraw the deposited amount along with accrued interest. The dismissal of the appeal was deemed unsustainable, and the appeal was restored to the file of CESTAT for adjudication in accordance with the law.

The judgment emphasizes the importance of considering financial hardship grounds by the CESTAT while deciding on pre-deposit issues. The court highlighted that if financial hardship grounds are pleaded by the appellant, the CESTAT is obligated to consider them along with the balance of convenience. Failure to do so constitutes a jurisdictional error. The court's decision to restore the appeal to the CESTAT for proper adjudication underscores the significance of addressing all relevant factors, including financial hardship, in such matters.

Overall, the judgment provides a comprehensive analysis of the issues related to delay in filing the appeal, challenges to pre-deposit orders, and the consideration of financial hardship grounds by the CESTAT. It clarifies the obligations of the appellate authorities in assessing such grounds and emphasizes the need for a thorough examination of all relevant factors in deciding on pre-deposit requirements in legal proceedings under the Central Excise Act.