2016 (4) TMI 1110 - HC - Central Excise

Waiver of pre-deposit - Financial hardship - Appellant stopped the business since 2009 and is living on support of the State - Held that - the Tribunal found a prima facie case in favour of the appellant. As there is no material placed before the Tribunal with respect to the financial hardship, but taking into consideration the oral pleading made on behalf of the appellant, the Tribunal directed 50% to be deposited. The order of the Tribunal cannot be found fault with. However, considering the fact that a voluminous material has been placed before us which, for some reason or the other, the appellant could not place before the Tribunal, it is appropriate to remit the matter on the aspect of predeposit for fresh consideration by the Tribunal, on the condition of the appellant depositing 10% of the disputed tax within eight weeks. On such deposit being made, the Tribunal shall either consider the application for waiver of the pre-deposit or take up the appeal itself and pass appropriate orders. - Appeal disposed of by remanding the matter

Summary

Issues:
- Stay Order passed by CESTAT, South Zonal Bench, Bangalore directing pre-deposit of 50% of the duty demanded within eight weeks.
- Financial hardship claimed by the appellant due to business cessation since 2009.
- Tribunal's consideration of financial hardship and lack of relevant material on record.
- Appeal for waiver of pre-deposit opposed by the department's Standing Counsel.
- Tribunal's decision to direct 50% deposit based on oral pleading and lack of financial statements.
- High Court's review of the Tribunal's decision and remittance of the matter for fresh consideration with a 10% deposit condition.

Analysis:

The High Court judgment pertains to an appeal against a Stay Order issued by CESTAT, South Zonal Bench, Bangalore, which directed the appellant to pre-deposit 50% of the duty demanded within eight weeks. The appellant, a proprietary concern, argued financial hardship due to business cessation since 2009, claiming no tax liability. The appellant contended that they operated as an assembling unit in a rural area, purchasing components with VAT paid, branding them under authorization, and supplying to the brand owner for retail sale. The appellant presented evidence of financial distress, including personal and business bank statements, to support their claim.

The appellant's counsel requested leniency and consideration of all material by the Tribunal for waiving the pre-deposit requirement. However, the department's Standing Counsel opposed, stating the appellant failed to submit necessary facts earlier, precluding them from seeking Court's indulgence. The Tribunal acknowledged the merit in the appellant's case but noted the absence of financial statements like balance sheets, income tax returns, and bank statements. Despite this, the Tribunal directed the 50% deposit based on oral submissions, finding a prima facie case in favor of the appellant.

Upon review, the High Court found that while the Tribunal's decision was not erroneous, the appellant had now presented substantial material not previously submitted. Considering this, the High Court remitted the matter back to the Tribunal for fresh consideration, imposing a 10% deposit condition. The Tribunal was instructed to reevaluate the application for pre-deposit waiver or proceed with the appeal, emphasizing that the judgment's observations were specific to the case at hand and not intended as a precedent.

In conclusion, the High Court disposed of the appeal without costs, closing any pending miscellaneous petitions. The judgment highlighted the importance of presenting relevant financial documentation to support claims of hardship and reiterated the need for a thorough consideration of all material before making decisions on pre-deposit requirements in tax-related matters.