2016 (7) TMI 721 - HC - Central Excise

Tribunal granted the full waiver from pre-deposit without assigning any reason - revenue in appeal - prejudice to the interest of public revenue - Held that - - The jurisdiction, which this Court exercises, under Section 35G of the Act, is only where a substantial question of law arises for consideration. While exercising jurisdiction under Section 35-G of the Act, this Court would not record a finding afresh on facts. The Tribunal was required in law to assign reasons why it considered it appropriate that the appeal should be heard without the requirement of pre-deposit; and to take into consideration undue hardship, if any, as also to safeguard the interests of Revenue. As the Tribunal has not assigned any reasons why it considered it appropriate to hear the appeal without any requirement of pre-deposit, the order under appeal is set aside. - Tribunal to re-decide the matter - Decided in favor of revenue.

Summary

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise and Service Tax Appellate Tribunal.
2. Consideration of waiver of pre-deposit in relation to Cenvat Credit Rules 2004 for input services.
3. Application of principles for dispensing with the requirement of pre-deposit under Section 35F of the Act.
4. Requirement of assigning reasons by the Tribunal for hearing the appeal without pre-deposit.
5. Jurisdiction of the High Court under Section 35G of the Act in cases where a substantial question of law arises for consideration.

Analysis:
1. The judgment deals with an appeal under Section 35G of the Central Excise Act, 1944 against a Tribunal order. The Tribunal had waived the requirement of pre-deposit for input services under Rule 3 of Cenvat Credit Rules 2004, citing precedents where R&D costs were factored into the final product's sale value. The High Court set aside the Tribunal's order as it failed to provide reasons for waiving pre-deposit.

2. The High Court considered the principles for dispensing with the requirement of pre-deposit under Section 35F of the Act. It emphasized the need for a prima facie case, balance of convenience, and protection of public revenue while granting interim orders. The Court highlighted the importance of considering undue hardship and safeguarding revenue interests when granting full or partial stay.

3. The judgment discussed the necessity for the Tribunal to assign reasons for hearing an appeal without pre-deposit. It stated that the Tribunal's failure to provide justification for waiving pre-deposit led to the order being set aside. The Court reiterated the importance of considering undue hardship and revenue protection in such decisions.

4. The High Court clarified its jurisdiction under Section 35G of the Act, emphasizing that it only intervenes when a substantial question of law arises. The Court highlighted that it does not re-examine facts but ensures that the Tribunal provides adequate reasoning for decisions regarding pre-deposit requirements. The judgment emphasized the need for the Tribunal to consider undue hardship and revenue protection.

5. Finally, the Court directed the Tribunal to decide on the stay application or the main appeal within a specified timeframe. Until the Tribunal's fresh orders, no coercive steps for duty recovery were permitted. The appeal was disposed of with directions to the Tribunal, and any pending petitions were also resolved without costs.