2008 (7) TMI 369 - HC - Central Excise

Stay Application Order of Tribunal - if it could be perceived that there is a conflict between two decisions of the Apex Court, the view expressed in the later decision must prevail, more so when the same directly deals with the issue - In the circumstances, the contention of the learned Counsel for the petitioner that by dint of the fact that the petitioner is registered as a sick unit with the BIFR, the petitioner is entitled to full waiver of the amount of pre-deposit, does not merit acceptance - While considering an application under section 35F of the Act, the Tribunal is required to keep in mind twin requirements viz, undue hardship to the applicant and imposition of conditions to safeguard the interest of Revenue. On the facts of the present case, it is apparent that the Tribunal has considered both the aforesaid aspects while directing the petitioner to deposit a sum of Rs. 4 crores order of the tribunal upheld.

Issues:
Challenge to orders of Customs, Excise & Service Tax Appellate Tribunal - Waiver of pre-deposit of duty, interest, and penalty amount - Financial hardship of petitioner - Registration as a sick unit with BIFR - Application for modification of order - Compliance with Section 35F of Central Excise Act, 1944 - Interpretation of relevant legal precedents.

Analysis:

1. Challenge to Tribunal Orders:
The petition contested the orders of the Customs, Excise & Service Tax Appellate Tribunal, seeking the quashing of the orders dated September 14-26, 2007, and December 18, 2007. The primary relief sought was the issuance of a writ to direct the Tribunal to hear the petitioner's appeal without requiring a pre-deposit.

2. Show Cause Notice and Tribunal's Decision:
The respondents issued a show cause notice alleging relatedness between the petitioner and another entity, leading to a demand for duty payment. The Tribunal, after considering submissions, found indications of a close relationship between the entities and directed the petitioner to deposit a sum of Rs. 4 crores within 12 weeks.

3. Application for Modification and Financial Hardship:
Following the Tribunal's order, the petitioner moved an application for modification, emphasizing financial hardship due to being a registered sick unit with the BIFR. The Tribunal, in its subsequent order, rejected the modification application, citing lack of fresh grounds and reiterated the need for the deposit.

4. Legal Precedents and Arguments:
The petitioner's counsel relied on various legal precedents to argue for a full waiver of the pre-deposit, emphasizing the petitioner's status as a sick unit. In contrast, the respondent's counsel highlighted the Tribunal's discretion under Section 35F of the Central Excise Act and argued against intervention.

5. Tribunal's Discretion and Financial Position:
The Tribunal exercised discretion in directing a partial deposit, considering the petitioner's financial hardship and the substantial total amount due. The Tribunal's decision to require only a fraction of the total amount indicated a balanced approach towards safeguarding revenue interests and addressing undue hardship.

6. Interpretation of Legal Precedents:
The Court referred to legal precedents, including the Metal Box India Ltd. case, to emphasize the limitations of seeking a full waiver based solely on the sick unit status. The decisions highlighted the distinction between relief under the Sick Industries Act and pre-deposit requirements under excise laws.

7. Conclusion and Dismissal of Petition:
Based on the analysis of the Tribunal's orders, legal arguments, and relevant precedents, the Court rejected the petition, finding no infirmity in the Tribunal's decisions. The petitioner was granted four weeks to comply with the Tribunal's directions, concluding the legal proceedings.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the Tribunal's decisions, arguments presented by both parties, and the Court's final ruling based on legal principles and precedents.

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