2009 (7) TMI 46 - HC - Central Excise

Waiver of pre-deposit Tribunal did not grant stay of pre deposit - appellant-assessee-Company has shown undue hardship towards its financial condition and that the demand as raised, has prima-facie no legs to stand HC directed the tribunal to decide the matter afresh.

Summary

The High Court of Madras, in the case of S. J. Mukhopadhaya and Raja Elango, JJ., heard Writ Appeal Nos. 1596 and 1597 of 2000 & C.M.P.Nos.13636 to 13638 of 2000. The appellant was directed by the Revenue to pay duty under Section 11-A of the Central Excise Act, 1944, and was also imposed a penalty under Section 11-AC. The appellant appealed these orders to the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) along with a petition to dispense with the deposit of the demanded duty and penalty. The CEGAT ordered a total sum of Rs.10 lakhs to be paid. The appellant then filed Writ Appeals after a learned single Judge confirmed the CEGAT order.

During the hearing, the appellant's counsel argued that the company had been experiencing continuous losses for several years, as certified by Chartered Accountants. The appellant contended that there was a strong prima facie case in their favor and that they should not be liable to pay the duty or penalty. Reference was made to previous CEGAT orders and the financial difficulties faced by the appellant. The appellant's business involved manufacturing "Uninterrupted Power Supply" systems and supplying them without batteries, which they argued should not be included in the value of the UPS as per Section 4 of the Act.

The Court noted the financial condition of the appellant and the losses it had incurred, and considered the undue hardship faced by the company. Citing a Supreme Court case, the Court concluded that it would be inappropriate to require the appellant to pay the full or substantive part of the demand, given the circumstances. Consequently, the Court set aside the CEGAT and single Judge's orders, remitting the cases back to CEGAT to decide on the appeals' merits without requiring the appellant to deposit any pre-deposit amount as per Section 35-F of the Act. The Writ Appeals were allowed with the mentioned observations, and no costs were awarded. C.M.Ps. were closed.