2017 (9) TMI 699 - HC - Central Excise

Waiver and stay of pre-deposit - Section 35(G) of the Customs Act, 1962 - Held that - On and from 06-8-2014, the requirement of pre-deposit has been amended. By the said amendment, it is enough if an assessee pays 10% of the demand, for the purpose of maintaining an appeal. But unfortunately, the Order-in-Original in the case of the petitioner was passed on 31-01-2012, prior to the amendment. Therefore, the Tribunal had the discretion to permit waiver from 0% to 100% - Since no reason has been stated by the Tribunal for coming to the conclusion, the order of the Tribunal requires to be set aside - the petitioner is granted a time of 8 (eight) weeks from the date of receipt of a copy of this order to deposit a sum of ₹ 10,00,000/- - petition allowed.

Summary

Issues:
1. Onerous condition imposed by CESTAT for waiver and stay.
2. Discretion of CESTAT in permitting waiver.
3. Lack of reasoning in the Tribunal's order.
4. Consideration of hardship in the case.
5. Determination of the amount for waiver and stay.

Analysis:
1. The appellant challenged an onerous condition imposed by CESTAT for waiver and stay under Section 35(G) of the Customs Act, 1962. The CESTAT had ordered a payment of ?22 lakhs as a condition for granting stay and waiver, which the appellant found unreasonable and excessive.

2. The Tribunal had discretion to permit waiver ranging from 0% to 100% of the demanded amount. However, the Tribunal's order lacked reasoning for fixing the specific amount of ?22 lakhs as a pre-deposit condition. The lack of justification for this decision raised concerns about the fairness and validity of the order.

3. The High Court noted that the Tribunal's order did not provide any rationale for determining the amount of ?22 lakhs out of the total demand of ?27,88,750. This lack of explanation led the High Court to conclude that the Tribunal's decision was arbitrary and required to be set aside.

4. Considering the hardship pleaded by the petitioner, the High Court determined that a more reasonable approach would be to direct the petitioner to pay 1/3rd of the duty demanded, which amounted to around ?9 lakhs. To alleviate the hardship while ensuring compliance, the Court rounded off this amount to ?10 lakhs for the waiver and stay.

5. Ultimately, the High Court allowed the appeal, set aside the Tribunal's order, and directed the petitioner to deposit ?10,00,000 with the original authority within eight weeks. Upon compliance, the Tribunal was instructed to take up the main appeal for disposal. Any previous payments made by the petitioner were to be credited against this amount. The judgment aimed to balance the interests of the petitioner with the requirements of the law, providing a more equitable solution in the absence of proper reasoning by the Tribunal.