2017 (12) TMI 956 - HC - Central Excise

Validity of order directing to make pre-deposit while Remanding back the proceedings - Held that - Under sub-section (1) of Section 35, the appellate Tribunal has a power to pass such orders on the appeals as it thinks fit, either confirming, modifying or annulling the decision appealed against or it may also refer the case back to the authority which passed such decision or order with such directions as the appellate Tribunal may think fit, for a fresh adjudication after taking additional evidence, if necessary. The powers of the Tribunal, thus, while entertaining an appeal at the hands of aggrieved person are quite wide. Nevertheless, requiring an assessee to deposit hefty sum of ₹ 50 lakhs while remanding the proceedings for fresh consideration, would not be justified, when the Tribunal, remanding the proceedings for fresh disposal was essentially wiping out the order of adjudicating authority which is adverse to the assessee-appellant. If that be so, requirement of deposit of ₹ 50 lakhs by way of pre-condition would be rather harsh and onerous. Similar view taken in the case of WAGHBAKRIWALA RAYONS Versus UNION OF INDIA 2016 (2) TMI 18 - GUJARAT HIGH COURT . The adjudicating authority shall pass fresh order after giving opportunity of hearing to the petitioner, however, without insisting on the condition of deposit of ₹ 50 lakhs as directed by the Tribunal - petition allowed.

Summary

Issues:
Challenge to orders passed by CESTAT, Proper opportunity of hearing and supply of documents, Requirement of deposit of amount pending appeal, Powers of the Appellate Tribunal, Imposition of conditions while remanding proceedings, Justification of deposit amount, Pre-condition of deposit, Setting aside impugned orders, Payment of costs, Fresh order without deposit condition.

Analysis:

The petitioners challenged the orders passed by CESTAT on the grounds of non-granting proper opportunity of hearing and supply of documents. The Tribunal directed the petitioners to deposit a hefty sum of ?50 lakhs as a pre-condition for a fresh consideration of the proceedings. However, the High Court noted that the Tribunal's requirement of such a deposit was harsh and onerous, especially when the Tribunal was essentially wiping out the adverse order of the adjudicating authority. The Court highlighted that the Tribunal's powers are wide, allowing it to impose conditions while remanding proceedings, but the deposit amount in this case was deemed unjustified. Reference was made to a previous case where a similar view was taken regarding the imposition of a deposit condition.

Under Section 35F of the Central Excise Act, 1944, there is a requirement to pre-deposit a certain amount pending appeal. However, the Court clarified that the Tribunal's order in this case should not be considered a pre-deposit but rather a deposit. Section 35C of the Act pertains to orders of the Appellate Tribunal, granting the Tribunal the power to pass suitable orders on appeals, including confirming, modifying, or annulling decisions. The Court emphasized that while remanding proceedings, the Tribunal can impose just and proper conditions, but the requirement of a ?50 lakhs deposit in this case was deemed excessive.

In the final judgment, the High Court set aside the impugned orders of the Tribunal and directed the petitioner to pay costs of ?50,000 to the respondents. The adjudicating authority was instructed to pass a fresh order after providing an opportunity of hearing to the petitioner, without insisting on the condition of depositing ?50 lakhs as directed by the Tribunal. The petition was disposed of accordingly, ensuring a fair reconsideration of the case without the burden of the excessive deposit condition.