2022 (1) TMI 60 - HC - Central Excise

Seeking a complete waiver of the pre-deposit of Central Excise duty - HELD THAT - As far as the prayer for waiver of the pre-deposit is concerned, the settled legal position as explained in several judgments including BENARA VALVES LTD. ORS. VERSUS CCE ANR. 2006 (11) TMI 6 - SUPREME COURT and INDU NISSAN OXO CHEMICALS INDUSTRIES LTD. VERSUS UNION OF INDIA 2007 (12) TMI 220 - SUPREME COURT is that financial hardship cannot be the only factor to be considered by the CESTAT while exercising the power under Section 35F of the CE Act. In the present case, the adjudication order has been passed by the Commissioner after complying with all the procedural requirements. For the purposes of the present petition, since the scope is limited, the Court refrains from expressing any opinion on the merits of the case. Suffice it to note that in the context of the demand amount, and the nature of activity carried on, the partial waiver of 50% of the demanded amount for the purposes of predeposit cannot be held to be harsh or unreasonable. The writ petition is dismissed.

Summary

Issues:
Challenge to CESTAT order on pre-deposit waiver of Central Excise duty.

Analysis:
1. The petition challenges the CESTAT order dated 16th June, 2014, directing the petitioner to make a pre-deposit of 50% of the Central Excise duty amounting to ?9,92,53,226, along with interest and penalty under Section 11AC of the Central Excise Act, 1944.

2. The petitioner sought a complete waiver of the pre-deposit amount, citing financial hardship due to unemployment after the closure of a tobacco manufacturing unit. The petitioner argued that paying the amount would cause irreparable loss and claimed not being an Income Tax assessee.

3. The court considered the settled legal position that financial hardship alone cannot be the sole factor for granting a waiver under Section 35F of the CE Act. Referring to judgments like Banaras Valves Ltd. v. Commissioner of Central Excise and Indu Nissan Oxo Chemicals Industries Ltd. v. Union of India, financial hardship must be balanced with the need to protect the Revenue's interests.

4. The court highlighted the Punjab & Haryana High Court's decision in Triveni Castings (P) Ltd. v. CESTAT, where financial hardship of the assessee must be weighed against Revenue interests. This decision was upheld by the Supreme Court, emphasizing the importance of balancing both aspects.

5. The court refrained from expressing an opinion on the case's merits but noted that the Commissioner had followed procedural requirements in issuing the adjudication order. Considering the nature of the activity and the demanded amount, the court found the partial waiver of 50% for pre-deposit not harsh or unreasonable.

6. Consequently, the writ petition was dismissed, and the interim order was vacated, upholding the CESTAT's decision on the pre-deposit waiver of Central Excise duty.