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2023 (2) TMI 232 - HC - Central ExciseSeeking waiver of pre deposit - Clandestine Removal - suppressed production of MS Ingots - reliance placed upon technical opinion report of productivity of Induction Furnace - HELD THAT - It is true that the amended provisions of Section 35F do not permit of any waiver. The vires of the aforesaid provision has been upheld by this Court in the case of Satya Nand Jha 2016 (7) TMI 1307 - JHARKHAND HIGH COURT . This Court however has also held that waiver of pre-deposit can be allowed in extreme cases in exercise of writ jurisdiction under Article 226 of the Constitution of India by holding that the impugned provisions are valid. It is, of course, clear that if gross injustice is done and it can be shown that for good reason the court should interfere, then notwithstanding the alternative remedy which may be available by way of an appeal under Section 20 or revision under Section 21, a writ court can in an appropriate case exercise its jurisdiction to do substantive justice. The opinion of the learned Coordinate Bench of this Court in Satya Nand Jha holds good till date. It further appears that Delhi High Court has also taken a similar view in the case of Shubh Impex 2018 (5) TMI 572 - DELHI HIGH COURT . Exercise of discretionary power under Article 226 of the Constitution of India is made to remedy extreme cases where the statutory provision does not permit of any exception. In the present case the petitioner unit is closed since 20.09.2006. The profit and loss statement enclosed as Annexure-1A-1 to the I.A. shows that for three consecutive financial years 2006-07, 2007-08 and 2008-09 the same is running in losses. The impugned demand is to the extent of Rs.12.50 Crores. The pre-deposit of 10% would come to Rs.1.25 crores which this Court finds would be onerous for the petitioner unit which is closed since 20th September 2006 to furnish in order to effectively avail of the remedy of appeal before learned CESTAT. The requirement of pre-deposit of 10% of the duty and penalty imposed or both for preferring appeal before learned CESTAT is waived. I.A. No.11581/2022 stands allowed - Petition disposed off.
Issues Involved:
1. Quashing of the order in original. 2. Allegations of suppressed production and clandestine removal. 3. Reliance on technical opinion reports. 4. Requirement of pre-deposit under Section 35F of the Central Excise Act. 5. Financial hardship and waiver of pre-deposit. Detailed Analysis: 1. Quashing of the Order in Original: The petitioner sought to quash the order in original no.24-25/Commissioner/2022 dated 28.10.2022. The petitioner contended that this was the third order in original passed for the period December 2001 to October 2006 based on a show-cause notice dated 19th March 2007. The petitioner argued that the adjudicating authority repeatedly relied on the technical opinion report of Dr. N.K. Batra and reports from the All India Induction Furnace Association. 2. Allegations of Suppressed Production and Clandestine Removal: The petitioner was accused of suppressing production of MS Ingots and clandestinely removing the goods without paying excise duty. The basis for this allegation was the higher consumption of electricity, which was checked and found to be on the higher side. The adjudicating authority used the consumption of electricity as the primary evidence to support the charge of clandestine removal. 3. Reliance on Technical Opinion Reports: The adjudicating authority relied heavily on the technical opinion report prepared by Dr. N.K. Batra of IIT, Kanpur. The petitioner argued that this report was not credible as Dr. Batra was no longer available for cross-examination. The learned CESTAT, Kolkata had previously set aside the orders based on this report and remanded the matter for a de novo assessment, instructing the adjudicating authority to collect corroborative evidence and provide a reasonable opportunity to the appellant/assessee. 4. Requirement of Pre-Deposit under Section 35F of the Central Excise Act: The petitioner invoked the jurisdiction of the High Court under Article 226 of the Constitution of India to waive the pre-deposit requirement under the amended Section 35F of the Central Excise Act. The petitioner argued that the amended provision does not allow waiver of pre-deposit before the appellate authority or learned CESTAT. The petitioner's financial hardship was cited as a reason for seeking this waiver. 5. Financial Hardship and Waiver of Pre-Deposit: The petitioner's unit had been closed since 20th September 2006, and the financial statements showed significant losses for the financial years 2006-07, 2007-08, and 2008-09. The total demand was Rs.12.50 crores, and the petitioner was not in a position to deposit 10% of the total demand for preferring an appeal before the learned CESTAT. The petitioner relied on previous judgments where courts had waived the pre-deposit requirement considering the financial condition and background of the petitioner. Judgment: The High Court acknowledged the extreme financial hardship faced by the petitioner and the fact that the unit had been closed since 2006. The Court referred to the decision in Satya Nand Jha Vrs. Union of India & Ors and Shubh Impex Vrs. Union of India & Ors, where waivers were granted in similar circumstances. The Court found that the pre-deposit of 10% (amounting to Rs.1.25 crores) would be onerous for the petitioner and waived the requirement of pre-deposit. The writ petition was disposed of, and the I.A. No.11581/2022 was allowed, thereby enabling the petitioner to appeal before the learned CESTAT without the burden of pre-deposit.
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