1992 (11) TMI 89 - HC - Central Excise

Summary

Issues:
1. Application for stay of the realization of excise duty and penalty.
2. Interpretation of Section 35F of the Central Excises and Salt Act, 1944.
3. Consideration of undue hardship and safeguarding revenue interests.
4. Review of the order of the Customs, Excise and Gold (Control) Appellate Tribunal.
5. Impact of interim stay granted by the High Court on revenue and petitioner.
6. Decision on pre-deposit conditions and appeal proceedings.

Analysis:
1. The judgment deals with an application challenging an order of the Customs, Excise and Gold (Control) Appellate Tribunal, which rejected the petitioner's request for a stay on the realization of excise duty and penalty. The petitioner, engaged in computer business, was assessed duty and penalty by the Collector of Central Excise. The Tribunal directed the petitioner to deposit the full duty amount in three monthly installments. The petitioner sought relief under Section 35F of the Central Excises and Salt Act, 1944, which mandates depositing duty or penalty pending appeal unless undue hardship is proven.

2. The interpretation of Section 35F is crucial in this case. The provision allows for dispensing with the deposit requirement if undue hardship is established, subject to conditions protecting revenue interests. The judgment emphasizes that undue hardship must be based on individual case facts and not just financial considerations. The rule mandates pre-deposit, making dispensation an exception. The Tribunal's decision not to waive the pre-deposit condition was upheld, citing the need to safeguard revenue interests as per legal precedents, including the judgment in the case of M/s. Empire Industries Ltd.

3. The Court considered the impact of the interim stay granted by a previous High Court order on both the petitioner and revenue. While the petitioner benefited from the stay, the revenue suffered as the amount due was not deposited. To balance the interests of both parties, the Court ordered the petitioner to deposit half of the excise duty within a specified period and provide security for the remaining amount. This decision aimed to protect revenue interests while allowing the petitioner to contest the demand in the appeal.

4. The judgment underscores the importance of balancing the interests of the parties involved in excise duty disputes. By requiring partial deposit and security, the Court sought to ensure a fair resolution that considers both the petitioner's circumstances and revenue protection. The case highlights the legal principles governing pre-deposit conditions in excise duty appeals and the need to uphold revenue interests while addressing undue hardship claims effectively.