1996 (1) TMI 130 - HC - Central Excise

Summary

Issues:
Challenge to order of Customs, Excise and Gold (Control) Appellate Tribunal regarding deposit of excise duty and penalty under Section 35F of Central Excises and Salt Act, 1944. Allegation of violation of principles of natural justice. Financial hardship as a ground for dispensation of deposit. Petitioner's claim of being a sick unit under Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis:
The petitioner challenged an order by the Customs, Excise, and Gold (Control) Appellate Tribunal regarding the deposit of excise duty and penalty under Section 35F of the Central Excises and Salt Act, 1944. The Tribunal had directed the petitioner to deposit only Rs. 5,00,000 out of the total demand of over Rs. 15,00,000, exercising its power under the proviso to Section 35F which allows dispensation of deposit in cases of undue financial hardship. The Tribunal found that the petitioner failed to establish a prima facie case of violation of natural justice in the order appealed against. Additionally, the Tribunal noted that no arguments on financial hardship were presented, and no documents reflecting the petitioner's current financial position were provided.

The petitioner contended that the order was passed in violation of natural justice as certain documents were not provided for inspection. However, this contention was disputed by the respondent, emphasizing that such matters should be addressed in the appeal before the Tribunal. The proviso to Section 35F allows for dispensation of deposits only in cases of undue financial hardship. The Tribunal highlighted the absence of arguments or documents regarding financial hardship, which is a crucial criterion for dispensation. The petitioner's claim of being a sick unit under the Sick Industrial Companies (Special Provisions) Act, 1985 was based on a vague averment regarding its financial capacity to pay the demanded amounts.

Despite the petitioner being declared a sick unit, the Court found the claim of financial incapacity to deposit the amount in question unsubstantiated. The Tribunal had partially waived the pre-deposit condition, requiring the petitioner to deposit only a fraction of the total demands raised. Consequently, the Court rejected the writ petition, stating that no grounds for interference under Article 226 of the Constitution of India were established. The petitioner was also directed to bear the costs associated with the petition.