1998 (9) TMI 94 - HC - Central Excise

Summary

Issues involved: Challenge to order for deposit, exemption of pre-deposit, interpretation of 'undue hardship', modification of order, legal position on pre-deposit requirement.

Exemption of Pre-Deposit:
The petitioners challenged an order directing them to deposit Rs. 10 lakhs within 10 days, arguing for exemption based on unsound financial position and strong prima facie case. The Commissioner of Central Excise rejected the exemption, stating that having a strong case is not sufficient for waiver unless undue hardship is proven. However, judicial precedence establishes that a strong prima facie case is relevant for exemption due to undue hardship.

Modification of Order:
The petitioners sought modification of the deposit order, citing a relevant judgment, but the request was denied as no new arguments were presented. The Commissioner's lack of awareness regarding the interpretation of 'undue hardship' in Section 35F of the Central Excise Act was noted, leading to a failure to consider the implications of judicial pronouncements.

Legal Position on Pre-Deposit Requirement:
Various judgments, including those by the Supreme Court and High Court, support the view that a good prima facie case justifies dispensation of pre-deposit. It is emphasized that undue hardship includes cases where the appellant has a strong prima facie case, and financial hardship is not the sole criterion for exemption.

Judicial Pronouncements and Decision:
The High Court reiterated the legal position, emphasizing that a strong prima facie case warrants exemption from pre-deposit. The impugned orders were set aside, directing the Commissioner to reconsider the exemption application in light of the judgment and the petitioner's strong prima facie case.

Conclusion:
The writ application succeeded, and the impugned orders were set aside. The Commissioner was instructed to review the exemption application considering the petitioner's strong prima facie case. No costs were awarded, and the respondents' failure to submit affidavits meant that the allegations in the writ petition were not deemed admitted.