2002 (7) TMI 109 - HC - Central Excise

Summary

Issues Involved:
1. Challenge to the order directing pre-deposit of Rs. 23,00,000.
2. Consideration of financial hardship and merits of the case for waiver of pre-deposit.
3. Validity of Notification No. 43 of 1998 and Rule 96ZQ.
4. Non-speaking order and lack of consideration of the petitioner's financial difficulties.

Detailed Analysis:

1. Challenge to the Order Directing Pre-Deposit:
The petitioner contested the order dated 28th June 2002 by the Commissioner, Central Excise, Ghaziabad, which mandated a pre-deposit of Rs. 23,00,000. The petitioner sought an expedited decision on their appeal, filed on 12th April 2002, without insisting on any pre-deposit.

2. Consideration of Financial Hardship and Merits of the Case for Waiver of Pre-Deposit:
The petitioner, a public limited company engaged in the manufacture of processed cotton and man-made fabrics, argued that the Commissioner (Appeals) did not consider the merits of the case or the financial difficulties faced by the petitioner. The petitioner had already deposited the duty amount along with interest and contended that there were bona fide reasons for the delay, thus no penalty should be imposed. The petitioner cited several judgments to support the argument that the appellate authority must consider prima facie merits and undue hardship when deciding on the waiver of pre-deposit.

3. Validity of Notification No. 43 of 1998 and Rule 96ZQ:
The petitioner challenged the validity of Notification No. 43 of 1998, which required the payment of excise duty in advance and imposed a 36% interest rate for delays, along with penalties. The petitioner referenced interim orders from the Delhi High Court and Rajasthan High Court, which had restrained the Central Excise Department from taking coercive steps under Rule 96ZQ.

4. Non-Speaking Order and Lack of Consideration of the Petitioner's Financial Difficulties:
The petitioner argued that the impugned order dated 28th June 2002 was not a speaking order as it did not consider the merits of the case or the financial difficulties faced by the petitioner. The petitioner cited various judgments, including Tata Iron and Steel Co. Ltd. v. Commissioner (Appeals), Central Excise, Calcutta, and M/s. Matsushita Television Audio Ltd., India v. Commissioner (Appeals), Customs and Central Excise, Noida, which emphasized the need for the appellate authority to take a realistic view of the matter and consider all relevant factors, including financial hardship and prima facie merits.

Conclusion:
The court concluded that the Commissioner had not considered the merits of the case or the judgments protecting the petitioner's interests. Therefore, the order dated 28th June 2002 was set aside, and the Commissioner was directed to reconsider the entire question under Section 35 of the Act, taking into account the observations made and hearing the parties on merits. The recovery of the amount demanded was stayed until the reconsideration was completed. The writ petition was allowed without costs.