2006 (5) TMI 94 - HC - Central Excise

Summary

Issues Involved:
1. Classification of the product "New Creamy Pond's Moisturising Face Wash" under CETA, 1985.
2. Requirement of pre-deposit under Section 35F of the Central Excise Act, 1944.
3. Maintainability of the writ petition.
4. Examination of prima facie case and undue hardship for stay of pre-deposit.

Detailed Analysis:

1. Classification of the Product:
The primary dispute involves the classification of "New Creamy Pond's Moisturising Face Wash" (NCPMFW). The Department claims it should be classified under TSH 3304.00 of CETA, 1985 as a skin care preparation, while the petitioner argues for classification under TSH 3402.90.

2. Requirement of Pre-deposit:
The petitioner filed a stay application under Section 35F of the Central Excise Act, 1944, seeking to dispense with the pre-deposit of duty. The respondent directed a pre-deposit of Rs. 50,00,000/- and waived the remaining duty until the final disposal of the appeal. The petitioner contended that the Tribunal had already acknowledged a prima facie case and considered a Bank Guarantee of Rs. 50,00,000/- sufficient, thus opposing the additional pre-deposit requirement.

3. Maintainability of the Writ Petition:
The respondent argued that the writ petition was not maintainable as an appeal against the order would lie to the CESTAT under Section 35B of the Act. However, the court found this argument untenable because the impugned order was not passed by the Commissioner of Central Excise as an adjudicating authority under Section 35A, but under Section 35F. Consequently, the writ petition was deemed maintainable.

4. Examination of Prima Facie Case and Undue Hardship:
The petitioner argued that the respondent failed to consider the prima facie merits and undue hardship, as required under Section 35F. The court reviewed several judgments, including:
- Bangaigoan Refinery and Petrochem Ltd. v. Collector of Central Excise (Appeals): Emphasized the need to consider prima facie merits and undue hardship.
- I.T.C. Ltd. v. Commissioner of Central Excise and Customs (Appeals), Calcutta: Stressed examining prima facie merits and financial hardship.
- Vijay Packaging System Ltd. v. Commissioner of Customs and Central Excise, A.P.: Highlighted the importance of considering prima facie case and financial hardship.
- Sony India Limited v. Union of India: Discussed the necessity of examining prima facie merits for stay applications.
- Mehsana District Co-operative Milk P.U. Ltd. v. Union of India: Noted that strong prima facie case warrants waiver of pre-deposit.
- Adwaiath Steels Limited v. Commissioner of Central Excise, Coimbatore: Reiterated the need for examining prima facie merits and undue hardship.
- Northern Doors (Private) Limited v. Commissioner of Central Excise, Kanpur: Supported the view that strong prima facie case should lead to waiver of pre-deposit.

The court concluded that the respondent's order was in conformity with the law laid down by the Supreme Court in Empire Industries Limited v. Union of India and Assistant Collector of Central Excise v. Dunlop India Limited, which emphasized the balance of convenience, public interest, and avoiding undue hardship.

Conclusion:
The writ petition was dismissed, affirming the respondent's order requiring a pre-deposit of Rs. 50,00,000/-. The petitioner was granted an additional two weeks to comply with the pre-deposit requirement, after which the appeal would be prioritized and disposed of on merits. No costs were awarded, and connected W.P.M.Ps were closed.