2009 (6) TMI 105 - HC - Central Excise

Whether the Appellate Tribunal was justified in law in directing the appellant to make a pre-deposit 30 lacs in cash? - Held that - In view of the facts and circumstances of the case as enumerated by the learned counsel for the appellant the interim order dated 1st April 2009 passed by the Appellate Tribunal is modified to the extent that instead of depositing 30 lakhs in cash the appellant may furnish security of 30 lakhs which security may be other than cash or Bank guarantee Such security may be furnished within four weeks from today.

Summary

Issues:
- Appeal against order of Customs, Excise & Service Tax Appellate Tribunal
- Stay application filed by appellant against duty and penalty imposed by Commissioner of Central Excise, Meerut
- Pre-deposit amount directed by Appellate Tribunal
- Appellant's plea for waiver of pre-deposit based on financial hardship
- Legal justification for directing pre-deposit in cash
- Comparison with previous court decisions on pre-deposit requirements

Analysis:
1. The appeal was filed by M/s. Shri Ram Garments & Accessories against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The appeal was related to the duty and penalty imposed by the Commissioner of Central Excise, Meerut. The Tribunal had directed the appellant to make a pre-deposit of Rs. 30 lakhs for the realization of the balance demand to remain stayed during the appeal process.

2. The appellant, a Private Limited Company manufacturing Slide Fasteners, argued that the pre-deposit amount would cause undue hardship due to its weak financial position. The appellant cited previous court decisions to support the argument that security other than cash or bank guarantee could be furnished to protect the revenue's interest. The Tribunal's decision was based on the lack of evidence to prove financial hardship or undue hardship if pre-deposit was required.

3. The High Court analyzed previous court decisions, including the case of SPL Siddhartha Ltd., which emphasized the need to protect businesses from substantial effects due to pre-deposit requirements. In line with this principle, the High Court modified the Tribunal's order, allowing the appellant to furnish security of Rs. 30 lakhs in a form other than cash or bank guarantee within four weeks, instead of making a cash pre-deposit.

4. The substantial question of law in the appeal was whether the Tribunal was justified in directing the appellant to make a pre-deposit of Rs. 30 lakhs in cash. The High Court's decision focused on balancing the interests of the appellant's financial position and the revenue's concerns, ultimately allowing for a non-cash security deposit as a suitable alternative to the cash pre-deposit requirement.

5. The High Court's judgment provided a nuanced analysis of the legal justifications for pre-deposit requirements, considering the specific circumstances of the case and the appellant's financial constraints. By modifying the Tribunal's order to allow for a non-cash security deposit, the High Court addressed the concerns raised by the appellant while ensuring the protection of the revenue's interests during the appeal process.