2007 (9) TMI 285 - HC - Central Excise

Summary

Issues:
Challenge to Tribunal's order for pre-deposit amount of Rs. 50 lakhs against duty demand of Rs. 1,14,67,020/- for hearing appeal on merits.
Consideration of financial hardship in pre-deposit requirement under Section 35F of the Central Excise Act.
Interpretation of whether pre-deposit under Section 35F can be insisted when proceedings are pending before the BIFR.
Applicability of the decision in Metal Box India Ltd. v. Commissioner of Central Excise regarding pre-deposit requirements.

Analysis:
The petitioners challenged the Tribunal's order directing them to pre-deposit Rs. 50 lakhs against a duty demand of Rs. 1,14,67,020/- for the appeal to be heard on merits. Initially, the Commissioner (Appeals) had directed a pre-deposit of Rs. 5 lakhs due to hardship, but eventually upheld the adjudicating authority's decision against the petitioners. Subsequently, the Tribunal ordered the petitioners to deposit Rs. 50 lakhs, which was later extended by six weeks despite a modification request by the petitioners. The petitioners argued that no pre-deposit should be insisted when proceedings are pending before the BIFR, and that the Tribunal did not consider their financial hardship. They cited the Texplast Engineers Ltd. v. Union of India case in support.

In response, the Court referred to the Metal Box India Ltd. v. Commissioner of Central Excise case, where it was held that pre-deposits under Section 35F do not fall under the categories mentioned in the Sick Industrial Companies (Special Provisions) Act. This means that even if a party is before the BIFR, the Tribunal can require a pre-deposit before hearing the appeal on merits. The Court noted that the duty amount is essentially government revenue collected by the manufacturer and that financial hardship should not prevent the deposit of such amounts. In this case, the Tribunal's direction to deposit Rs. 50 lakhs out of a total demand of Rs. 1,14,67,020/- was considered reasonable.

Based on the above legal principles and precedents, the Court found no reason to interfere with the Tribunal's order. However, taking into account the circumstances of the case and the counsel's request, the Court extended the time for depositing the Rs. 50 lakhs by one month. Failure to comply would result in the Tribunal dismissing the appeal for non-compliance with Section 35F of the Act. Ultimately, the petition was dismissed with this direction.