2000 (3) TMI 734 - AT - Central Excise

Issues:
1. Competency of the Tribunal to pass an order favoring both sides under Sec. 35F.
2. Whether the Tribunal exceeded its legal jurisdiction in making the order under Sec. 35F.
3. Compliance with the provisions of Sec. 35F and the consequence of failure to comply.

Issue 1: Competency of the Tribunal under Sec. 35F:
The judgment pertains to an appeal where the applicant was directed to deposit Rs. 50,000 as a pre-condition for hearing, with the Tribunal indicating that the revenue could recover the remaining sum using legal means. The applicant sought modification, arguing that the Tribunal cannot pass an order favoring both sides under Sec. 35F. The Tribunal analyzed the section, stating that it empowers them to dispense with the mandatory deposit if it causes undue hardship and safeguards revenue interests. While the proviso does not explicitly grant authority to stay recovery, the Tribunal can waive the deposit while ensuring revenue protection. The Tribunal considered the applicant's financial evidence, limiting the deposit to Rs. 50,000 despite a penalty of Rs. 5 lakhs, allowing revenue to recover the remaining amount legally. The Tribunal found no merit in the application and dismissed it, asserting that the order was within legal jurisdiction.

Issue 2: Tribunal's Jurisdiction under Sec. 35F:
The Tribunal examined whether it exceeded its legal jurisdiction in making the order under Sec. 35F. It emphasized that the power to waive the deposit is essential to prevent undue hardship and protect revenue interests. Despite the absence of explicit authority to stay recovery, the Tribunal can issue orders under the proviso to waive deposits. The Tribunal reviewed the applicant's financial evidence and chose to limit the deposit to Rs. 50,000, allowing revenue to recover the remaining penalty through legal means. The Tribunal concluded that its order was within legal bounds and dismissed the application.

Issue 3: Compliance with Sec. 35F and Consequences of Non-compliance:
Regarding compliance with Sec. 35F, the Tribunal inquired if the applicant could comply with the earlier order. The applicant, through counsel, expressed inability to make the predeposit. Consequently, the Tribunal dismissed the appeal for failure to adhere to the provisions of Sec. 35F of the Central Excise Act, 1944. Additionally, the Tribunal addressed the modification application questioning the Tribunal's power to grant stay. It noted that the Tribunal has inherent power to grant stay as incidental to hearing appeals, citing legal precedents. Dismissing the modification application, the Tribunal affirmed that the power to grant stay cannot be questioned, emphasizing its necessity for appeal hearings.

This judgment from the Appellate Tribunal CEGAT, Mumbai clarifies the Tribunal's authority under Sec. 35F, emphasizing the balance between preventing undue hardship and safeguarding revenue interests. It underscores the Tribunal's power to waive deposits and issue orders while allowing revenue recovery through legal means. Non-compliance with Sec. 35F led to the dismissal of the appeal, highlighting the importance of adhering to statutory provisions. The judgment reaffirms the Tribunal's inherent power to grant stay, crucial for effective appeal hearings, and dismisses challenges to this authority.

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