2013 (3) TMI 113 - HC - Central Excise

Clandestine removal of processed Man Made Fabrics (MMF) - demand of duty with recovery of interest and penalty - assessee submitted that his Company was in the process of revival prayer for waiver of the condition of pre-deposit denied - Held that - Tribunal appears to have made rather hard an observation as if it were a case of admission regarding clandestine removal by the petitioner. The observations foregoing are to indicate that at the given stage, the Tribunal appears to have over-stepped the aspect of prima facie case and rather made an assumptive and hard observation about the alleged admission of the petitioner. It would be one thing to say that a particular explanation is not accepted and absolutely different to say that there is an admission. Thus hasten to observe that ultimately the matter is to be adjudicated upon and decided in the pending appeals and hence, no final comments on the merits of the case either way have been made. Thus considering the submissions that the petitioner s matter had been before the Board of Industrial and Financial Re-construction ( BIFR ) and where the matter was allegedly dropped as the Company could not be revived. It is submitted that despite these odds, the Directors of the petitioner-Company are making all out personal efforts for revival of the Company and they have paid off dues of one of its secured creditors, namely Saraswat Co-operative Bank Ltd. and have also settled the matter of dues as regards Rajasthan Financial Corporation. Thus noticing the fact that the petitioner has indeed deposited the amount of Rs.22,32,781/- as assured before this Court, the petitioner deserves to be given some relaxation in the matter of the condition of pre-deposit - it would serve the cause of justice if the petitioner is directed to make deposit of another sum of Rs.11,16,000/- within a period of four weeks from today and to furnish solvent security before the Tribunal for making payment of the remaining amount, in case so required, as per the final order tobe passed in the appeals.

Summary

Issues: Challenge to order declining waiver of pre-deposit in Central Excise Appeals.

Analysis:
The petitioner challenged the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, which declined the waiver of the condition of pre-deposit in relation to Central Excise Appeals. The Tribunal found the petitioner-company liable for clandestine removal of processed Man Made Fabrics (MMF), directing payment of central excise duty, interest, and penalty. The petitioner unsuccessfully challenged the order before the Commissioner, Central Excise (Appeals), leading to appeals and stay applications before the Tribunal.

The Tribunal, in its order, considered the submissions for waiver of pre-deposit and found circumstantial evidence of clandestine removal. It noted the lack of substantive evidence supporting the petitioner's claims and observed an admission of clandestine removal. The Tribunal directed the petitioner to deposit the entire demanded amount within eight weeks. The petitioner, during the writ petition, emphasized adverse financial conditions, revival efforts, and readiness to pay the principal amount of duty demanded.

Upon review, the High Court observed the Tribunal's harshness in presuming an admission of clandestine removal based on the Director's explanation. It emphasized the need for a merit hearing of the appeals and acknowledged the petitioner's efforts for company revival. The Court directed the petitioner to deposit a partial amount and furnish solvent security, granting relaxation in pre-deposit conditions for a balanced approach safeguarding revenue interests while allowing a merit hearing of the appeals.

The Court partially allowed the petition, requiring the petitioner to deposit a specified amount and furnish security within a set timeframe. Compliance with these conditions would waive the pre-deposit requirement for the remaining amount, allowing the Tribunal to consider the appeals on merits. Failure to meet the stipulated requirements within the specified time would lead the Tribunal to consider non-fulfillment of pre-deposit conditions and pass appropriate orders accordingly. The Court imposed no costs in this matter.