2013 (9) TMI 845 - HC - Central Excise

Waiver of Pre- Deposit prima facie case - undue hardship - power of appellate authority to grant stay - Held that - From perusal of this proviso appended to Section 35F of the Act, it becomes evident that deposit of such duty or penalty as a condition precedent for hearing the appeal may be dispensed with in case of undue hardship to such appellant after safeguarding the interest of the revenue by imposing such conditions as he or it may deem fit - It, thus, transpires that waiver of pre-deposit was not a matter of right. At the same time, it was also not a concession to be doled out by the authorities as per their whims and fancies - By no means it can be a sweet wish of any statutory authority - In short, grant of waiver was to be backed by reasons keeping in view facts of each case - There cannot be any formula of general application - There was no cut and dried short cut of universal application of rule. Relying upon Ravi Gupta Vs. Commissioner, Sales Tax 2009 (3) TMI 200 - SUPREME COURT OF INDIA - There can be no rule of universal application in such matters and the order had to be passed keeping in view the factual scenario involved - While going through the factual matrix and the chain of events, learned counsel for the appellant had not been able to show that there was any case of public mischief or grave irreparable personal injury or there was likely to be dwarfing of citizens faith in the impartiality of public administration - When no factual or legal infirmity had been found in the order by the appellant and even in proceedings no case for interference with the order was made out particularly when the Appellate Tribunal had, after going through the complete record and attending circumstances, come to a firm finding that it was not a case of complete waiver - the appellant was directed to comply with the order regarding pre-deposit Decided against Assessee.

Summary

Issues:
1. Duty demand for clearance of school dual desks under Central Excise Act, 1944.
2. Demand for service tax and education cess for bullet proofing of vehicles under Finance Act, 1994.
3. Appeal regarding total waiver of demanded duty.
4. Compliance with terms and conditions of notification Nos.49-50/2003-CE.
5. Proviso to Section 35F of the Act - waiver of pre-deposit.
6. Criteria for granting waiver - undue hardship and safeguarding revenue.
7. Application of waiver based on factual scenario.
8. Interpretation of waiver as per Ravi Gupta Vs. Commissioner, Sales Tax case.
9. Lack of grounds for complete waiver based on facts and law.
10. Dismissal of appeal and direction for compliance with pre-deposit order.

1. Duty Demand for School Dual Desks:
The appellant faced a duty demand of Rs. 1,24,93,030 for clearance of school dual desks chargeable to Central Excise Duty. The Commissioner confirmed the duty demand under Section 11-A of the Central Excise Act, 1944, along with interest and penalty. Additionally, a service tax demand of Rs. 2,85,934 and education cess of Rs. 5,719 for bullet proofing of vehicles were also confirmed under the Finance Act, 1994.

2. Appeal for Total Waiver:
The appellant appealed to the Customs, Excise & Service Tax Tribunal seeking a total waiver of the demanded duty. The appellant claimed eligibility for exemption under notification No. 50103-CE, stating compliance with the notification and substantial expansion prior to 7.1.2003. The Tribunal, after evaluating both parties' claims, directed the appellant to deposit Rs. 42,00,000 within eight weeks, rejecting the plea for total waiver.

3. Compliance with Notification Terms:
The appellant contended compliance with notification Nos. 49-50/2003-CE, asserting substantial expansion and increased capacity with due intimation to the department. The respondent argued non-compliance with notification terms before 7.1.2003, leading to the rejection of the total waiver claim.

4. Proviso to Section 35F - Waiver of Pre-Deposit:
The proviso to Section 35F of the Act allows for the waiver of duty deposit if it causes undue hardship, subject to safeguarding revenue interests. The waiver is not a right but granted based on specific circumstances of each case, as highlighted in Ravi Gupta Vs. Commissioner, Sales Tax case.

5. Criteria for Granting Waiver:
Granting waiver is not arbitrary but requires justification based on undue hardship and revenue protection. The appellant sought complete waiver citing strong grounds likely to exonerate from payment, emphasizing the absence of public mischief or irreparable personal injury.

6. Lack of Grounds for Complete Waiver:
The Tribunal's decision to not grant a total waiver was upheld, noting the absence of factual or legal flaws in the order. The appellant failed to demonstrate grounds for interference with the decision, especially when the Tribunal found no basis for complete waiver.

7. Dismissal of Appeal and Compliance Order:
The appeal was dismissed due to lack of merit, directing the appellant to comply with the pre-deposit order within eight weeks. The judgment emphasized adherence to the Tribunal's decision and the absence of grounds for overturning the ruling.