2014 (7) TMI 927 - HC - Central Excise

Waiver of pre-deposit - Tribunal came to the conclusion that there was no evidence to prove the nexus of services with manufacturing activities of the Appellant/ Assessee. - Held that - Tribunal has given some conclusive opinion on merits of the Appeal that we are of the opinion that once there was an arguable case, then, the rights and equities could have been balanced. The approach which preserves the right of appeal, so also, protects the interest of the Revenue could have been adopted. Appeal allowed by modifying the order of the Tribunal. The Appellant/ Assessee, therefore, would not be required to deposit a sum of ₹ 3.83 crores in cash. However, the Appellant/ Assessee shall deposit a sum of ₹ 1.25 crores in cash and furnish a bank guarantee of any nationalized bank for the balance sum, to the satisfaction of the Commissioner. - Decided partly in favor of assessee.

Summary

Issues Involved:
Whether the Appellate Tribunal was justified in directing the Appellant to deposit a specific amount as a condition to hear the Appeal.

Analysis:
The High Court considered the substantial question of law regarding the justification of the Appellate Tribunal's direction for the Appellant to deposit a significant amount before hearing the Appeal. The Court noted that the Tribunal had concluded there was no evidence to prove the nexus of services with the manufacturing activities of the Assessee. The Court found this conclusion premature, especially since the Assessee claimed they were not given an opportunity to address certain documents and services related to their business activities. The Court emphasized the need for a balanced approach that preserves the right of appeal while protecting the interests of the Revenue.

The Revenue argued that the Assessee failed to produce satisfactory material and that the deposit amount did not cause financial hardship. However, the High Court disagreed and held that once an arguable case existed, the rights and equities should have been balanced. Therefore, the Court modified the Tribunal's order, reducing the cash deposit amount for the Assessee and requiring a bank guarantee for the remaining sum. The Assessee was granted six weeks to comply with the modified order, failing which the Tribunal would take necessary action for non-compliance. The Court clarified that its decision did not express any opinion on the rival contentions, leaving all issues open for further consideration.

In conclusion, the High Court allowed the Appeal by modifying the Tribunal's order, directing the Assessee to deposit a reduced amount and provide a bank guarantee. The Tribunal was instructed to hear the Appeal on merits, free from any tentative findings in the impugned order. The Court emphasized the importance of justice and maintaining the balance between the rights of the Assessee and the interests of the Revenue. The Appeal was disposed of with no costs awarded.