2018 (5) TMI 1563 - HC - Central Excise

Pre-deposit under amended Section 35F of Central Excise Act 1944 - Area Based Exemption - commencement of Commercial production - case pf petitioner is that appeal of the petitioner should be admitted for consideration and heard without insisting on pre-deposit in view of the earlier orders passed by the Tribunal which have attained finality upholding stand and stance of the petitioner on claim of exemption under notification dated 10th June 2003. Held that - we are inclined to accept the prayer made by the petitioner. The petitioner has already succeeded before the Tribunal on the question of grant of exemption under notification dated 10th June 2003 in other connected appeals. The said order of the Tribunal has attained finality as no appeal has been preferred by the Revenue before the Supreme Court. Pre-deposit in these circumstances would be a technicality and mere formality for the issue is settled by an earlier order in favour of the petitioner - further the petitioner has expressed and shown financial hardship and distress by referring to balance sheet and profit and loss account for the year ending 31st March 2017 which reflects accumulated losses of over 59, 918, 456.93. Tribunal will admit and hear the appeal preferred by the petitioner without insisting on pre-deposit of 7.5% of the tax and penalty - petition disposed off.

Summary

Issues:
1. Commencement of commercial production before the specified date for exemption eligibility.
2. Admissibility of appeal without pre-deposit under Section 35F of the Central Excise Act.
3. Financial hardship and distress faced by the petitioner.

Analysis:

Issue 1: Commencement of Commercial Production
The case involved adverse orders-in-original passed against the petitioner by the Assistant Commissioner, Central Excise & Service Tax, Rampur, regarding the commencement of commercial production before 31st March, 2010, a prerequisite for exemption under Notification No.50/03-CE dated 10th June, 2003. The Tribunal, in an order dated 6th February, 2017, ruled in favor of the petitioner, stating that commercial production had indeed commenced before the specified date. This decision was not appealed by the Revenue to the Supreme Court, leading to the finality of the Tribunal's order.

Issue 2: Admissibility of Appeal without Pre-deposit
The petitioner sought admission and hearing of an appeal without pre-deposit under Section 35F of the Central Excise Act, citing the finality of the Tribunal's decision in their favor. The High Court accepted the petitioner's plea, considering the settled issue in previous orders and the financial hardship faced by the petitioner, as evidenced by substantial accumulated losses and previous pre-deposits not being refunded.

Issue 3: Financial Hardship of the Petitioner
The petitioner demonstrated financial distress through its balance sheet and profit and loss account, showing significant accumulated losses. The Court acknowledged the financial burden faced by the petitioner, noting the previous pre-deposit made and the additional amount required, which would exacerbate the financial strain. Citing precedents and considering the financial hardship, the Court directed the Tribunal to admit and hear the appeal without requiring the pre-deposit of tax and penalty, emphasizing that the merits of the appeal and the specific issue of commercial production commencement were not addressed in the judgment.

In conclusion, the High Court's judgment favored the petitioner, allowing the appeal to be heard without pre-deposit due to the finality of the Tribunal's decision and the petitioner's financial distress, as evidenced by substantial losses and previous financial commitments.