2020 (8) TMI 299 - HC - Customs

Requirement to make pre-deposit - undue hardship in making payment - appellant contends that there has been no production, and that there are various liabilities on the appellant - HELD THAT - The non-functioning of the assessee is undisputed. The material on record would indicate that the appellant has also sustained various other losses - We do not intend to go into the merits of the Appeal, since the same is within the jurisdiction of the Tribunal. Suffice to hold that, on the basis of the contentions advanced and the facts stated, we are of the view that it would cause undue hardship if the appellant is directed to make the pre-deposit. Therefore, the same constitutes a hardship to the appellant. The impugned order passed by the CESTAT, New Delhi is modified. The payment of ₹ 40,00,000/-, as demanded by the learned Tribunal, is reduced to a sum of ₹ 5,00,000/-. The appellant to pay a sum of ₹ 5,00,000/- within a period of five months from today with the respondent - Appeal disposed off.

Summary

Issues:
1. Appellant's challenge against the order to pay a pre-deposit of ?40,00,000.
2. Applicability of Section 129-E of the Customs Act, 1962 for pre-deposit.
3. Consideration of hardship in waiving pre-deposit.
4. Dispute over the amount of pre-deposit.
5. Judicial interference in the matter.

Analysis:
The appellant contested the order by CESTAT directing a pre-deposit of ?40,00,000, arguing an inability to make the payment due to financial constraints. The appellant referred to Section 129-E of the Customs Act, 1962, emphasizing the provision for dispensing with the deposit in cases of undue hardship, subject to safeguarding revenue interests. The appellant proposed a reduced pre-deposit of ?5,00,000 within five months, asserting a strong case on merits.

In response, the respondent's counsel insisted on the mandatory nature of pre-deposit under the amended Section 129-E, suggesting a payment of 7½% of the duty demanded, amounting to ?11,13,169 in this case. The judges noted the non-functioning status of the appellant and acknowledged various losses suffered, refraining from delving into the appeal's merits, as it falls under the Tribunal's jurisdiction. They recognized the undue hardship faced by the appellant in making the pre-deposit, concluding it would be burdensome.

In light of the arguments presented, the judges deemed it necessary to intervene. They accepted the appellant's offer of ?5,00,000 as a reduced pre-deposit within five months, considering it a measure to safeguard revenue interests while alleviating the appellant's hardship. Consequently, the original pre-deposit demand of ?40,00,000 was reduced to ?5,00,000, with instructions for the CESTAT to proceed with the appeal post the deposit.

In conclusion, the High Court modified the CESTAT's order, emphasizing the consideration of undue hardship faced by the appellant, leading to the reduction in the pre-deposit amount. The judgment highlighted the balance between revenue protection and appellant's circumstances, ultimately allowing for a reduced pre-deposit and the continuation of the appeal process.