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2024 (12) TMI 152 - HC - Central ExciseRecovery of Central Excise Duty with interest and penalty - Waiver of the amount of pre-deposit of Rs. 10 Crore for preferring an appeal before the CESTAT as provided under Section 35F of the Central Excise Act 1944 - HELD THAT - A bare perusal of Section 35F makes it clear that the petitioner is liable to make pre-deposit of Rs.10 Crores being the minimum amount for filing an appeal before the CESTAT. This Court is therefore not required to examine whether there is any prima facie case in favour of the petitioner in view of the fact that after the insertion of Section 35F no discretion whatsoever has been left for granting any waiver / reduction in the amount of pre-deposit for preferring an appeal. Therefore this Court would not be in a position to grant waiver or to reduce the amount of pre-deposit for preferring an appeal on the ground of financial hardship as it would be contrary to the legislative intention. Moreover this Court vide order dated 16.12.2021 has observed that the petitioner is precluded to make submissions on merits hence the submissions made qua prima facie case is required to be considered accordingly. In the opinion of this Court the petitioner has the alternative efficacious remedy of filing an appeal before the CESTAT and only on the ground that the petitioner is unable to make payment of the amount of pre-deposit the impugned orders cannot be challenged before this Court in writ jurisdiction. In the case of ASSISTANT COMMISSIONER (CT) LTU KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED 2020 (5) TMI 149 - SUPREME COURT while considering the maintainability of a writ petition where an alternative remedy is available the Hon ble Apex Court held that writ jurisdiction can certainly not be exercised when invoked to undermine or defeat the applicable statutory regime. Whether a prima facie case as canvassed by learned advocate for the petitioner can be considered at this stage to grant waiver of the amount of pre-deposit which is a pre-condition for preferring an appeal before the CESTAT? - HELD THAT - The petitioner has relied upon the decision of the Hon ble Jharkhand High Court in SRI SATYA NAND JHA R/O STAFF QUARTERS KENDRIYA VIDYALAY VERSUS UNION OF INDIA THROUGH THE SECRETARY MINISTRY OF FINANCE NEW DELHI CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL EASTERN ZONAL BENCH KOLKATA 2016 (7) TMI 1307 - JHARKHAND HIGH COURT which has upheld the vires of Section 35F of the Central Excise Act 1944 by referring to the concession made by the respondent authority that in extreme cases the assessee is not remedy-less and that it can prefer a writ petition. The Hon ble Delhi High Court while considering the aspect of wrong valuation has directed waiver of the amount of penalty in the case of MOHAMMED AKMAM UDDIN AHMED ORS. VERSUS COMMISSIONER APPEALS CUSTOMS AND CENTRAL EXCISE ORS. 2023 (5) TMI 23 - DELHI HIGH COURT to grant an opportunity to the assessee to prefer an appeal. Whereas the Hon ble Allahabad High Court in the case of M/S. SHUKLA BROTHERS VERSUS CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL OTHERS 2014 (12) TMI 1098 - ALLAHABAD HIGH COURT has observed that the phrase undue hardship would also cover a case where the appellant has a strong prima facie case. It appears that the petitioner therefore must satisfy this Court that he has a good prima facie case to the effect that he is likely to succeed in the appeal. In order to come to the conclusion that the petitioner would succeed in the appeal having a good prima facie case so as to grant waiver of the pre-condition of pre-deposit for filing the appeal the petitioner is required to disclose a situation where he may be either subjected to gross injustice and / or misfortune or he is liable to excessive demand contrary to the facts and evidence on record or the impugned orders are perverse coupled with the fact that the conduct of the petitioner is blotless - Considering the facts of the case and the three tests which may be considered to arrive at a prima facie conclusion as to whether the petitioner has a prima facie case for waiver of the pre-deposit or not it is required to examine the facts which are recorded in the order-in-original. Petition dismissed.
Issues Involved:
1. Whether the petitioner is entitled to a waiver of the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, for filing an appeal before the CESTAT. 2. Examination of the petitioner's claim of financial incapacity to make the pre-deposit. 3. Assessment of the petitioner's prima facie case for waiver of pre-deposit based on alleged errors in the valuation and number of machines considered by the authorities. 4. Consideration of the maintainability of the writ petition under Article 226 of the Constitution of India given the availability of an alternative remedy. Issue-wise Detailed Analysis: 1. Waiver of Pre-deposit Requirement: The petitioner sought a waiver of the mandatory pre-deposit requirement under Section 35F of the Central Excise Act, 1944, which necessitates a deposit of 7.5% of the duty demanded for filing an appeal before the CESTAT. The court noted that the statutory provision is clear and leaves no discretion for granting any waiver or reduction of the pre-deposit amount. The legislative intent behind Section 35F is to ensure that appeals are not filed frivolously, and the court emphasized that it cannot contravene this legislative mandate by granting a waiver based on financial hardship. 2. Financial Incapacity: The petitioner argued financial incapacity to make the pre-deposit, citing income tax returns showing a low declared income. However, the court held that financial hardship alone does not justify bypassing the statutory requirement of pre-deposit. The court referred to precedents where financial hardship was not considered a sufficient ground to waive the pre-deposit requirement, emphasizing that the statutory framework must be adhered to. 3. Prima Facie Case for Waiver: The petitioner contended a prima facie case for waiver based on alleged errors in the valuation of goods and the number of machines considered by the authorities. The petitioner argued that only six machines were operational, contrary to the authority's consideration of 17 machines, and that the valuation did not follow the prescribed method under Rule 12 of the Rules, 2008. The court, however, refrained from delving into these factual disputes, stating that such matters should be addressed in the appropriate appellate forum, namely the CESTAT, rather than in a writ petition. 4. Maintainability of Writ Petition: The court examined the maintainability of the writ petition under Article 226, given the availability of an alternative efficacious remedy through an appeal to the CESTAT. Citing precedents, the court reiterated that writ jurisdiction should not be exercised to undermine the statutory appeal process unless exceptional circumstances justify such intervention. The court found no such exceptional circumstances in this case and emphasized that the petitioner should exhaust the statutory remedy provided by the Central Excise Act. In conclusion, the court dismissed the petition, underscoring the mandatory nature of the pre-deposit requirement and the availability of an alternative remedy through the appellate process. The court's decision aligns with the legislative intent to ensure that appeals are pursued diligently and not as a means to delay compliance with tax obligations.
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