2010 (2) TMI 924 - HC - Central Excise

High Court overturns Customs Tribunal's pre-deposit order, stresses fair play, urges reevaluation

The High Court set aside the Customs Tribunal's order directing a pre-deposit of Rs. 4,00,000, emphasizing the importance of fair play and urging the ... Writ application - pre-deposit - two procedures - one under Section 3A(4) of the Central Excise Act, 1944 read with Section 96ZP(1) of the Central Excise Rules for assessment as per actual production and the other provided under Rule 96ZP(3) of the Central Excise Rules for assessment on the basis of the production capacity, as determined, are alternate procedures and the assessee has the choice to opt for either - According to the petitioner, the compounded levy scheme was effective for the period from September, 1997 to March, 2000 and thereafter, again ad valorem rate of duty under Section 3 of the Central Excise Act was introduced - petitioner opted for duty under Rule 96ZP(3) of the Central Excise Rules for 1997-1998 - It is alleged that petitioner opted to pay duty as per actual production under Section 3A(4) of the Central Excise Act, 1944 read with Rule 96ZP(1) of the Central Excise Rules - contended that the option was not for the period in dispute, but for the next financial year – Held that:- Tribunal has disposed of the stay application cursorily, by recording that the appellant had not been able to make out a case for total dispensation of duty and penalty - It is also difficult to appreciate the basis on which the learned Tribunal directed payment of Rs. 4,00,000/-. The order impugned does not discuss the basis for directing the appellant to pay Rs. 4,00,000/-, orders cannot be sustained and the same are set aside. The learned Tribunal shall decide the issue of dispensation of pre-deposit afresh in accordance with law and in the light of the observations made above, writ application is disposed of Issues:Challenge to Customs Tribunal Order for pre-deposit of duty and penalty under Central Excise Act, 1944.Analysis:1. The petitioner contested an Order passed by the Customs, Excise & Service Tax Appellate Tribunal, Kolkata, directing pre-deposit of Rs. 4,00,000 within eight weeks. The Tribunal found the petitioner had not made a case for total dispensation of duty and penalty.2. The petitioner, engaged in manufacturing excisable goods, opted for duty assessment under Rule 96ZP(3) of the Central Excise Rules for the financial year 1997-1998. Later, the petitioner allegedly opted for duty as per actual production under Section 3A(4) for 1999-2000.3. The Tribunal's order was based on the petitioner's obligation to discharge duty liability on annual production capacity as determined by the Central Excise Commissioner. The petitioner's contention of not exercising the option under Rule 96ZP(3) for the financial year in question was not considered.4. The Tribunal directed pre-deposit without discussing the basis for the amount. The petitioner's argument of undue hardship due to potential incorrect assessment under Rule 96ZP(3) was not addressed. The Tribunal's cursory treatment of the stay application lacked consideration of the petitioner's contentions.5. The High Court cited precedents emphasizing that undue hardship covers strong or arguable cases in appeal. The Court set aside the Tribunal's orders, directing a fresh decision considering the petitioner's arguments and observations made in the judgment.6. The Court highlighted the importance of fair play, urging the Tribunal to decide on pre-deposit dispensation afresh and proceed with the appeal on merits. The writ application was disposed of, allowing parties to obtain certified copies of the order upon formalities' compliance.