2011 (7) TMI 902 - HC - Central Excise

Appellate Discretion Upheld in Pre-Deposit Penalty Cases: Court Emphasizes Reasonable Waiver

The High Court upheld the order of the Commissioner of Customs, Central Excise, and Services Tax to restrict the pre-deposit amount of penalty in two ... Waiver of pre-deposit - It is the sole contention of the learned counsel for the petitioners that in view of the remand order passed by the Appellate Tribunal at Madurai Bench in A. Nos. 223 to 225 & 232 of 2009, dated 21-7-2010 in similar set of facts, the order passed by the primary authority i.e. Additional Commissioner of Central Excise, Hyderabad dated 20-12-2010 is liable to be set aside in the impugned appeals by the first respondent and therefore, insisting the petitioners for pre-deposit amount of penalty by the first respondent would cause undue hardship - When the discretion has been vested in the appellate authority to dispense with such deposit unconditionally or subject to such conditions, as it may impose in its discretion taking into consideration the undue hardship which it is likely to cause to the appellant - Held that: this Court cannot go into the merits of the order passed by the primary authority which imposed the penalty - The writ petitions are accordingly dismissed Issues:Challenging order of Commissioner of Customs, Central Excise and Services Tax on pre-deposit amount of penalty - Violation of principles of natural justice - Merits of appeal not to be considered during waiving pre-deposit amount - Remand order from Appellate Tribunal at Madurai Bench - Discretion of appellate authority to waive deposit - Compliance with principles of natural justice - Applicability of previous judgments on similar provisions - Dismissal of writ petitions.Analysis:The writ petitions before the High Court of Andhra Pradesh challenged the order passed by the Commissioner of Customs, Central Excise and Services Tax regarding the pre-deposit amount of penalty in two separate cases. The petitioners contended financial constraints as the reason for seeking waiver of the pre-deposit amount for entertaining the appeals. The petitioners argued that the order passed by the Additional Commissioner of Central Excise imposing the penalty was in violation of principles of natural justice as they were not provided an opportunity to present their case before the imposition of the penalty.The standing counsel for the Central Government argued that the merits of the appeal cannot be considered at the time of waiving the pre-deposit amount, citing previous judgments by the Supreme Court and the High Court. The petitioners relied on a remand order from the Appellate Tribunal at Madurai Bench in a similar case to support their contention that the order passed by the Additional Commissioner of Central Excise should be set aside. They argued that insisting on the pre-deposit amount would cause undue hardship.The High Court observed that when an order is subject to appeal before a statutory authority, the court cannot delve into the validity of the order passed. Citing previous judgments, the court highlighted the discretion vested in appellate authorities to waive deposits subject to conditions, emphasizing the need for a reasonable and rational exercise of discretion considering all relevant facts and circumstances. The court noted that the appellate authority had considered the grounds of appeal and waived the condition for entertaining the appeals by restricting the pre-deposit amount, finding no infirmity in the order passed by the first respondent.In conclusion, the High Court dismissed the writ petitions, upholding the order of the first respondent to restrict the pre-deposit amount of penalty. No costs were awarded in the matter.