High Court modifies tribunal's order, requires Rs.7 crores deposit & bank guarantee for appeal.

The High Court modified the Custom Excise and Service Tax Appellate Tribunal's order, allowing the petitioner to deposit Rs.7 crores towards the assessed liability and provide an irrevocable bank guarantee for the remaining amount to hear the appeal on merits. Failure to comply would result in dismissal of the appeal. The Court balanced the petitioner's request for waiver with safeguarding the Revenue's interest, citing legal precedent.

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Issues:
1. Petitioner's prayer for waiving duty demand, interest, and penalty for hearing the appeal.
2. Interpretation of Section 35-F of the Central Excise Act, 1944.
3. Conditions for deciding the appeal on merits.

Analysis:
1. The writ petition challenged the order of the Custom Excise and Service Tax Appellate Tribunal, which declined the petitioner's request to waive duty demand, interest, and penalty as a pre-condition for hearing its appeal. The Tribunal directed the petitioner to deposit the entire duty demand with interest and penalty within 8 weeks from the date of the order. The petitioner highlighted that the total amount assessed was around Rs.10 crores. The High Court considered the legislative intent behind Section 35-F of the Central Excise Act, 1944, aiming to balance 'undue hardship' and 'safeguarding the interest of Revenue.'

2. The High Court issued a notice of motion to decide whether a direction could be given to hear the petitioner's appeal on depositing Rs.7 crores towards the assessed liability/penalty and providing an irrevocable bank guarantee for the balance amount. The respondent's counsel acknowledged that the tentative order passed by the Court would safeguard the Revenue's interest based on the legal precedent set in Benara Valves Ltd. v. Commissioner of Central Excise (2006) 13 Supreme Court Cases 347.

3. Consequently, the High Court modified the Tribunal's order, stating that if the petitioner deposited Rs.7 crores towards the assessed liability, interest, and penalty within six weeks, and furnished an irrevocable bank guarantee for the remaining amount within four weeks thereafter, the Tribunal would decide the appeal on merits and in accordance with the law. Failure to adhere to this schedule would result in the Tribunal dismissing the appeal as per the law. The writ petition was disposed of accordingly, with the directive issued through Dasti.

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