High Court sets aside pre-deposit order under Central Excise Act, directs bank guarantee issuance for appeal.

The High Court found the order directing the appellant to make a pre-deposit of Rs. 53 lakhs under Section 35F of the Central Excise Act, 1944, unsustainable. The Court directed the appellant to provide a bank guarantee for an additional amount of Rs. 28 lakhs within four weeks. Once the bank guarantee was furnished, the Appellate Tribunal was instructed to proceed with hearing the appeal on merit within a further four-week period. The appeal was partly allowed with these directions, and no costs were imposed.

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Issues:
Challenge to order directing pre-deposit under Section 35F of Central Excise Act, 1944.

Analysis:
The appellant challenged an order by the Customs, Excise & Service Tax Appellate Tribunal directing them to make a pre-deposit of Rs. 53 lakhs within eight weeks under Section 35F of the Central Excise Act, 1944. The appellant argued that another hotel owned by them had been granted exemption on tax on food items under the Finance Act, but the same treatment was not extended to their current unit. The ASGI representing the respondent contended that the power to grant waiver on pre-deposit during the appeal lies within the discretion of the appellate authority and should not be disturbed since the main appeal is pending. The respondent argued that no hardship plea was made by the appellant and the impugned order should not be interfered with. The total demand confirmed by the Commissioner was over Rs. 1,10,00,000, with an equal amount imposed as a penalty.

The main issue revolved around the legality of the order passed by the CESTAT on 18-2-2013. The High Court examined the order passed by the Commissioner, the impugned order, and Section 35F of the Central Excise Act. It was noted that the Appellate Tribunal has the discretion to dispense with the deposit if it would cause undue hardship. The appellant contended that the exemption granted to their other unit was arbitrarily denied to the present unit, but this ground was not considered by the Tribunal. The Court found that a material factor relevant to the case had been overlooked. The appellant had deposited Rs. 25 lakhs as per the Court's stay order against coercive recovery.

The High Court held the impugned order to be unsustainable and directed the appellant to provide a bank guarantee for the additional amount of Rs. 28 lakhs within four weeks. Upon furnishing the bank guarantee, the Appellate Tribunal was instructed to proceed with hearing the appeal on merit and make a decision within a further four-week period. The appeal was partly allowed with these directions, and no costs were imposed.

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