2015 (7) TMI 971 - HC - Central Excise

Court Upholds Rs. 3 Crore Deposit Directive under Central Excise Act

M/s. Rathi Ispat Limited Versus The Commissioner Of Central Excise, Ghaziabad

The High Court upheld the Tribunal's decision to direct the appellant to deposit Rs. 3 crores during the appeal under Section 35F of the Central Excise ... Waiver of pre deposit - Misdeclaration of goods - Misdeclaration of value of goods - Wrongful availment of MODVAT Credit - Held that:- The Tribunal has examined whether the appellant had a strong prima facie case that would result in its exoneration from the imposition of duty. In this connection, the Tribunal has recorded a finding against the appellant on each of the three components of duty/modvat credit. In respect of the goods cleared by the appellant as OAS Billets during the relevant period from 5 August 1993 to February 1994 and thereafter from March 1994 upto July 1994, the Tribunal has concluded from the test reports of the samples drawn during this period that the goods that were cleared were SS billets and not OAS billets. In respect of the Modvat Credit, the Tribunal has observed that the appellant was unable to make out a prima facie case. The Tribunal, therefore, concluded that the appellant had failed to make out a case for total waiver of pre-deposit. - The effect of the application filed by the appellant before the BIFR was also examined. The Tribunal, after taking notice of the statement of learned counsel for the appellant that the application filed before the BIFR had subsequently been dismissed, concluded that this was also a reason for imposing the condition for safeguarding the interest of the Revenue. - no good reason to interfere with the direction issued by the Tribunal - Decided against Assessee. Issues:1. Validity of directing the appellant to pay Rs. 3 crores during the pendency of the appeal under Section 35F of the Central Excise Act, 1944.2. Tribunal's authority to direct the appellant to deposit Rs. 3 crores despite the existence of a previous deposit of Rs. 1 crore.3. Justifiability of directing the deposit of Rs. 3 crores when the appellant's assets are in the custody of the department and the factory has been closed for several years.Issue 1:The appellant contested the Tribunal's direction to deposit Rs. 3 crores during the appeal, arguing lack of concrete evidence and non-compliance with Tribunal's directions. The appellant's case involved alleged evasion of duty by clearing stainless steel billets as other alloy steel billets, resulting in duty evasion amounts. The Commissioner's order confirmed duty demands, Modvat Credit, penalties, and confiscation of assets. The Tribunal initially directed a deposit of Rs. 2 crores, later increased to Rs. 3 crores. The Tribunal found against the appellant on duty evasion and Modvat Credit, leading to the deposit order. The Tribunal considered the appellant's application before the BIFR, which had been dismissed, as a factor in safeguarding revenue interests. The High Court upheld the Tribunal's decision, dismissing the appeal due to lack of substantial legal questions.Issue 2:The appellant questioned the Tribunal's authority to demand an additional Rs. 3 crores deposit despite an earlier Rs. 1 crore deposit. The Tribunal's decision to increase the deposit was based on findings against the appellant regarding duty evasion and Modvat Credit. The Tribunal also considered the dismissed BIFR application as relevant to safeguard revenue interests. The Tribunal's directive for the Rs. 3 crores deposit was upheld by the High Court, emphasizing the lack of legal merit in the appellant's arguments.Issue 3:The appellant raised concerns about the deposit requirement considering the custody of assets by the department and the factory's closure. The Tribunal's decision to demand Rs. 3 crores within eight weeks was based on findings against the appellant on duty evasion and Modvat Credit. The Tribunal's consideration of the dismissed BIFR application was deemed necessary to protect revenue interests. The High Court upheld the Tribunal's decision, rejecting the appellant's arguments as lacking legal foundation.This detailed analysis of the judgment highlights the issues raised by the appellant, the Tribunal's rationale for the deposit directive, and the High Court's affirmation of the Tribunal's decision, ultimately dismissing the appeal.