2016 (2) TMI 18 - HC - Central Excise

High Court Overturns Tribunal's Deposit Order, Emphasizes Discretion

WAGHBAKRIWALA RAYONS Versus UNION OF INDIA

The High Court set aside the Customs, Excise and Service Tax Appellate Tribunal's order imposing a deposit condition of Rs. 50 lacs on the petitioners. ... Validity of order directing to make pre-deposit while Remanding back the proceedings - The adjudicating authority proceeded ex-parte and passed the final order confirming the duty demand with penalty and interest. - Tribunal on the ground that twice the proceedings were earlier adjourned, refused to grant any further time and while remanding the proceedings to the adjudicating authority imposed the said condition of depositing sum of ₹ 50 lacs on the petitioners. Held that:- When the Tribunal in the present case set aside the order-in-original, there was no order confirming duty penalty or interest and in that sense, the condition of pre-deposit of any amount could not have been imposed. This is, however, not the same thing to suggest that even if the facts otherwise so merited, the Tribunal had no jurisdiction to impose suitable condition of depositing appropriate amount. Reverting to the facts of the case, it appears that the petitioners were not duly served with the notices of hearing of the show cause notice proceedings and hearing was revived after long gap of nearly 9 years. In the meantime, factory of the petitioners was closed down. Primarily on such grounds, we are inclined to set aside the condition imposed by the Tribunal of depositing a sizable sum of ₹ 50 Lacs which is made a precondition for fresh disposal of the show cause notice by the adjudicating authority. In order not to delay the proceedings further while setting aside the Tribunal's condition of pre-deposit of ₹ 50 Lacs, we direct that the petitioners shall deposit cost of ₹ 25,000/- with the Department subject to which the adjudicating authority shall grant hearing and dispose of the proceedings afresh. - Decided in favor of assessee. Issues:Challenge to order of Customs, Excise and Service Tax Appellate Tribunal imposing deposit condition of Rs. 50 lacs on petitioners.Analysis:The petitioners challenged an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which remanded the proceedings back to the adjudicating authority and imposed a condition of depositing Rs. 50 lacs on the petitioners. The Tribunal observed that the petitioners had not cooperated with the adjudicating authority and had not filed a reply to the show cause notice. The Tribunal directed the main appellant to deposit the amount within eight weeks and file a reply to the show cause notice within four weeks. The petitioners argued that while remanding the proceedings for breach of natural justice, the Tribunal cannot impose a pre-deposit condition, citing relevant case laws. On the other hand, the Department contended that the Tribunal has the power to impose suitable conditions under Section 35C of the Central Excise Act.The High Court referred to a Division Bench decision recognizing the wide powers of the Tribunal under Section 35C of the Act. The Court noted that the Tribunal has discretion to pass orders, including imposing conditions while remanding a case. The Court clarified that the condition of depositing an amount is not the same as a pre-deposit of duty, interest, or penalty. In this case, since there was no order confirming duty, penalty, or interest, the Tribunal could not impose a pre-deposit condition. However, the Court acknowledged the Tribunal's authority to impose suitable conditions if warranted by the facts of the case.Regarding the facts of the case, the Court found that the petitioners were not properly served with notices, and there was a significant delay in the proceedings. The Court set aside the condition of depositing Rs. 50 lacs imposed by the Tribunal. However, the Court noted that the petitioners could have informed the authorities about the closure of their factory and provided a residential address for communication. As a measure to expedite the proceedings, the Court directed the petitioners to deposit a cost of Rs. 25,000 with the Department and instructed the adjudicating authority to grant a hearing and dispose of the proceedings afresh. The petitioners were also given deadlines for obtaining documents and filing replies.In conclusion, the High Court disposed of the petition by setting aside the Tribunal's condition of pre-deposit and replacing it with a cost deposit of Rs. 25,000. The Court emphasized the importance of cooperation with the authorities and timely pursuit of legal remedies to avoid delays in the adjudication process.