High Court quashes tribunal order, grants restoration application, sets deposit condition.

The High Court quashed the tribunal's order and clarified that the restoration application by the assessee was granted. The court set aside the dismissal of the appeal for non-prosecution or non-compliance with section 35F of the Central Excise Act, emphasizing that the tribunal lacked the power to dismiss the appeal without adjudication on merits. The assessee was directed to comply with the deposit condition of Rs. 6 lakhs within two weeks for the appeal to be restored and heard on merits, failing which the tribunal's order would stand. Compliance with the deposit condition was deemed necessary for the appeal to proceed, with costs waived due to the appellant's financial position.

---

---

Issues:
1) Restoration of appeal for hearing on merits.
2) Compliance with deposit condition under section 35F of the Central Excise Act, 1944.

Analysis:
1) The High Court found that the tribunal should have restored the appeal of the assessee for genuine reasons. The tribunal's order was quashed, but it was clarified that the restoration application filed by the assessee was indeed granted. The appeal was initially dismissed for non-prosecution, and upon restoration, a condition of depositing Rs. 6 lakhs was imposed. The High Court set aside the direction to dismiss the appeal for non-prosecution or non-compliance with section 35F of the Central Excise Act, 1944. The court emphasized that the tribunal lacked the power to dismiss the appeal without adjudication on merits, as per the provision of section 35F.

2) The court held that the assessee must comply with the deposit condition of Rs. 6 lakhs within two weeks for the appeal to be restored and heard on merits. Failure to comply would result in the tribunal's order standing, depriving the assessee of the opportunity for a hearing on merits. The court highlighted that the assessee had not challenged the restoration order or the deposit condition previously. Therefore, compliance with the deposit condition was deemed necessary for the appeal to proceed. The court disposed of the appeal with these directions and waived costs considering the appellant's financial position.

---