2020 (8) TMI 110 - HC - Central Excise

Court upholds pre-deposit rule, financial hardship not enough for waiver.

The court dismissed the writ petitions challenging the Customs, Excise, and Service Tax Appellate Tribunal's dismissal of appeals due to non-compliance ... Maintainability of appeal - non-compliance of pre-deposit under section 35F of Central Excise Act, 1944 - HELD THAT:- The petitioners have not been able to make out any exceptional grounds of undue hardship for waiver of mandatory pre-deposit under section 35-F of C.E.A, 1944, as amended with effect from 06th August 2014 in exercise of writ jurisdiction. Petition dismissed. Issues Involved:1. Non-compliance with pre-deposit requirement under Section 35F of the Central Excise Act, 1944.2. Request for waiver of pre-deposit due to financial hardship.3. Validity and applicability of amended Section 35F.4. Procedural and substantive grounds for challenging the CESTAT's dismissal of appeals.Issue-wise Detailed Analysis:1. Non-compliance with Pre-deposit Requirement:The petitioners challenged the dismissal of their appeals by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, due to non-compliance with the pre-deposit requirement under Section 35F of the Central Excise Act, 1944. The CESTAT dismissed the appeals solely on the ground that the petitioners did not comply with the mandatory pre-deposit of 7.5% of the duty demanded or penalty imposed.2. Request for Waiver of Pre-deposit Due to Financial Hardship:The petitioners sought a waiver of the pre-deposit requirement, citing financial hardship. They argued that the company had already deposited Rs. 37,50,000 during the investigation and that the directors were not in a financial position to make the mandatory pre-deposit. They claimed economic slowdown and loss of reputation in the business circle as reasons for their financial crisis. However, the court found no material or document to support the company's inability to make the pre-deposit.3. Validity and Applicability of Amended Section 35F:The court highlighted that the constitutional validity of the amended Section 35F had been upheld by a Coordinate Bench in a previous case (Sri Satya Nand Jha Vs. Union of India). The amended section requires a pre-deposit of 7.5% to 10% of the duty or penalty before an appeal can be entertained. The court reiterated that the right to appeal under Sections 35 and 35B is conditional upon making the pre-deposit, and there is no provision for waiver under the amended Section 35F.4. Procedural and Substantive Grounds for Challenging the CESTAT's Dismissal:The petitioners argued that the CESTAT should have heard their appeal on merits despite the non-compliance with the pre-deposit requirement, citing financial stress and other grounds such as the credibility of Panch witnesses and procedural irregularities during the search. However, the court found these grounds insufficient to constitute undue hardship. The court emphasized that financial hardship alone is not a valid ground for waiver of the pre-deposit and that the petitioners failed to establish any exceptional circumstances warranting such a waiver.Conclusion:The court concluded that the petitioners did not make out any exceptional grounds of undue hardship for waiver of the mandatory pre-deposit under Section 35F of the Central Excise Act. Consequently, the writ petitions were dismissed as devoid of merit.