Court sets aside CESTAT order on excise duty, requires pre-deposit cost for delay.

The court set aside the CESTAT order affirming the demand of differential excise duty, subject to the petitioner depositing a cost for the delay in pre-deposit. The CESTAT was directed to restore the appeal and decide it on its merits, with no coercive measures for recovery until the appeal's disposal. The court emphasized the statutory right to appeal and the mandatory pre-deposit requirement post-amendment. The writ petition and the I.A. were disposed of accordingly.

---

---

Issues Involved:

1. Validity of the demand of differential excise duty.
2. Applicability of Rule 8 versus Rule 4 of the Central Excise Valuation Rules, 2000.
3. Waiver of pre-deposit under Section 35F of the Central Excise Act, 1944.
4. Delay in compliance with the pre-deposit condition.
5. Statutory interpretation of Section 35F pre and post-amendment.

Detailed Analysis:

1. Validity of the Demand of Differential Excise Duty:

The petitioner challenged the order dated 19th March 2018 by the CESTAT, which affirmed the demand of differential excise duty amounting to Rs. 333,22,45,002/- along with interest and penalty. The demand was initially raised by the Commissioner of Central Tax, GST & CX Commissionerate, Rourkela, through an Order-in-Original dated 29th November 2017. The affirmation was due to non-fulfillment of the pre-deposit condition as per Section 35F of the Central Excise Act, 1944.

2. Applicability of Rule 8 versus Rule 4 of the Central Excise Valuation Rules, 2000:

The petitioner contended that the valuation of iron ore pellets cleared from its unit should have been in terms of Rule 8, as the clearances were made to its own units, which do not fall under "related units." The petitioner argued that the differential amount demanded was arbitrary and contrary to settled cases by the Courts/CESTAT.

3. Waiver of Pre-Deposit under Section 35F of the Central Excise Act, 1944:

The petitioner argued that due to acute hardship and a strong prima facie case, it was entitled to a waiver of the pre-deposit requirement under Section 35F. The petitioner cited the Supreme Court judgment in Super Industries and Ors. Vrs. Commissioner of Central Excise and Customs, Vadodara, to support this contention.

4. Delay in Compliance with the Pre-Deposit Condition:

The petitioner filed I.A. No. 4359 of 2022, seeking permission to deposit the amounts required for the pre-deposit condition to get a hearing on merits before the CESTAT. The petitioner submitted proof of payment of Rs. 10 crores as the pre-deposit, the maximum amount specified under the first proviso to Section 35F. The court noted that the delay in making the pre-deposit could be condoned based on settled law.

5. Statutory Interpretation of Section 35F Pre and Post-Amendment:

The court examined the statutory provisions of Section 35F before and after the amendment by the Finance (No. 2) Act, 2014. Before the amendment, the appellant could seek a waiver of the deposit by demonstrating undue hardship. Post-amendment, the requirement to deposit 7.5% or 10% of the duty or penalty, subject to a maximum of Rs. 10 crores, became mandatory for the entertainment of appeals. The court cited various judgments, including Tecnimont Pvt. Ltd. Vrs. State of Punjab and Indian Oil Corporation Vrs. Odisha Sales Tax Tribunal, to emphasize that the right to appeal is statutory and can be conditional.

Conclusion:

The court set aside the CESTAT order dated 19th March 2018, subject to the petitioner depositing a cost of Rs. 1,00,000/- for the delay in pre-deposit. The CESTAT was directed to restore the appeal and decide it on its merits. The court also directed that no coercive measures be taken for the recovery of the remaining demand until the appeal's disposal by the CESTAT. The writ petition and the I.A. were disposed of accordingly.

---