High Court Waives Pre-Deposit for Petitioner in Financial Hardship

The High Court waived the pre-deposit requirement for the petitioner, facing extreme financial hardship due to the closure of their unit since 2006. Citing previous judgments, the Court found the 10% deposit of Rs.1.25 crores onerous and allowed the petitioner to appeal before the CESTAT without the pre-deposit burden.

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Issues Involved:
1. Quashing of the order in original.
2. Allegations of suppressed production and clandestine removal.
3. Reliance on technical opinion reports.
4. Requirement of pre-deposit under Section 35F of the Central Excise Act.
5. Financial hardship and waiver of pre-deposit.

Detailed Analysis:

1. Quashing of the Order in Original:
The petitioner sought to quash the order in original no.24-25/Commissioner/2022 dated 28.10.2022. The petitioner contended that this was the third order in original passed for the period December 2001 to October 2006 based on a show-cause notice dated 19th March 2007. The petitioner argued that the adjudicating authority repeatedly relied on the technical opinion report of Dr. N.K. Batra and reports from the All India Induction Furnace Association.

2. Allegations of Suppressed Production and Clandestine Removal:
The petitioner was accused of suppressing production of MS Ingots and clandestinely removing the goods without paying excise duty. The basis for this allegation was the higher consumption of electricity, which was checked and found to be on the higher side. The adjudicating authority used the consumption of electricity as the primary evidence to support the charge of clandestine removal.

3. Reliance on Technical Opinion Reports:
The adjudicating authority relied heavily on the technical opinion report prepared by Dr. N.K. Batra of IIT, Kanpur. The petitioner argued that this report was not credible as Dr. Batra was no longer available for cross-examination. The learned CESTAT, Kolkata had previously set aside the orders based on this report and remanded the matter for a de novo assessment, instructing the adjudicating authority to collect corroborative evidence and provide a reasonable opportunity to the appellant/assessee.

4. Requirement of Pre-Deposit under Section 35F of the Central Excise Act:
The petitioner invoked the jurisdiction of the High Court under Article 226 of the Constitution of India to waive the pre-deposit requirement under the amended Section 35F of the Central Excise Act. The petitioner argued that the amended provision does not allow waiver of pre-deposit before the appellate authority or learned CESTAT. The petitioner's financial hardship was cited as a reason for seeking this waiver.

5. Financial Hardship and Waiver of Pre-Deposit:
The petitioner's unit had been closed since 20th September 2006, and the financial statements showed significant losses for the financial years 2006-07, 2007-08, and 2008-09. The total demand was Rs.12.50 crores, and the petitioner was not in a position to deposit 10% of the total demand for preferring an appeal before the learned CESTAT. The petitioner relied on previous judgments where courts had waived the pre-deposit requirement considering the financial condition and background of the petitioner.

Judgment:
The High Court acknowledged the extreme financial hardship faced by the petitioner and the fact that the unit had been closed since 2006. The Court referred to the decision in Satya Nand Jha Vrs. Union of India & Ors and Shubh Impex Vrs. Union of India & Ors, where waivers were granted in similar circumstances. The Court found that the pre-deposit of 10% (amounting to Rs.1.25 crores) would be onerous for the petitioner and waived the requirement of pre-deposit. The writ petition was disposed of, and the I.A. No.11581/2022 was allowed, thereby enabling the petitioner to appeal before the learned CESTAT without the burden of pre-deposit.

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