Supreme Court allows appeal without pre-deposit under Central Excise Act

The Supreme Court set aside the lower court orders and directed the matter to be remitted for a hearing on merits by the Assistant Commissioner of Central Excise, Hyderabad II Division. The Court found the insistence on pre-deposit for hearing the appeal under section 35F of the Central Excise Act unjustified due to the lack of notice and opportunity provided to the appellant. The appellant, declared a sick industry, successfully challenged the requirement to pay excise duty before appeal hearing. The appeal was allowed with no costs imposed on either party.

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Issues Involved:
The issues involved in this case are the lack of notice and opportunity before passing the assessment order, the requirement of pre-deposit for hearing the appeal u/s 35F of the Central Excise Act, and the declaration of the appellant as a sick industry.

Lack of Notice and Opportunity:
The appellant's grievance was that the 3rd respondent did not provide any opportunity to substantiate its claim before passing the assessment order, resulting in an ex parte order. The appellant was directed to pay the full excise duty amount for entertaining and hearing the appeal, without proper notice or opportunity being given.

Pre-Deposit Requirement u/s 35F:
Upon appealing the order of the 2nd respondent, the appellant was directed to pay a reduced amount for hearing the appeal, along with providing a bank guarantee. However, considering the objection raised by the appellant regarding the lack of notice and opportunity, the Supreme Court found the insistence on payment of the determined duty before hearing the appeal unsustainable.

Declaration as a Sick Industry:
The appellant had been declared as a sick industry by the Board for Industrial and Financial Reconstruction. Taking this into account, the Supreme Court set aside the orders of the High Court, the Appellate Authority, and the 3rd respondent. The Court decided that directing the appellant to pay the excise duty as a condition for hearing the appeal was not sustainable in these circumstances.

Remittal for Hearing on Merits:
Both counsels agreed that the matter should be remitted to the Assistant Commissioner of Central Excise, Hyderabad II Division for hearing the case on merits. Consequently, the Supreme Court allowed the appeal, with no costs imposed on either party.

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