2002 (4) TMI 95 - HC - Central Excise

High Court Overturns Commissioner's Order, Directs Fresh Consideration of Waiver Request

HEINZ INDIA PVT. LTD. Versus DEPUTY COMMISSIONER OF C. EX., ALIGARH

The High Court set aside the Commissioner (Appeals) order dated 12th April, 2002, directing a fresh consideration of the waiver request under Section 35F. ... Stay/Dispensation of pre-deposit Issues Involved:1. Classification of the product 'Complan' under the Central Excise Tariff.2. Requirement of pre-deposit under Section 35F of the Central Excise Act.3. Consideration of undue hardship for waiver of pre-deposit.4. Validity of the Commissioner (Appeals) order dated 12th April, 2002.Issue-wise Detailed Analysis:1. Classification of the product 'Complan' under the Central Excise Tariff:The petitioner, a company engaged in the manufacture of 'Complan and Glucon D,' had been paying Central Excise Duty under Heading 2107.91, which was later changed to 2108.99. A show cause notice issued on 29th November, 2000, proposed reclassification under Heading 1901.92, arguing that 'Complan' contains 'Malto Dextrin' and should be treated as a food preparation containing malt extract. The petitioner contested this, presenting expert opinions from the Central Food Technological Research Institute, Mysore, and the University of Mumbai, which differentiated 'Malto Dextrin' from malt or malt extract.2. Requirement of pre-deposit under Section 35F of the Central Excise Act:The petitioner appealed against the Deputy Commissioner's order demanding differential duty and penalty, seeking waiver of the pre-deposit requirement under Section 35F. The petitioner argued that they had a strong prima facie case and that the balance of convenience was in their favor.3. Consideration of undue hardship for waiver of pre-deposit:The petitioner cited several judgments to support their claim of undue hardship. In Tata Iron and Steel Co. Ltd. v. Commissioner (Appeals), it was held that prima facie case and undue hardship are relevant factors for considering waiver of pre-deposit. The Supreme Court in Vijay Prakash D. Mehta and Jawahar D. Mehta v. Collector of Customs (Preventive), Bombay emphasized that discretion to waive pre-deposit should be exercised based on relevant materials. Similarly, in M/s. Matsushita Television Audio Ltd., India v. Commissioner (Appeals), it was noted that the appellate authority should take a realistic view when determining waiver requests.4. Validity of the Commissioner (Appeals) order dated 12th April, 2002:The petitioner contended that the order dated 12th April, 2002, was not a speaking order and did not consider the merits or financial difficulties of the petitioner. The court found that the order lacked detailed reasoning and directed the Commissioner to reconsider the entire question under Section 35F, taking into account the petitioner's arguments and the law on the subject. The court also stayed the recovery of the demanded amount until the Commissioner passed a fresh order.Conclusion:The High Court set aside the Commissioner (Appeals) order dated 12th April, 2002, directing a fresh consideration of the waiver request under Section 35F. The Commissioner was instructed to hear the parties on merits and pass a detailed order within two months, staying the recovery of the amount in the interim. The petition was disposed of with no order as to costs.