2008 (10) TMI 244 - HC - Central Excise

Court Upholds Deposit Requirement in Central Excise Case

SREE NITHYAKALYANI TEXTILES LTD. Versus COMMISSIONER OF C. EX., MADURAI

The court dismissed the writ petition challenging the direction to deposit 50% of the duty amount imposed under the Central Excise Act. The petitioner ... Stay/Dispensation of pre-deposit - Undue hardship - Maintainability of Writ Petition - Held that:- In the petition filed before the tribunal seeking to dispense with the pre-deposit, the petitioner has not made out any case to establish undue hardship to him. However, the tribunal has taken a very lenient view to dispense with 50% of the amount demanded. Thus find no reason to interfere with the order impugned. On this ground alone the writ petition is liable to be dismissed. Regarding maintainability of the writ petition, as pointed out by the Assistant Solicitor General, any order made under Section 35F is appealable which includes an order refusing to dispense with pre-deposit. But the petitioner has not chosen to prefer any appeal and on this ground also the writ petition is liable to be dismissed. Issues:1. Challenge to the demand and penalty imposed under the Central Excise Act.2. Appeal against the reduction of penalty by the appellate authority.3. Petition under Section 35F of the Central Excise Act for stay.4. Dispute over the direction to deposit 50% of the duty amount by the Tribunal.5. Consideration of undue hardship in seeking dispensation with pre-deposit.6. Maintainability of the writ petition due to appealable orders.Analysis:1. The petitioner challenged the demand and penalty imposed under the Central Excise Act. The adjudicating authority confirmed a demand of Rs. 25,89,250/- and imposed a penalty of Rs. 25,00,000/-. The petitioner appealed to the Commissioner of Central Excise (Appeals), who confirmed the demand but reduced the penalty to Rs. 10,00,000. Subsequently, the petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal, seeking a stay under Section 35F of the Act. The Tribunal directed the petitioner to deposit 50% of the duty amount, which led to the petitioner filing a writ petition challenging this direction.2. The petitioner contended that the appellate tribunal did not consider the undue hardship and circumstances leading to the request for dispensation with pre-deposit. The respondent argued that the writ petition should be dismissed as the order was appealable, and the petitioner failed to provide sufficient material justifying the request for dispensation. The respondent relied on a Supreme Court judgment emphasizing the need to establish undue hardship for waiver requests.3. The court noted that the petitioner did not establish undue hardship to warrant dispensation with the pre-deposit. Referring to the Supreme Court judgment, the court highlighted the importance of proving undue hardship and safeguarding revenue interests. The court found that the petitioner failed to demonstrate excessive hardship, and the Tribunal's decision to dispense with 50% of the demanded amount was lenient.4. The court emphasized the petitioner's obligation to prove undue hardship to avoid payment. The court concluded that the petitioner did not meet this burden, and the Tribunal's decision to require a 50% deposit was justified. The court also addressed the maintainability of the writ petition, noting that orders under Section 35F are appealable, which the petitioner did not pursue, leading to the dismissal of the writ petition.5. In conclusion, the court dismissed the writ petition, vacated the interim order, and closed related petitions, citing the lack of grounds to interfere with the Tribunal's decision and the appealable nature of the orders under Section 35F. The court ruled in favor of maintaining the Tribunal's directive to deposit 50% of the duty amount, highlighting the petitioner's failure to establish undue hardship and the appealable nature of the orders.