Appeal Reinstated After Non-Compliance Set Aside; Petitioner Granted 3 Months for 7.5% Pre-Deposit Under Excise Act.

The Bombay HC set aside the impugned order dismissing the Petitioner's Appeal for non-compliance with the pre-deposit requirement under Section 35(F) of the Central Excise Act. The Court reinstated the Appeal for reconsideration by the Commissioner (Appeals), granting the Petitioner three months to deposit 7.5% of the demanded tax. Non-compliance within this period would lead to dismissal of the Appeal. The decision, specific to the case's circumstances, was not to be treated as a precedent. The Rule was disposed of without any cost order, and parties were directed to act on an authenticated copy of the order.

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Issues: Challenge to impugned order for failure to deposit tax amount; Jurisdiction of show cause notice; Requirement of pre-deposit under Section 35(F) of Central Excise Act; Petitioner's financial hardship; Waiver of pre-deposit; Compliance with pre-deposit condition.

The judgment by the High Court of Bombay involved a challenge to an impugned order dated 30 April 2024, where the Commissioner (Appeals) dismissed the Petitioner's Appeal due to failure to deposit 7.5% of the demanded tax amount as required under Section 35(F) of the Central Excise Act, 1944. The Petitioner argued that the show cause notice issued was without jurisdiction as it was beyond the prescribed period of limitation, rendering subsequent orders nullities. The Petitioner contended that the pre-deposit condition was arbitrary and violated Article 14 of the Constitution, especially considering the financial constraints, with an income of Rs. 10,000 per month. The Petitioner sought a waiver of the pre-deposit, citing decisions from other High Courts allowing such waivers in cases of strong prima facie evidence and grave hardships.

The Respondents, however, argued that the pre-deposit was mandatory for hearing the Appeal, citing legal precedents to support their stance. The Court considered the arguments and observed that challenging the show cause notice was not within the scope of the current Petition. It noted that the Commissioner (Appeals) rightfully dismissed the Appeal for non-compliance with the pre-deposit condition, referencing a previous case that established the mandatory nature of the pre-deposit requirement. Despite this, the Court acknowledged the Petitioner's financial difficulties, especially considering the history of the business and the current financial state. The Court decided to grant the Petitioner an additional opportunity to comply with the pre-deposit requirement without waiving it entirely.

In light of the peculiar facts of the case, the Court set aside the impugned order and reinstated the Appeal for reconsideration by the Commissioner (Appeals). However, the Court stipulated that the Appeal would not be decided on merits until the Petitioner deposited 7.5% of the demanded tax amount within three months. Failure to comply within the specified period would result in dismissal of the Appeal. The Court clarified that the decision was specific to the circumstances of the case and not to be treated as a precedent. The Rule was disposed of without any cost order, and all parties were directed to act upon an authenticated copy of the order.

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