TaxTMI 
TaxTMI 
2014 (5) TMI 1061
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....stoms, Excise and Service Tax Appellate Tribunal, Easter Regional Bench, Kolkata, refusing to modify the aforesaid order and directing the petitioner to pre-deposit Rs. 60 Lakhs and report compliance on 28th March, 2012. 3. The short question involved in this appeal is whether the learned Tribunal was justified in directing the petitioner to deposit Rs. 60 Lakhs as a condition for hearing the appeals. 4. The petitioner No. 1 carries on business, inter alia, of manufacture of diverse goods, which are excisable commodities, including re-rolled steel products, non-alloy steel ingots and sponge iron. The petitioner No. 1 has various units in West Bengal. 5. The petitioners claim to sell their finished products to independent buyers and also to their sister concerns on stock transfer basis. According to the petitioners, the petitioners supply manufactured goods to their sister concerns on payment of duty. visited the registered office of the petitioner No. 1 at Kolkata. Thereafter, on the allegation that the petitioners were clearing goods to their sister concerns at lesser value than the value at which goods were sold to independent buyers, a show-cause notice N....
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....oner was called upon to show-cause why the differential duty should not be recovered along with interest and penalty. By a letter dated 9th July, 2007 the petitioner duly replied to the aforesaid show-cause notice in details dealing with all the allegations and/or contentions in the show-cause notice. 8. Section 11A of the Central Excise Act, 1944, as it stood at the material time when the show-cause notice was issued, is set out hereinbelow for convenience :- 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within [one year] from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-l....
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....nits, with intent to evade payment of differential Central Excise Duty and Educational Cess. 11. Prima facie goods cleared by the various units of the petitioner No. 1 to sister concerns and/or units were disclosed and duty was paid thereon. It is doubtful whether it can be said that there was any such suppression of facts or any such contravention of the Central Excise Act to entitle the Revenue to invoke the extended period of limitation. These observation are, however, only prima facie observations which will not influence the adjudication of the pending appeals on merit. 12. The learned Commissioner confirmed the demand and imposed Penalty on the petitioners. The petitioners appealed whereupon the learned Tribunal remanded the matter to the learned Commissioner on I he ground that the Commissioner had applied a method of valuation contrary to the method approved by a larger Bench of the Tribunal. 13. Thereafter de novo proceedings were held. The petitioners claim to have submitted all documents pertaining to the disputed period i.e. from 2002 to 2005, to show that there was no undervaluation of the goods transferred to the sister concerns/units, and in a....
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....ere in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the [Commissioner (Appeals)] or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the [Commissioner (Appeals)] or as the case may he, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing." 20. Section 35F provides that pending ....
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....of the appellant and the prima facie case. The financial capacity of the appellant has to be considered in all cases, irrespective of the prima facie merits of the ease. Even where an appellant has the financial capacity to deposit the disputed tax and/or penalty, pre-deposit might have to be waived if the appellant makes out a good prima facie case. 26. Where there is a very good prima facie case, pre-deposit would have to be waived altogether. Where the appellant has an arguable case, pre-deposit might be waived on such conditions as would protect the interest of Revenue. In fact, learned Tribunal was conscious of its duty to consider the prima facie case and accordingly recorded a prima facie finding with regard to the merit of the demand, but cursorily without properly applying its mind to the issues involved in the appeal. 27. In Farmania Steel Works v. Union of India reported in 2011 (274) E.L.T. 331 (Cal.) this Court set aside an order of pre-deposit because the order did not disclose reasons for directing pre-deposit of rupees four lakhs. In this case too the reasons for directing lump sum deposit of Rs. 60 lakhs have not been disclosed. 28. In Amita....
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.... asking, at the same time, while considering an application for waiver of pre-deposit, the Court must apply its mind as to whether the appellant has a strong prima facie case on merits. If an appellant having a strong prima facie case on merits is asked to deposit the amount assessed or penalty imposed, it would cause undue hardship to the appellant. 33. The Appellate Authority may dispense with pre-deposit subject to such conditions as it might deemed fit to impose as to safeguard the interest of the revenue. In Benaras Valves Ltd. v. Commissioner of Central Excise reported in 2006 (204) E.L.T. 513 (S.C.) the Supreme Court held as follows :- "8. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful to the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such mat....
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....he Tribunal to impose such conditions as are deemed proper to safeguard the interest of revenue. Therefore the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to under hardship and also to stipulate condition as required to safeguard the interest of revenue." 34. The aforesaid view has been reiterated in Pennar Industries Ltd. v. State of Andhra Pradesh & Ors. reported in (2009) 3 SCC 177, Ravi Gupta v. Commissioner of Sales Tax reported in 2009 (237) E.L.T. 3 (S.C.), Manotosh Saha v. Special Director, Enforcement Directorate reported in 2008 (229) E.L.T. 492 (S.C.), Indu Nissan Oxo Chemicals India Ltd. v. Union of India reported in 2008 (221) E.L.T. 7 (S.C.). 35. Compulsion to pay any unjust dues per se would cause hardship as held by the Supreme Court in B.M. Malani v. Commissioner of Income Tax reported in (2008) 306 ITR 196 (S.C.). In Vijay Prakash Mehta v. Collector of Customs reported in 1989 (39) E.L.T. 178 (S.C.) the Supreme Court held that a right to appeal is a statutory right and considering Section 129E of the Customs Act, there was discretion in the authority to dispense with the application of....
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....rima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given." 42. Moreover, as observed by the Division Bench of Bombay High Court comprising Rebello and Karnik, JJ., in CEAT Ltd. v. Union of India reported in 2010 (250) E.L.T. 200 (Bom.) the Court cannot be oblivious of the state o....