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2014 (5) TMI 1061 - CALCUTTA HIGH COURTWaiver of pre deposit - Demand of differential duty - Undervaluation of goods - Clearance of goods to sister concern - Section 11A - whether the learned Tribunal was justified in directing the petitioner to deposit ₹ 60 Lakhs as a condition for hearing the appeals - Held that:- Prima facie there is not a whisper in the show-cause notice of any fraud, collusion, wilful mis-statement, suppression of facts or of contravention of any particular provision of the Central Excise Act, 1944. There is only a sweeping, vague averment that the petitioner No. 1 appeared to have deliberately undervalued the goods cleared to its sister units, with intent to evade payment of differential Central Excise Duty and Educational Cess. - 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. Where an assessee has a good prima facie case, and the disputed duty and/or penalty has apparently been charged wrongfully, the requirement of pre-deposit of the disputed tax and/or penalty is liable to be waived, since pre-deposit of tax not payable by an assessee, would in itself cause hardship to that assessee - 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. - Tribunal has cursorily considered the merits of the case. The learned Tribunal has not at all considered the question of limitation, on which, the question of jurisdiction to issue a show-cause notice for realizing a demand, depends. Admittedly, the demand was not raised within one year but almost two/three years by-invoking the extended period of limitation. Prima facie case was in favour of the demand, insofar as recovery of duty is concerned, the learned Tribunal did not consider whether imposition of 100% penalty was justified in the particular facts of the case. - The power to dispense with pre-deposit may be discretionary. However, it is well-settled, that when facts and circumstances of the case warrant exercise of discretion to waive pre-deposit, pre-deposit would have to be waived. - The condition precedent for exercise of power to waive pre-deposit is prima facie satisfaction of the Appellate Authority that pre-deposit would result in undue hardship to the appellant. The Appellate Authority cannot whimsically and arbitrarily waive pre-deposit or even part thereof. Pre-deposit can be waived in part either on satisfaction that payment of the amount that is waived would cause financial hardship to the appellant, but the appellant is, in the financial position to make payment of the rest of the duty and penalty without undue hardship, or alternatively when the Appellate Authority is prima facie satisfied that the appellant has been able to make out a strong prima facie case for setting aside of a part of the duty levied and/or penalty imposed corresponding to the amount, of which pre-deposit is waived. In the instant case, the impugned order does not disclose the reason for directing pre-deposit of ₹ 60 lakhs only and waiving deposit of the balance duty and penalty. - Decided in favour of assessee.
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