2008 (10) TMI 249 - HC - Central Excise

Stay/Dispensation of pre-deposit - Captive consumption - Held that - Taking into consideration financial position while it did not choose to modify the earlier order dated 23rd Aug. 2001 observed that in case the department refunds the amount the sum of Rs. 15 crores may be adjusted. The earlier order dated 23rd Aug. 2001 having not challenged by the appellant and in the present appeal the appellant having obtained an interim order for refund of the said amount of Rs. 44 crores and in view of the interim order dated 2nd April 2003 the appellant having received the total amount of Rs. 44 crores without any adjustment giving reference to a subsequent circular dated 13th Feb. 2003 arguing the case on merit they cannot derive any advantage to declare the order passed by CEGAT dated 2nd Nov. 2001 as illegal. The position of the company financially being better since the matter was pending before the CEGAT it having received further amount of Rs. 44 crores by way of refund in view of interim order passed in this appeal being in advantageous position it cannot claim for waiver of amount in terms with the proviso to Section 35-F of the Central Excise Act 1944.

Summary

Issues:
Challenge to order requiring pre-deposit of Rs. 15 crores, valuation of anode for duty payment, waiver of pre-deposit, calculation of duty payable, justification of pre-deposit requirement.

Analysis:
1. The petitioner challenged an order by Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) requiring a pre-deposit of Rs. 15 crores. The petitioner, engaged in anode manufacturing, argued that since anodes were captively consumed at its plant, duty paid at Tuticorin plant was available as Modvat credit, making the issue revenue neutral.

2. The respondent issued seventeen show cause notices based on a cost audit report valuing anode at Rs. 1,32,738 per metric tonne. The petitioner deposited Rs. 15.20 crores pending adjudication. CEGAT accepted Rs. 15 crores deposit and required an additional Rs. 15 crores, considering the petitioner's financial position and profit history.

3. The petitioner sought waiver citing financial difficulties, pending drawback claim duty refund of Rs. 43 crores. CEGAT refused waiver, considering the petitioner's profits and pending refund claims. A subsequent circular dated 13th Feb., 2003, modified valuation rules, impacting the duty calculation.

4. The Court noted the petitioner's receipt of the total refund amount of Rs. 44 crores due to an interim order, without any amount withheld. The petitioner argued for a remand without pre-deposit based on the new circular. However, the Court found no merit in the appeal, dismissing it without costs.

5. The Court emphasized the requirement under Section 35-F of the Central Excise Act, 1944, for pre-deposit unless undue hardship is proven. Considering the petitioner's financial position and the refund received, the Court upheld CEGAT's decision on the pre-deposit requirement, given the petitioner's improved financial status during the proceedings.