TMI Blog2014 (9) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... r of pre-deposit. Moreover it would apt to note at this juncture that the amount of ₹ 10.00 lakhs is already deposited with the Tribunal and therefore, it cannot be said that the petitioner is not desirous of genuinely pursuing the said cause. All the three orders under challenge passed by the Tribunal of rejecting the request of total waiver of pre-deposit and consequently dismissing all the appeals of the petitioner for non-deposit of amount vide its impugned orders respectively dated 9-9-2010, dated 31-1-2011 and dated 29-3-2011 need to be quashed. Resultantly, orders impugned are set aside and quashed. While allowing this petition, it is being specified, however, that the amount of ₹ 10.00 lakhs already deposited by the petitioner by way of pre-deposit with the CESTAT shall continue to remain with the Tribunal till final disposal of the appeals - Decided in favour of assessee. - Special Civil Application No. 9386 of 2011 - - - Dated:- 22-12-2011 - Akil Kureshi and Sonia Gokani, JJ. Shri Devan Parikh, Senior Counsel, for the Petitioner. Shri Y.N. Ravani, Standing Counsel, for the Respondent. JUDGMENT Challenge in this petition is to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue, directed the petitioner to deposit the sum of ₹ 50 lakhs towards the duty demanded, which was less than 7% of the total amount of the duty, interest and penalty confirmed against the petitioners. It has also been noted that the petitioner substantiated this plea of undue hardship with the latest balance-sheet and profit and loss account of the company. This was directed to be deposited within 12 weeks from the date of pronouncements of the order dated 9-9-2010. 5. Aggrieved by the impugned order, the petitioner sought modification by moving application for modification of the said order and the Tribunal rejected the said application and confirmed its earlier order by its decision dated 31-1-2011. On 29-3-2011, the Tribunal dismissed the appeals for non-compliance of the provisions of Section 35F of the Central Excise Act, 1944 read with the stay order. Aggrieved by the impugned order, challenge is made in the present petition. 6. Learned Senior Counsel Mr. Devan Parikh appearing for the petitioner fervently made his submission by urging this Court that this is a classic case of non-availing fair opportunity to the petitioner to defend its case. It is a case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the petitioner. The adjudicating authorities, in order-in-original, had elaborated the said aspect and thereby imposed duty, interest and penalty. It is however urged by the learned counsel that the total amount directed to be paid by way of pre-deposit is only 7% of the total liability imposed on the petitioner and, therefore, hue and cry made by the petitioner in the present appeal requires no meritorious consideration. He also pointed out further that an application for modification of the order of the Tribunal directing pre-deposit of ₹ 50 lakhs also was preferred and that had been rejected by the Tribunal availing further time of 8 weeks. There also it had noted that there was no financial change. According to the learned counsel by way of a statement given by the Director of the Company, he had in terms admitted of large scale evasion of excise duty and retraction of such statement had come only after the period of two months which is apparently nothing but an after-thought. He further urged this Court to consider the affidavit-in-reply where it is emphasized that even if the petitioner is declared to be a sick industry undertaking that would not entitle it to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of duty or penalty. However, discretion is conferred by this provision of Section 35F of the Act on the Commissioner (Appeals) as well as on the Appellate Authority which can be exercised in the event of opinion of Appellate Authority that such deposit may cause undue hardship to such person and in such circumstances, it can direct to dispense with the deposit of such an amount. 12. The twin requirements at the time of directing pre-deposit u/s. 35(F) as laid down by the Apex Court in case of Benara Valves Ltd. and Others v. Commissioner of Central Excise reported in 2006 (13) SCC 347 = 2006 (204) E.L.T. 513 (S.C.) = 2008 (12) S.T.R. 104 (S.C.) are (1) Undue financial hardship (2) safeguard to the interest of revenue . The Apex Court has laid down that while dealing with the application of dispensing with the deposit of such amount, consideration which should weigh with these authorities are undue hardship aspect as well as aspect of safeguarding the interest of Revenue. It is also held in the said judgment that undue hardship is special knowledge of the applicant which requires to be established by him and these concerns economic hardship. Apex Court has interpreted this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of actual work done, but not being sure of manipulation, it chose not to send the hard disc to forensic expert. What further has been found intriguing by the Tribunal is the fact that the invoices which were averred to have been generated during the training process were signed by the authorized signatory. Not only that but invoices have been also generated in the name of M/s. Nova Bimet Techno P. Ltd. creating serious doubt over the theory of trial run during the training programme. There were shortages and excesses found during the course of search of the factory and no satisfactory explanation was tendered by the petitioner. 15. On considering the financial worth of the Company as also noting of Annual Report, cash on hand, advances with the Government authorities and unsecured debtors, Tribunal deemed it appropriate to direct deposit of ₹ 50.00 lakhs towards duty demanded for the same being less than 7% of the total amount of duty, interest and penalty confirmed against the present petitioner. Petitioner thus was directed by the Tribunal to make deposit of the aforementioned amount of ₹ 50.00 lakhs within 12 weeks from the said order and subject to such pre-depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as on the authenticity of the disc. As the system can scrupulously maintain track of the dates of every work done and data generated. However, only point that requires specific mention is the doubt voiced by the Tribunal about hard disc. As computer system with its hard disc for all these years with the petitioner and therefore, it was same hard disc from which data had been generated and shall have to be meticulously examined. Belated scheme of examination also resulted into negation of such plea of the petitioner. Keeping all these issue open. There would be no harm in considering the request. Such hard disc to be examined by the Forensic Science Laboratory assuming without admitting that this was the same hard disc which was used for the training purpose and details of data that may have been maintained in the said hard disc. All these aspects would be in the realm of adjudication. However, this Court is presently concerned with the order of pre-deposit mainly for not having found any prima facie case and for not having sustained the ground of undue financial hardship. Tribunal also considered to safeguard the interest of the Revenue and permitted deposit of only 7% of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit relying in the judgment of this Court in M/s. Special Prints Ltd. v. UOI reported in [2009 (238) E.L.T. 738 (Guj.)] where Court held that merely because Company is declared to be a sick industrial undertaking that would not ipso facto entitle them to get relief of waiver of pre-deposit. Petitioner is not a sick unit nor it has applied under BIFR. 23. Contention of respondents merits no acceptance that on the ground that the company has not applied to BIFR, Company may not be entitled to waiver of deposit which is only 7% of the total amount objected by the Commissioner (Appeals). However, the balance-sheet produced before us is indicative of severe financial restrains and limitation of the Company. As rightly pointed out by the learned counsel allowing no interference with the order would drive the Company to pay from its capital assets and that would surely further bring down the financial position of the Company. Provision embodied in the Act granting discretion to the Adjudicating Authorities requires to be exercised in appropriate cases and well laid down criteria as also mentioned in case of Benara Valves Ltd. (supra) case. One of the parameters is poor financial co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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