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2016 (6) TMI 437 - DELHI HIGH COURT

2016 (6) TMI 437 - DELHI HIGH COURT - 2016 (340) E.L.T. 63 (Del.) - Seeking complete waiver of pre-deposit - without requiring mandatory pre-deposit of 7.5% / 10% for filing an appeal before CESTAT - Section 35F of the Central Excise Act, 1944 - Financial hardship to the petitioner - Held that:- under Section 35F of the CE Act as it stood prior to 6th August 2014, a discretion was available to the CESTAT to consider the financial hardship and accordingly determine the pre-deposit amount. That di .....

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t relief notwithstanding the amended Section 35 F cannot possibly be taken away, the Court is of the view that the said power should be used in rare and deserving cases where a clear justification is made out for such interference. Having heard the submissions of Mr Datta and having perused the adjudication order, the Court is not persuaded to exercise its powers under Article 226 to direct that there should be a complete waiver of the pre-deposit as far as the Petitionerís appeal before the CES .....

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ber, 2014 issued by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the matter of mandatory pre-deposit of 7.5%/10% as the case may be for filing an appeal before the CESTAT in terms of amendment in Section 35F of the Central Excise Act, 1944 (CE) Act with effect from 6th August 2014. 2. The consequential prayer is that this Court should declare that, where the lis had originated, by means of initiation of proceedings before the lower adjudicating/appellate authorities before .....

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datory pre-deposit to be made by the Petitioner. 3. Mr Sachin Datta, learned Senior counsel appearing for the Petitioner, submitted that notwithstanding the decision of the Allahabad High Court in Ganesh Yadav v. Union of India 2015 (320) E.L.T. 711 (All.) which has been followed by this Court in the decision dated 21st October, 2015 in Customs Appeal No.19/2015 (Anjani Technoplast Ltd. v. The Commissioner of Customs), the order dated 25th April, 2016 in W.P.(C) No.3380/2016 (Suvidha Signs Studi .....

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he Allahabad High Court in Ganesh Yadav (supra). In other words, the Court is not prepared to reopen the question of the validity of Section 35F of the CE Act. 5. In terms of the amended Section 35 F of the CE Act the CESTAT can insist on a mandatory pre-deposit of 7.5%/10% of the demand of duty in respect of all appeals pending as on tha date. As far as the present case is concerned, although the initial adjudication order was passed on 23rd December 2010, that order was set aside by the CESTAT .....

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order has confirmed the demand against the Petitioner in the sum of ₹ 2,82,49,444/- and a penalty of the equal amount. the further the case of the Petitioner is that in view of the financial hardship of the Petitioner, this Court should in exercise of its powers under Article 226 of the Constitution waive the requirement of pre-deposit. Mr Sachin Datta drew the attention of the Court to the following lines in para 9 of the decision of the Allahabad High Court in Ganesh Yadav in support of .....

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amount to be deposited to a maximum of ₹ 10 crores. Prior to the amendment, the Commissioner (Appeals) or the Appellate Tribunal were permitted to dispense with such deposit in a case of undue hardship subject to such conditions as may be imposed so as to safeguard the interest of the revenue. Stay applications and the issue of whether a case of undue hardship was made out, gave rise to endless litigation. There would be orders of remand in the litigative proceedings. All this was liable t .....

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nnot be regarded or held as being arbitrary or as violative of Article 14. Above all, as the Supreme Court held in Shyam Kishore (supra), the High Court under Article 226 of the Constitution is vested with the jurisdiction in an appropriate case to dispense with the requirement of pre-deposit and the power of the Court under Article 226 is not taken away. This was also held by the Supreme Court in P. Laxmi Devi (supra) in which the Supreme Court observed that recourse to the writ jurisdiction wo .....

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of the plea that the Petitioner proprietory concern had ceased for exist as such. At this stage, it must be recalled that the Petitioner is a Proprietary concern of which Mr Pankaj Chopra is the sole Proprietor. Pursuant to the leave granted by this Court an additional affidavit has been filed by Mr Pankaj Chopra on 12th May, 2016 in which he explains that the Petitioner is no longer in existence since 2007 and that it has no source of income. He relies on the letter dated 18th December, 2006 i .....

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oint venture with M/s Samarth Designs Pvt. Ltd. and new entity came into carried out the same line of business as the Petitioner. While Mr Chopra may have decided to close the Petitioner's operations, in reality, the liability of the Petitioner as a legal entity to pay arrears of statutory duties did not cease. In other words, it was not as if Samarth Designs Pvt. Ltd. took over the liabilities of the Petitioner. It is stated that at no stage was a resolution regarding taking over the existi .....

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