Aluminium and Glazing vs Commissioner of Central Excise (Appeals), The Additional Commissioner of Central Excise and Commissioner of Service Tax

V. Dhanapalan, J.—Heard Mr. Joseph Prabakar, learned Counsel for the Petitioner and Mr. Vikram Ramakrishnan, learned Central

Government Standing Counsel appearing for the Respondents. The order passed by the First Respondent-Appellate Authority in order in A. No.

473/2012 (M-ST) in Pre-Deposit-cum-Appeal Order No. 43/2012 [(M-ST (PD)], dated 18.1.2013, whereby and whereunder, the authority has

decided that for taking up the Appeal, the pre-condition for depositing the entire amount of Rs. 38,99,288/- towards Service Tax, with interest,

penalty, etc., had been reduced to Rs. 19,50,000/- u/s 35-F of the Central Excise Act (hereinafter referred to as ''the Act'') made applicable to the

Service Tax as per Section 83 of the Finance Act and the balance amount was waived, is called in question, seeking to quash the same as arbitrary

and illegal.

According to the Petitioner-Company, they are engaged in the business of structural glazing and registered with the Service Tax Department,

vide Registration No. AEFPA-6746-LST-001 under the category of ""commercial or industrial construction services and construction of residential

complex services"". The work carried out by the Petitioner-Company involves purchase and sale of materials like aluminium, glass, etc. and also

rendering service. Accordingly, they have paid sales tax/VAT on the value of materials involved in the contract and they are also liable too pay

Service Tax for the portion of the work involving services and they have paid Service Tax under ''erection, commissioning or installation'' as per

Section 65(39a) of the Finance Act, 1994 and availed abatement of 67% as per Notification No. 1/2006, dated 1.3.2006 and paid Service Tax

on 33% of the total contract value.

While so, it is the case of the Petitioner that a Show Cause Notice in No. 317/2009, dated 19.8.2009 was issued to the Petitioner, denying the

benefit of the said abatement of 67%. However, the Petitioner filed reply, dated 5.10.2009 and attended personal hearing and thereafter, the

matter was adjudicated by the Second Respondent-Original Authority, who passed the order in Order-in-Original No. 19/2012, dated

28.3.2012, levying Service Tax of Rs. 38,99,288/-, with interest, penalty, etc., against which, the Petitioner filed Appeal before the First

Respondent-Appellate Authority, which was numbered as A. No. 473/2012 (MST).

Thereafter, the First Respondent issued a notice, dated 10.1.2013, calling for personal hearing on 18.1.2013 in the stay Petition. The Petitioner

could not send their official for the personal hearing on 18.1.2013, and accordingly, their Counsel requested to have the personal hearing after four

weeks. However, the First Respondent passed the impugned order, dated 18.1.2013, in Pre-Deposit-cum-Appeal Order No. 43/2012 [M-ST

(PD)] (in A. No. 473/2012 (M-ST)), thereby directing the Petitioner to pay the amount of Rs. 19,50,000/- as pre-deposit in cash on or before

8.2.2013 u/s 35-F of the Act, made applicable to Service Tax as per Section 83 of the Finance Act and the balance was waived. The impugned

Order is challenged by the Petitioner on the ground that there was no hearing of the Stay Petition and the request for adjournment of the personal

hearing was not considered. Hence, the Petitioner has filed this Writ Petition for the above relief.

Mr. Joseph Prabakar, learned Counsel for the Petitioner mainly focussed his arguments on the point that the Petitioner-Company is not in a

position to pay any amount, i.e. even the amount so reduced by the First Respondent-Appellate Authority in the impugned order, which is a non-

speaking order. The undue hardship of the Petitioner-Company has not been taken into account by the First Respondent.

Per contra, Mr. Vikram Ramakrishnan, learned CGSC appearing for the Respondents submitted that the First Respondent was so lenient in

considering the prima facie case, balance of convenience, undue hardship and financial burden of the Petitioner-Company and thereby reduced the

amount of pre-deposit to Rs. 19,50,000/- from Rs. 38,99,288/-, and such a lenient approach has been questioned by the Petitioner, which is not

permissible under law, and therefore, the Writ Petition is liable to be dismissed in limine.

On the above background of pleadings and the submissions, I have heard the learned Counsel appearing for the parties.

It is not in dispute that the Petitioner is a Company engaged in the business of structural glazing and they purchase raw materials like aluminium,

glass, etc. and also rendering service and registered their name with the Service Tax Department under the category of ""commercial or industrial

construction services and construction of residential complex services"". The Petitioner also paid Service Tax under ""erection, commissioning or

installation"" as per Section 65(39a) of the Finance Act, 1994 and availed abatement of 67% as per Notification No. 1/2006, dated 1.3.2006 and

also paid service tax on 33% of the total contract value. A Show Cause Notice, dated 19.8.2009 was issued to the Petitioner, denying the benefit

of abatement of 67%, and thereafter, the matter was contested by the parties and adjudication was made and the Original Authority passed the

order on 23.8.2012 in Order-in-Original No. 19/2012, levying Service Tax, interest, penalty, etc., against which, the Petitioner filed Appeal before

the First Respondent, which is pending. The condition for taking up the Appeal is that there must be a pre-deposit of the amount in fall, and

therefore, the First Respondent issued Notice of personal hearing of the Petitioner. As the Petitioner did not send their official for the hearing on

18.1.2013, there is no other option for the First Respondent but to pass the impugned order in Pre-Deposit-cum-Appeal Order No. 43/2012 [M-

ST (PD)], dated 18.1.2013, which is called in question in this Writ Petition by the Petitioner, as there is still undue hardship for them.

It is to be noted that when once Appeal is filed by the aggrieved person against the original order, it is mandatory requirement u/s 35-F of the

Act to pay the entire amount ordered by the Original Authority, as a condition precedent for taking up the Appeal.

Law is well settled that the capacity of a party to pay the pre-deposit amount had to be noticed and the financial burden and undue hardship

for the party to resort to claim waiver of the pre-deposit have also to be considered. In this regard, it is worthwhile to notice a decision of a

Division Bench of this Court reported in Trendy Moods Vs. Customs, Excise and Gold (Control) Appellate Tribunal (now known as Customs,

Excise and Service Tax Appellate Tribunal) and Commissioner of Customs, , wherein, this Court, after taking into account the various decisions of

the Supreme Court, for and against, ultimately came to the conclusion that the capacity of the Appellant therein to pay the amount having been

noticed and in the absence of any financial burden, it cannot be construed that there is an undue hardship for the Appellant therein to resort to claim

waiver of pre-deposit.

The cardinal principle of consideration of the waiver of pre-deposit is based on undue hardship, prima facie case, balance of convenience,

financial burden and other difficulties expressed by the party before taking the matter on Appeal and these factors have to be weighed in relevant

circumstances, taking into account all the material facts, which alone can come to the wisdom of the authority to give certain waiver of pre-deposit

to the party, who is on Appeal.

In this case, a sum of Rs. 38,99,288/- as Service Tax, with interest, penalty, etc., were levied by the Original Authority, and thereafter, in the

Appeal stage, the Petitioner was called for personal hearing on 18.1.2013, on which date, the Petitioner did not send their official, and therefore,

the First Respondent passed the impugned Order, reducing the amount to Rs. 19,50,000/- as pre-deposit amount, and the prima facie case,

balance of convenience, undue hardship and financial burden, which were focussed by the Petitioner, had been duly considered by the First

Respondent in accordance with law, while reducing the amount of pre-deposit to Rs. 19,50,000/-, which is approximately 50% of the total amount

due, and therefore, such a lenient approach made by the First Respondent, in my considered opinion, cannot be called in question in this Writ

Petition by the Petitioner, particularly, when there is no substantial hardship made out by the Petitioner. Such an approach made by the Petitioner

to file this Writ Petition challenging the order of pre-deposit, is no way called for interference by this Court, and therefore, the Writ Petition

deserves no merit consideration, which is liable to be dismissed.

At this stage, learned Counsel for the Petitioner made a plea that the Appeal pending before the First Respondent-Appellate Authority may be

directed to be disposed of within a time frame. It is needless to state that it is for the Petitioner to pay the amount of pre-deposit as ordered by the

First Respondent in the impugned Order, and on such payment to be made by the Petitioner, the First Respondent shall take up the Appeal itself

and dispose of the same, on merits and in accordance with law, within a period of four weeks from the date of payment of the pre-deposit amount.

With the above observations and directions, the Writ Petition is dismissed. No costs. The Miscellaneous Petition is closed.