Ashapuri Metals Pvt. Ltd. vs Commissioner of Customs

Akil Abdul Hamid Kureshi, J.—The assessee has filed this appeal against the judgement of Customs Excise & Service Tax Appellate Tribunal ("the Tribunal" for short) dated 23.6.2014 raising the following questions for our consideration:

"(A) Whether in the facts and in the circumstances of the case, the appellate Tribunal is right in not considering the breach of principles of natural justice by the respondent in issuing the ex parte order in original?

(B) Whether the Tribunal can fail to consider the CBEC circulars and the decisions by coordinate benches on identical issues while passing orders on the stay application?

(C) Whether the Tribunal can rely upon findings in the order of the Development Commissioner when the said order has not attained finality?

(D) Whether the Tribunal can pass orders directing predeposit of duty by ignoring a final order of a coordinate bench holding that duties cannot be demanded in case of raw materials used in intended purpose by an EOU?"

The issue pertains to amount of predeposit insisted upon by the Tribunal for entertaining the appeal of assessee on merits. It may be recorded that the assessee was a 100% export oriented unit. It made exports of raw materials on the condition of export of finished goods. It is the case of the department that the assessee failed to fully fulfill its export obligations and fall short of export target. On such basis, show cause notice was issued. Upon adjudication, the adjudicating authority confirmed the duty demand of Rs. 1.13 crores (rounded off) with interest and penalty of matching amount. However, in view of the fact that there was no allegation of diversion or illicit clearance of goods, the proposal contained in the show cause notice of confiscation of goods was dropped. It was against this order that the assessee preferred appeal before the Tribunal. In order to enable the assessee to pursue the appeal on merits, the Tribunal by the impugned order imposed condition of predeposit of Rs. 10 lakhs.

Learned counsel Shri Suryanarayan for the appellant vehemently contended that the Tribunal committed a serious error in imposing such a stringent condition without properly appreciating the facts. He also took us briefly through the order of adjudicating authority to canvas that the very decision was erroneous. However, at the stage of deciding the question of predeposit, we would not like to dwell deeply into the merits of the case. Prima facie, it appears that against the duty demand of Rs. 1.13 crores with interest and matching penalty, condition of predeposit of Rs. 10 lakhs is imposed. No case for financial hardship was made out before the authority. No documents have been presented before us nor such case argued. Merely because there is prima facie arguable case of assessee, would not warrant total waiver of predeposit. The element of undue hardship, does carry the question of financial hardship as well as issue on merits. However, mere prima facie case would not warrant total waiver of predeposit condition.

Tax appeal is therefore, dismissed. Civil Application also stands dismissed.