Security Engineering Products vs CESTAT

Dr. Bharat Bhushan Parsoon, J.—Consequent upon duty demand of Rs. 1,24,93,030/- in respect of clearance of school dual desks

(chargeable to Central Excise Duty) manufactured by the appellant, the appellant was issued show cause notice dated 5-11-2008 (Annexure A-1)

which after reply (Annexure A-2) of the appellant was adjudicated by the Commissioner vide order dated 15-9-2009 Annexure A-3 wherein the

quantum of Central Excise Duty, as demanded, was confirmed against the appellant-company u/s 11A of the Central Excise Act, 1944 (hereinafter

mentioned ''the Act''), which was also held liable to pay interest and penalty of equal amount u/s 11AB of the Act. In addition, in respect of amount

received by the appellant for bullet proofing of vehicles, Service Tax, demand of Rs. 2,85,934/- and education cess of Rs. 5,719/- was also

confirmed against the appellant company under Sections 73(1) and 75 of the Finance Act, 1994 along with interest besides penalty of equal

amount under Sections 75A, 76, 77 and 78 of the Finance Act, 1994. Against this order of the Commissioner, the appellant-manufacturer had

preferred an appeal before the Customs, Excise & Service Tax Tribunal, Principal Bench, New Delhi. Stand of the appellant before the Tribunal

seeking stay on recovery of the demand raised by the department was that during the period of dispute 2003-04 and 2004-05, they were eligible

for the benefit of exemption as per Notification No. 50/2003-C.E. of the Government and thus were not liable to pay the demanded duty. It was

further explained that intimation letter in compliance with the notification along with all the details was furnished to the department. Stand of the

department, on the other hand, was that neither an intimation in this regard had been received by it nor the unit of the appellant was eligible for

exemption regarding payment of duty as the unit was not existing prior to 7-1-2003 and had also not undertaken substantial expansion of the

installed capacity by not less than 25% on or after 7-1-2003 in terms of the notification of the government under which relief was being claimed by

the appellant.

Considering all these aspects as also the attending circumstances and on hearing rival claims of the parties, the Tribunal had verdicted that it was

not a case of ''total waiver''. Consequently, the appellant was directed to deposit Rs. 42,00,000/- within a period of eight weeks from the date of

the order i.e. 10-10-2011.

Aggrieved by this order, in this appeal preferred by the appellant, claiming that plea of the appellant unit was wrongly rejected regarding

exemption from payment of demanded duty, total waiver has been sought.

It is claimed that the appellant for the purpose of availing benefit under Notification Nos. 49-50/2003-C.E. had undertaken substantial

expansion prior to 7-1-2003 and had sequelly increased its installed capacity by more than 25% under due intimation to the department vide letter

dated 25-9-2003. It is pleaded that such communication of the appellant through Sector Office, Central Excise, Una (H.P.) had been sent to the

Divisional Office, Shimla but even then claim of the appellant-unit for total waiver was discarded. Stand of the respondent, on the other hand, is

that the appellant had not made due compliance with terms and conditions of Notification Nos. 49-50/2003-C.E., prior to 7-1-2003 and thus it

was found that no case of total waiver was made out.

Rival claims of both the parties have been evaluated in the interface of facts and law.

It is a conceded fact that u/s 35F of the Act any person, desirous of appealing against decision relating to any duty demanded in respect of

excisable goods, pending appeal, is required to deposit with the adjudicating authority, the duty demanded or the penalty levied.

Proviso to Section 35F of the Act is very relevant and for ready reference is appended as below:

Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded

or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may

dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.

From perusal of this proviso appended to Section 35F of the Act, it becomes evident that deposit of such duty or penalty as a condition

precedent for hearing the appeal may be dispensed with in case of ""undue hardship"" to such appellant after ""safeguarding the interest of the

revenue"" by imposing such conditions as he or it may deem fit.

It, thus, transpires that waiver of pre-deposit is not a matter of right. At the same time, it is also not a concession to be doled out by the

authorities as per their whims and fancies. By no means it can be a sweet wish of any statutory authority. In short, grant of waiver is to be backed

by reasons keeping in view facts of each case. There cannot be any formula of general application. There is no cut and dried short-cut of universal

application of rule. It was held in Ravi Gupta Vs. Commissioner Sales Tax, Delhi and Another, as under:

There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved.

Learned counsel for the appellant referring to this very decision of the Hon''ble Apex Court has drawn our attention to the following

observations made therein:

Where denial of interim relief may lead to public mischief, grave irreparable private injury or shakes citizens'' faith in the impartiality of public

administration, interim relief can be given.

Claiming that it is a case of ""undue hardship"" for the appellant and that it has a, prima facie, very strong case which is likely to exonerate him

from payment demanded, complete waiver of such deposit has been sought.

Even while going through the factual matrix and the chain of events, learned counsel for the appellant has not been able to show that there is

any case of ""public mischief"" or ""grave irreparable personal injury"" or there is likely to be dwarfing of citizens'' faith ""in the impartiality of public

administration"".

It remains a fact that out of duty demand of Rs. 1,24,93,030/- in respect of manufacture and clearance of school dual desks, the appellant has

been called upon to deposit a sum only of Rs. 42,00,000/-, for which two months'' time had also been granted. In the impugned order, the

Tribunal had very convincingly and clearly made it ''not to be a case of total waiver''.

When no factual or legal infirmity has been found in the impugned order by the appellant and even in proceedings before us, no case for

interference with the impugned order is made out particularly when the Appellate Tribunal had, after going through the complete record and

attending circumstances, come to a firm finding that it was not a case of complete waiver.

There being no merit, the appeal is dismissed. Parting with this order, the appellant is directed to comply with the impugned order regarding

pre-deposit now within eight weeks from today.