Share Microfin Ltd. vs Commissioner of Customs, Central Excise and Sales Tax

Kalyan Jyoti Sengupta, C.J.�C.EA No. 94 of 2014 has been filed impugning the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore, dated 23-5-2013, by which the learned Tribunal has directed to make pre-deposit of the liability as assessed by the three adjudication orders within a time frame. This order was clarified by the Tribunal by its miscellaneous order No. 25998 of 2013, dated 4-4-2014, confirming that the appellant should deposit the entire amount as directed in the stay order including the interest and penalty amounts and not just the actual tax involved. The appellant was given time upto 17-7-2014 to make the payment and report compliance. Aggrieved by the subsequent order, the appellant filed C.E.A. No. 80 of 2014. Both the appeals are taken up for consideration. According to us, when the appeal is admitted for hearing and the order of the assessment is under scrutiny, unless the order of assessment reaches its finality, the question of initiation of penalty proceedings does not and cannot arise. The power of dispensation of pre-deposit has been given under proviso to Section 35F of the Central Excise Act, 1944, which reads as follows:

"...PROVIDED that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of the 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...?"

Therefore, it is clear that in view of insertion of the word ''or'' the Tribunal cannot ask for the pre-deposit of the penalty also. According to us, the pre-deposit of the penalty amount would be required only when the order of the penalty alone is under challenge. But when there is composite order namely assessment order of the tax component along with interest and also penalty as in the present case, direction for pre-deposit of any portion of the penalty amount would result in injustice as well as hardship. Under these circumstances, we are of the view that the direction for pre-deposit of the penalty component of the order has to be deleted and the same is accordingly deleted and the rest of the order would remain.

We direct the Tribunal to decide the appeal as early as possible, preferably within a period of eight weeks from the date of pre-deposit in terms of this order. In view of pendency of the matter, we grant extension of time to deposit the tax and interest components within a period of four weeks from date. In the event, the appellant carries out the order of the learned Tribunal read with our order within four weeks from date, our order would remain but in case of failure, the learned Tribunal may pass appropriate orders upon expiry of the time aforestated.

The appeals are accordingly disposed of. As a sequel to the disposal of the appeals, pending miscellaneous applications, if any, shall also stand closed. No order as to costs.