Waiver of Pre-deposit- Discretionary Power of Tribunal

PJ/Case Laws/2011-12/1348

Case: COROMANDEL GRANITE COMPANY LTD. Versus CESTAT, CHENNAI

Citation: 2011 (271) E.L.T. 187 (Mad.)

Issue:- Waiver of Pre-deposit for admitting appeal – Tribunal has discretionary powers to decide the same – Pre-deposit as directed to be deposited but amount reduced on considering mitigating circumstances.

Brief Facts:- Petitioner filed appeal before the Tribunal against the order confirming the demand of duty with interest and imposition of penalty.

In application for waiver of pre-deposit, the Tribunal held that the petitioner had failed to make prima facie case for waiver of pre-deposit of entire amount of duty and penalty. The Tribunal directed the petitioner to deposit a sum of Rs. 30 lakhs within six weeks. Upon deposit of the said amount, pre-deposit of the balance amounts of duty and penalty was to be waived and recovery thereof stayed till final disposal of the appeal.

Petitioner moved modification application before the Tribunal contending that the Tribunal had failed to consider the Coordinate Benches decision relied on for the purpose of considering prima facie case made out by the petitioner. The Tribunal passed an order in Miscellaneous Petition rejecting the prayer of petitioner for modification. In the circumstances, the Tribunal directed the petitioner to pay the said amount by extending the time by 8 weeks and directed to report compliance of the same on 15-3-2010.

Aggrieved by the same, present writ petition has been filed for waiver of pre-deposit.

Petitioner’s Contention:- Petitioner contended that the Tribunal failed to consider the decision of the Coordinate Benches decision, which is relied on by the petitioner for the purpose of prima facie case made out by him. The Tribunal erred in directing the petitioner to deposit the sum of Rs. 30 lakhs. The Tribunal had not cared to refer even a decision cited by the petitioner which would amply demonstrate that the issue in question is covered by the decision of the Tribunal.

Reasoning of Judgment:- The High Court noted from the perusal of the affidavit, and the documents that as against the demand of duty of Rs. 4,76,36,099/- [Rs. 3,86,36,099/- (demand of duty) plus Rs. 90,00,000/- (penalty)], the petitioner was directed to deposit a sum of Rs. 30 lakhs. The order of waiver of pre-deposit is a pure and simple question of discretion which the Tribunal has to exercise on prima facie case made out by the petitioner.

The High Court does not find any justification in interfering with the order passed by the Tribunal. However, having regard to the fact that the petitioner has come out of BIFR proceedings recently and in view of the financial constraints that the petitioner is facing, as against the sum of Rs. 30 lakhs, the petitioner is hereby directed to deposit a sum of Rs. 10 lakhs within a period of six weeks from today. On such payment, there shall be stay of pre-deposit of the balance amount of duty and penalty and recovery thereof stayed pending the appeal. The Tribunal is directed to dispose of the appeal expeditiously.

Decision:- Petition disposed off.

Comment:- The lowering of pre-deposit in case of BIFR units is a welcome step on the part of High Court. The unit is already sick and the department seeking huge amount to be deposited. But such unit will not be able to do so and will be deprived of legal remedy to pursue the matter.

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PJ/Case Laws/2011-12/1348

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