By TIOL News Service

AHMEDABAD, MAR 09, 2016: PETITIONERS have challenged an order dated 6.2.2014 passed by the CESTAT under which while remanding the proceedings back to the adjudicating authority, Tribunal imposed a condition of depositing sum of Rs.50 lacs on the petitioners.

It is the contention of the Petitioner that though Tribunal has wide powers under Section 35C of the Central Excise Act, while remanding the proceedings on the ground of breach of principles of natural justice, condition of pre-deposit cannot be imposed.

After hearing both sides, the High Court held:

+ Sub-section (1) of Section 35C of the Central Excise Act provides that the Appellate Tribunal may, after giving the opportunity of hearing to the parties, pass such orders as it thinks fit either confirming, modifying or annulling the decision or order appealed against or may refer back to the authority which passed such order as to the legality or propriety of such decision with such directions that Tribunal thinks fit, for fresh adjudication or decision after taking additional evidence if necessary. Thus undoubtedly the Tribunal has wide powers while disposing of appeal before it. In the process of directing the authority to re-decide the case, Tribunal may also give directions as found fit. It is, therefore, clear that any order of remand that the Tribunal may pass does not need to be unconditional. It is well within the jurisdiction of the Tribunal to impose suitable conditions as may be found necessary in the facts of the case. Depositing certain amount as a pre-condition to such remand therefore is well within the power of the Tribunal, though the same may not be termed as a pre-deposit of the duty since there can be pre-deposit only of an amount of duty interest or penalty which has been confirmed. And when the Tribunal set aside the order-in-original, there was no order confirming duty penalty or interest and in that sense, the condition of pre-deposit of any amount could not have been imposed. This is, however, not the same thing to suggest that even if the facts otherwise so merited, the Tribunal had no jurisdiction to impose suitable condition of depositing appropriate amount.

+ From the record it appears that the petitioners were not duly served with the notices of hearing of the show cause notice proceedings and hearing was revived after long gap of nearly 9 years. In the meantime, factory of the petitioners was closed down. Primarily on such grounds the court is inclined to set aside the condition imposed by the Tribunal of depositing a sizable sum of Rs.50 Lakhs which is made a precondition for fresh disposal of the show cause notice by the adjudicating authority. However, it appears that the petitioners had corresponded with the authorities from the factory address as well as residential address. Nothing prevented the petitioners from pointing out to the authority that now the factory is closed and further communication be made only at the residential address. In that view of the matter, petitioners have also contributed to, though in a small measure, the ex-parte order is passed. The Tribunal also noted that the petitioners had after filing of an appeal not pursued the same expeditiously. In order not to delay the proceedings further while setting aside the Tribunal's condition of pre-deposit of Rs.50 Lakhs, the petitioners directed to make a deposit cost of Rs.25,000 /- with the Department subject to which the adjudicating authority shall grant hearing and dispose of the proceedings afresh.

Please also see 2014-TIOL-2014-HC-AP-CX wherein the High Court of Andhra Pradesh held that the Tribunal has no jurisdiction to put a condition of pre-deposit for adjudicating the matter afresh in remand.

(See 2016-TIOL-439-HC-AHM-CX)