Sachin Walia vs. Union Of INDIA And Ors.

Facts

The Petitioner, Sachin Walia, a property dealer, is challenging an order of the CESTAT that dismissed his appeal on the grounds of non-compliance with the pre-deposit requirement under Section 35F of the Central Excise Act, 1944. This stemmed from an Order In Original dated January 31, 2024, which imposed a penalty of Rs. 1.5 crores on the Petitioner. The Petitioner's role, as per the Order In Original, was limited to negligently enabling premises to be rented for illegal activities and acting as a witness to the rent agreement. The Petitioner claims a meager monthly income of Rs. 15,000/- and asserts his inability to deposit the mandated Rs. 11,25,000/-. He has provided an Income and Asset Certificate and his bank statement to support his financial hardship.

Held

The Court held that it has the power under Article 226 to grant a waiver or reduction of the pre-deposit requirement in rare and deserving cases, notwithstanding Section 35F of the Central Excise Act, 1944. The reasoning was based on the limited role ascribed to the Petitioner in the Order In Original, his admitted position as a property dealer who merely facilitated the rental of premises, and his demonstrated financial condition. The Court found these factors compelling enough to warrant a hearing on merits. Consequently, the impugned order of the CESTAT was set aside, and the Petitioner's appeal was restored. The Court directed that the appeal be heard on merits by the CESTAT, subject to the Petitioner making a deposit of Rs. 1 lakh within four weeks. The ratio decidendi is that financial hardship coupled with a demonstrably minor role in the alleged infraction can justify a reduction in the statutory pre-deposit for the purpose of hearing an appeal on merits.

Key Issues

1. Whether the Delhi High Court, in its writ jurisdiction under Article 226, can grant a waiver or reduction of the pre-deposit requirement mandated by Section 35F of the Central Excise Act, 1944, in 'rare and deserving cases'? The Petitioner argued that the Court possesses such power, citing precedents like Pioneer Corporation Vs. Union of India and Shubh Impex Vs. Union of India & Ors. They contended that given his limited role as a property dealer and his severe financial constraints, this case qualifies as rare and deserving. The Revenue did not record any arguments against this contention.