JINDAL STEEL AND POWER Vs. CCE

JUDGEMENT

(1.) THIS appeal filed by the assessee is directed against the order of the Commissioner (Appeals) dt. 22.5.07 dismissing the appeal of the appellant which it had preferred against the order -in -original of the Asstt. Commissioner, for non -compliance under Section 35F of Central Excise Act, 1944. It may be stated here that along with the appeal the appellant had filed application seeking stay of the order of Addl. Commissioner dt.30.10.06. The said application was heard and by order dt. 19.3.07, the appellant was directed to deposit a sum of Rs. 5,00,000/ - (Rs. Five lakhs). It is relevant to mention that the assessee is required to pre -deposit entire amount of duty etc. as the case may be, subject to the power of the appellant authority to waive the requirement of such deposit. As the appellant failed to deposit the said amount of Rs. 5 lakhs and they comply with the said order dt. 19.3.07, the appeal was dismissed for non -compliance of the order on 22.5.07.

(2.) HAVING heard Ld. DR at length, we are satisfied that the order cannot be sustained and the matter is fit to go back for consideration on merit by the Commissioner (Appeals). We were taken through the circular of Central Board of Excise and Customs dt.8.10.01 wherein it was clarified that the levy of service tax extends to the whole of India including the territorial waters of India. In the instant case, service was rendered and payment was also made outside and no part of the activity took place within India or the territorial water thereof and therefore so far as the impugned part of service is concerned, the appellant is not liable to pay service tax on that portion. We are of the view that the said circular lends support to the appellant's case and the appellant had a strong prima -facie case which justified full waiver of the requirement of pre -deposit and consideration on merit.

(3.) LD . DR relied upon a decision of the Hon'ble Supreme Court in the case of Honda Indu Nissan Oxo Chemicals Inds. Ltd. v. Union of India in support of the contention that the stay of waiver can be granted only in cases of undue hardship. According to him, as no case of undue hardship in the sense of economic hardship is made out, the appellants did not deserve any waiver and therefore, the Commissioner was fully justified in directing the appellant to deposit service tax to the extent of 25% of the demand. We are of the view that the observations in para 15 of the judgment relied upon by Ld. DR have to be read alongwith the observations occurring in the earlier part of the judgment as follows: But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand