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2000 DIGILAW 721 (ALL)

KANPUR PESTICIDES AND CHEMICAL PVT. LTD. v. CEGAT

2000-05-12

P.K.JAIN

body2000
P. K. JAIN, J. ( 1 ) PETITIONER M/s. Kanpur Pesticides and Chemical Private Limited is a unit engaged in the manufacture of dyes falling under Chapter 32 of the Central Excise Tariff Act, 1985 (hereinafter called as the Act) and is duly registered with the Excise Department. On 16-2-1995 the petitioners premises was surveyed by the Central Excise Officers who seized certain documents/records revealing evasion of excise duty to the tune of Rs. 1. 53 crores during the period assessment years 1990-91 to 1994-95. The Director as well as the Manager of the company admitted mis-declaration and undervaluation of the goods and evasion of excise duty under the Act and undertook to pay the amount. It further appears that the Company paid the amount of Rs. 1. 53 crores. Thereafter a show cause notice dated 12-11-1996 was served upon the petitioner calling upon as to why the petitioner and its Director may not be penalized for evasion of the excise duty under various provisions of the Central Excise Act and the Rules. The petitioner and its Director made reply to the show cause. The Adjudicating authority on consideration of the submissions made on behalf of the petitioner and its Director imposed penalty of Rs. 20 lacs on the petitioner and Rs. 2,50,000/-upon its Director. Feeling aggrieved by the order of the Adjudicating authority an appeal was filed before the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi along with an application under Section 35f of the Act for Stay-cum-Waiver. That application was disposed of by the Tribunal vide order dated 12th may, 1998. The Tribunal partly allowed the application and directed the petitioner to pay Rs. 5 lacs and its Director was directed to deposit Rs. 50,000/- as pre-condition to the hearing of the appeal. Thereafter an application for modification of the order dated 12-5-1998 was moved by the petitioner which was rejected vide order dated 16-9-1998. The petitioner did not comply with the order passed on the application of Stay-cum-Waiver. The appeal was, therefore, dismissed by order dated 5-1-1999 as contained in Annexure-6 to the writ petition. Thereafter the petitioner moved an application for recalling of the final order dated 5-1-1999 which was dismissed by the tribunal vide order dated 6-12-1999. The petitioner did not comply with the order passed on the application of Stay-cum-Waiver. The appeal was, therefore, dismissed by order dated 5-1-1999 as contained in Annexure-6 to the writ petition. Thereafter the petitioner moved an application for recalling of the final order dated 5-1-1999 which was dismissed by the tribunal vide order dated 6-12-1999. ( 2 ) BY the present writ petition, the petitioner Company has prayed for quashing the orders dated 6-12-1999, 5-1-1999 and 12-5-1998 by issuing a writ of certiorari and further to direct the tribunal to restore the appeal and decide the same on merits without insisting upon any pre-deposit by issuing a writ of mandamus. ( 3 ) SRI A. P. Mathur, learned Counsel for the petitioner and Sri G. R. Gupta, learned Standing counsel appearing for the respondents have been heard at length. ( 4 ) SRI A. P. Mathur, learned Counsel for the petitioner has submitted that the petitioner had agreed and had actually deposited the amount of evaded excise duty on understanding given by the respondents that show cause notice shall not be issued to them invoking penal provisions of the Act and the Rules framed thereunder and that the Company was under great financial constraints and financial hardship on account of which it was not in a position to deposit the amount of penalty. ( 5 ) LEARNED Standing Counsel appearing for the respondents however, submits that the material on record does not show that any such understanding was given by the respondents or by their representatives and that the financial hardship has been considered by the respondents while passing the orders dated 12-5-1998 and 15-9-1998. ( 6 ) I have considered the arguments advanced by the learned Counsel for the parties and have gone through the material on record. In order dated 12-5-1998 the Tribunal has observes as follows : "on the question of financial hardship, the only allegation in paragraph 6 of the stay petitions is as under : "their financial condition is also poor. Petitioner craves leave to refer to the balance sheet at the time of hearing of this case. It would be of great hardship on the part of the petitioners if they are required to deposit Rs. 20 lacs before the appeal is finally decided. Petitioner craves leave to refer to the balance sheet at the time of hearing of this case. It would be of great hardship on the part of the petitioners if they are required to deposit Rs. 20 lacs before the appeal is finally decided. " on behalf of the appellants it is stated that the copy of the balance sheet is available with the appellants representative. Production of the balance sheet is opposed by Sri M. Ali, JDR on the ground that it should have been produced along with the stay petitions and if it is allowed to be produced now, he will have no opportunity to take instructions in the matter. Sri Chattopadhyay, who appeared for the appellants read out from the balance sheet for 1997-98 according to which the annual years loss was Rs. 1. 56 crores (inclusive of Rs. 1. 53 crores paid as duty) and accumulated loss was Rs. 1. 74 crores. According to him the balance sheet shows the value of fixed assets as Rs. 4. 18 lacs and total depreciation as around Rs. 34 lacs. It is also pointed out that activities in the factory have been wound up and the registration certificate has been surrendered. The averments regarding financial condition in paragraph 6 of the stay petitions is vague. No details about financial condition are provided in the stay petitions or even in the balance sheet as read out by Shri Chattopadhyaya. We are not told as to what exactly are the movable and immovable properties belonging to the Company and the outstandings. In these circumstances, we are not in a position to agree that the appellants are not in a position to pay a substantial part of the amount of penalties imposed. " ( 7 ) THE above discussions by the Tribunal vide order dated 12-5-1998 clearly indicate that a question of financial hardship was considered by the Tribunal and proper finding was arrived at. The application for modification of the said order was rejected by subsequent order dated 16-9-1998 which has not been challenged in this writ petition. The orders dated 12-5-1998 and 16-9-1998 were not complied with by the petitioner within the time granted by the Tribunal. The appeal was, therefore, dismissed vide order dated 5-1-1999. The Tribunal has given sufficient and cogent reasons for rejecting the subsequent application for recalling of the final order dated 5-1-1999. The orders dated 12-5-1998 and 16-9-1998 were not complied with by the petitioner within the time granted by the Tribunal. The appeal was, therefore, dismissed vide order dated 5-1-1999. The Tribunal has given sufficient and cogent reasons for rejecting the subsequent application for recalling of the final order dated 5-1-1999. The petition therefore, does not have any merit. ( 8 ) HOWEVER, it is well settled that the appeals should normally be heard and decided on merit and should not be rejected on technical grounds. In the interest of justice, it is expedient that the petitioner may be granted one more opportunity to comply with the order dated 12-5-1998 and subsequent order dated 16-9-1998 so that the appeal of the petitioner may be heard and decided on merit. ( 9 ) IN this view of the matter the petition is partly allowed. The order dated 5-1-1999 dismissing the appeal on ground of non-compliance of the orders passed under Section 35f of the Act and subsequent order dated 6-12-1999 rejecting application for recall of the order dated 5-1-1999 are quashed so far as they relate to the petitioner and the Tribunal is directed to hear the appeal on merit provided the petitioner complies with the orders dated 12-5-1998 and 16-9-1998 within eight weeks from today failing which the Tribunal may pass appropriate order. ( 10 ) NO order as to costs. .