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2008 DIGILAW 16 (JHR)

Arya Steels Private Ltd. v. Union of India

2008-01-10

D.K.SINHA, M.KARPAGAVINAYAGAM

body2008
JUDGMENT M. Karpaga Vinayagam, CJ.-This writ petition filed by the petitioner, M/s Arya Steels Private Ltd. is directed against the orders passed by respondents 2 and 3, namely, ustoms, Excise and Service Tax Appellate Tribunal and the Commissioner of Central Excise. Both these orders dated 4.9.2003 and 26.5.2004 respectively are the impugned in this writ petition for being quashed by issue of writ of certiorari. 2. The short facts are as follows: (i) The petitioner is running a re-rolling mill, which is engaged in manufacturing of bars and rods of non-alloy steel. As per Section 3A of the Central Excise Act, the petitioner is required to pay Central Excise Duty on the goods produced on the basis of Annual Capacity of Production (ACP) of re-rolling mill. (ii) On 21.8.1997, the petitioner sent a representation to the Commissioner, Central Excise informing its willingness to avail the scheme, as prescribed under Rule 96ZP of the Central Excise Rules. (iii) Accordingly, the Commissioner, by the order dated 23.2.1998 fixed the ACP in respect of the petitioner's factory at 4930.864 MTs. (iv) Thereupon, the petitioner moved the High Court challenging the validity of Section 3A of the Act. (v) In that writ petition an interim order was passed. In pursuance of the said interim order, petitioner calculated its actual production for the period from September 1997 to August 1998 at 1583.55 MTs. And discharged its liability by making the payment towards the Excise Duty. (vi) On 22.9.1998, the petitioner sent another representation to the Commissioner of Excise disputing the ACP fixed by him by the order dated 23.2.1998, thereby requesting the Commissioner to refix the ACP (vii) The said representation was rejected by the Commissioner on 9.12.1998. (viii) Thereupon, the petitioner filed an appeal before the CEGAT, which, in turn set aside the order and remanded the matter for fresh adjudication. (ix) On that basis, the matter was re-opened. The Commissioner of Central Excise again adjudicated the matter afresh and confirmed the ACP, which was earlier fixed and dismissed the representation filed by the petitioner. (x) Against this order, the petitioner filed an appeal before the Appellate Tribunal. (ix) On that basis, the matter was re-opened. The Commissioner of Central Excise again adjudicated the matter afresh and confirmed the ACP, which was earlier fixed and dismissed the representation filed by the petitioner. (x) Against this order, the petitioner filed an appeal before the Appellate Tribunal. The Appellate Tribunal, while entertaining the appeal passed stay order on 26.5.2004, on the condition that the petitioner has to make a pre-deposit of Rs.17lakhs out of the total duty demanded within eight weeks from 26.5.2004, i.e., on or before 3.8.2004 and stayed recovery of balance of the duty demanded and whole of the penalty and interest as pre-condition for hearing the appeal. (xi) The petitioner requested for modification of the order passed on 26.5.2004.The said request was rejected. (xii) Hence, the petitioner filed the present writ petition seeking for the quashing of the order of both the authorities dated 4.9.2003 and 26.5.2004. (xiii) In the meantime, the Tribunal took up the appeal on 3.8.2004 and on noticing that conditional deposit has not been made, dismissed the appeal by the order dated 3.8.2004. (xiv) Thereupon, he added one more prayer in this present writ seeking for the quashing of the order dated 3.8.2004 as, well. 3. Mr. R, Santhanam, the learned counsel for the petitioner would make elaborate submissions challenging the orders referred to above passed by the authorities and also filed an elaborate written submissions. The gist of his submissions is as follows:- "The order earlier passed by the Commissioner of Excise on 23.2.1998 fixing the estimated production capacity as 4930.864 MTs. is in ex parte order, mechanically passed without proper application of mind. The said order was passed disregarding the earlier orders passed by this Court on various dates from 17.12.1997 onwards. The very same order was confirmed by the order dated 4.9.2003 by the Commissioner even though the earlier order was set aside by the Tribunal asking for directing the Commissioner to give a fresh adjudication. Further order has been passed on 4.9.2003 without giving proper opportunity to the petitioner violating the principles of natural justice and without taking into consideration the various orders passed by this High Court as well as Supreme Court. The Tribunal also did not apply its mind while directing pre-deposit of Rs.17laklls nor was it justified in refusing to recall its order dated 26.5.2004 and without adjusting the amount paid earlier. The Tribunal also did not apply its mind while directing pre-deposit of Rs.17laklls nor was it justified in refusing to recall its order dated 26.5.2004 and without adjusting the amount paid earlier. Both authorities have failed to adjust the amount already paid by the assessee and failed to take into account the refund due to the assessee. Thereupon, on 3.8.2004, the Tribunal simply dismissed the appeal without considering the orders. Therefore, the orders passed by the authorities on various dates are wrong; 4. In reply to the above submissions, Dr. J.P. Gupta, learned counsel appearing for the respondents has submitted:- "Against the order dated 4,9.2003 an appeal has been filed before the Tribunal and the Tribunal while entertaining the appeal, followed the provisions of Section 35F of the Central Excise Act and passed a conditional order of stay dated 26.5.2004 directing the petitioner to deposit Rs.17lakhs out of the duty demanded pending disposal of the appeal and therefore, the merits of the matter could be argued before 1he Tribunal after complying with the conditions imposed by the Tribunal while the appeal is taken up for hearing and as such this Court may not under Article 226 consider the merits of the matter as the petitioner has not chosen to avail the remedy available before the Appellate Tribunal." 5. Both the counsel would cite several authorities before this Court. The counsel for the petitioner also has referred to so many previous orders passed by this Court. 6. We have carefully considered the rival contentions and we have given our thoughtful consideration. 7. At the outset, it shall be mentioned that the order passed by the Commissioner of Excise dated 4.9.2003 was challenged in the appeal before the Appellate Tribunal by the petitioner choosing to avail his remedy by way of filing appeal and as such the merits of the matter with reference to the validity of the order dated 4.9.2003 passed by the Commissioner of Central Excise, in our view, has to be gone into only by the Appellate Tribunal. 8. While entertaining the appeal, the Appellate Tribunal passed an interim order directing the petitioner to make a deposit of Rs.17 lakhs from the total dues of Rs.22,11,043/- on or before 3.8.2004. This order was challenged before this Court in the writ petition. 8. While entertaining the appeal, the Appellate Tribunal passed an interim order directing the petitioner to make a deposit of Rs.17 lakhs from the total dues of Rs.22,11,043/- on or before 3.8.2004. This order was challenged before this Court in the writ petition. Since the Tribunal noticed that the amount has not been deposited on or before the said date, i.e.,' 3.8.2004, the Appellate Tribunal dismissed the appeal by the order dated 3.8.2004. This order as well has been challenged in the very same writ petition. 9. So, ultimately, the petitioner seeks to quash these three orders, one 4.9.2003 passed by the Commissioner of Central Excise, then the interim order dated 26.5.2004 passed by the Appellate Tribunal granting conditional stay and lastly the final order dated 3.8.2004 passed by the Appellate Tribunal, dismissing the appeal. 10. As indicated above, this Court cannot go into the merits of the order passed by the Commissioner of Excise dated 4.9.2003 as the Appellate Tribunal alone could go into the merits of the same. So, we do not incline to deal with the reasoning of the order dated 4.9.2003. 11. In regard to the order passed by the Tribunal on 26.5.2004 it is to be stated that the Appellate Tribunal entertained the appeal and passed order of conditional stay as per requirement of the provisions of Section 35F of the Central Excise Act, 1954. 12. In this context, it would be relevant to quote Section 35F of the Central Excise Act:- 35F. Deposit, Pending appeal of duty demanded or penalty levied.- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. 13. 13. Taking into consideration the Section 35F, the Tribunal entertained the appeal and as against the payment of total amount of Rs.22,11,043/- directed the petitioner to make a pre-deposit of RS.17lakhs. Therefore, it cannot be said that the interim conditional stay order passed by the Tribunal is without jurisdiction. 14. The impugned order dated 26.5.2004 passed by the Tribunal, which is under challenge, in our view, is very much lawful within the provision of law and within the jurisdiction of the Tribunal. The order passed by the Tribunal dated 26.5.2004 under Order No. S-243-258/KOU204 is as follows:- "Heard Shri S.P. Majumdar, Adv. For the appellants and Shri N.K. Mishra, JDR for the Revenue. Shri Majumdar submitted that their factory was closed from 1.8.97 to 30.9.97 and as such they may be given abatement. Shri Majumdar also submitted a letter dt. 29.11.98 wherein Appellants have surrendered their registration certificate to the department. 2. Shri Mishra on the other hand submits that Commissioner has fixed the annual capacity of production vide his order dt.22.3.98 against which the party filed an appeal before the Tribunal which was dismissed by this Tribunal vide his order No. M-563/A-733 dt 8.7.99. This order was not challenged in any higher forum thus Commissioner's order 22.3.98 has attained finality. 3. Again they made a representation to the Commissioner without mentioning the fact that the Tribunal has dismissed their appeal and as such the Commissioner's order for fixation of annual capacity has become final Commissioner rejected their representation again. The Appellant filed an appeal before the Tribunal without disclosing the above fact to the Tribunal with the result the Tribunal asked for de novo adjudication after granting an opportunity of hearing to the appellant by their order No. A-1083 dt. 20.7.2002. It has also been pointed out that when the personal hearing took place in this case on 22.7.2003 before the Commissioner Shri Sunil Gupta, Director of the appellant appeared and never submitted that his factory was closed from 20.8.98. He did not mention about the surrender of the registration certificate. 4. After hearing both the sides and taking the facts into consideration we order that the party to deposit Rs.17,00,000/-(rupees seventeen lakhs) within a period of eight weeks from today. Upon depositing the above amount the penalty shall be dispensed with compliance to be reported on 3.8.2004." 15. He did not mention about the surrender of the registration certificate. 4. After hearing both the sides and taking the facts into consideration we order that the party to deposit Rs.17,00,000/-(rupees seventeen lakhs) within a period of eight weeks from today. Upon depositing the above amount the penalty shall be dispensed with compliance to be reported on 3.8.2004." 15. The perusal of the above order would indicate that taking into consideration provisions of the Section 35F the Tribunal has passed conditional order of stay. 16. It is pointed out by the counsel for the respondents that, in a similar facts of the case, a writ petition was filed before the Delhi High Court challenging the order of the Tribunal CEGAT granting partial stay on conditional deposit while dealing with the application for waiver of the pre-deposit and also the subsequent order dismissing the appeal for non-compliance of such order as the amount directed to be deposited was not deposited within the time frame. The Delhi High Court finally decided the issue which is reported in 2002(143) E.L.T.515 (Del.) [Raju Metal Industries vs. Union of India] by holding that in these cases there is little scope for the High Court to interfere, especially the conditional deposit was directed to be made under Section 35F and dismissed the writ petition directing the CEGAT to allow the petitioner to make the requisite deposit by giving some more time. 17. The above said judgment was challenged before the Supreme Court. The Supreme Court, ultimately, dismissed the Special Leave Petition by the order dated 11.12.2000. This also has been reported in 2002(145) E.L.T. A165 (SC). 18. It would be worthwhile at this stage to refer to the observations made by the Delhi High Court as well as Supreme Court. (i) The observation of the Delhi High Court is as follows:- [Order]-Challenge in this writ petition is to the order passed by Customs, Excise and Gold (Control) Appellate Tribunal (in short 'Tribunal') granting partial stay while dealing with an application for waiver of pre-deposit and dismissing the appeal for non-compliance of such order. Petitioner was assessed to extra demands of duty amounting to RS.1,08,35,181/and penalty of Rs.10 lakhs was also imposed by the Commissioner of Central Excise under Central Excise Act, 1944, Same is under challenge before the Tribunal. Petitioner was assessed to extra demands of duty amounting to RS.1,08,35,181/and penalty of Rs.10 lakhs was also imposed by the Commissioner of Central Excise under Central Excise Act, 1944, Same is under challenge before the Tribunal. By order dated 4th February, 2000 Tribunal directed deposit of Rs.25 lakhs within a period of 12 weeks from the date of order. It was directed that the matter was to come up on 9th May, 2000 for compliance. When the matter was taken up on 9th May, 2000 an application was filed for dispensing with the pre-deposit and for permitting the petitioner to furnish security bond for Rs.25 lakhs. Tribunal did not accept this prayer and only extended the time for deposit by eight weeks. It was directed to post the case for 12th July, 2000 for reporting compliance. As the amount had not been• deposited the appeal was dismissed for noncompliance. 2. Learned Counsel for petitioner stated that considering the fact that purchases were from concerns like MMTC, there was no scope for levy of duty as the petitioner purchased rejected alloys of various non-ferrous metals which are duty paid. Besides manufacturing alloys of copper, aluminium, zinc it also manufactures alloy nickel, tin and lead which are chargeable to duty and the other alloys are exempted under various exemption notifications. Tribunal took note of the stand of respondent which, inter alia, in essence, was to the effect that petitioner could not submit figures of clearance of the impugned goods from their records to the authorities and Collector, in adjudication order, had observed that petitioner did not co-operate with the Department. Tribunal did not think it appropriate to take into consideration some certificates as these were not produced before the adjudicating authority, and were obtained much after adjudication of the case. Taking into account financial situation of the' petitioner and the 3 extent of turnover, direction was given to deposit Rs.25 lakhs. 3. In cases of this nature there is little scope for interference, particularly when appeal has already been dismissed for non-compliance with the direction for deposit. Tribunal has taken note of the relevant facts and directed deposit Rs.25 lakhs. We do not find any reason to interfere with the conclusions. However, if the deposit is made by 9th February. 3. In cases of this nature there is little scope for interference, particularly when appeal has already been dismissed for non-compliance with the direction for deposit. Tribunal has taken note of the relevant facts and directed deposit Rs.25 lakhs. We do not find any reason to interfere with the conclusions. However, if the deposit is made by 9th February. 2001, and this aspect is brought to the notice of the Tribunal, it would do well to restore the appeal for disposal on merits. 4. The petition stands disposed of accordingly. {Reported in 2002(143) E.L.T. 515. (Del.) [Raju Metal Industries vs. Union of India]} (ii) The observation made by the Supreme Court is as foliows:- The petitioner by way of writ petition challenged before Delhi High Court the CEGAT order granting partial stay while dealing with an application for waiver of pre-deposit and subsequently dismissing the appeal for non-compliance of such order as the amount in question (Rs.25 lakhs) was not deposited. The Delhi High Court had held that in cases of this nature there is little scope for interference, particularly when appeal was already dismissed by Tribunal for non-compliance with the direction for deposit. Tribunal has taken note of the relevant facts and directed to deposit Rs.25 lakhs. The Delhi High Court did not find any reason to interfere with the conclusions arrived at by the CEGAT. However, the Delhi High Court held that if the requisite deposit is made by 9.2.2001, and this aspect is brought to the notice of the Tribunal, it would do well to restore the appeal for disposal on merits. [Reported in 2002(145) E.L.T.A165 (S.C.)] 19. The above observations made by the Delhi High Court as well as the Supreme Court, in our opinion, would squarely apply to the present facts of the case. [Reported in 2002(145) E.L.T.A165 (S.C.)] 19. The above observations made by the Delhi High Court as well as the Supreme Court, in our opinion, would squarely apply to the present facts of the case. Therefore, in the light of the orders passed by the Supreme Court, it would be proper for this Court to direct the petitioner to approach the Tribunal again and request the Tribunal to give further time for making the deposit of the said amount or even make a request for reduction of the said amount for making a pre-deposit to the appropriate sum by pointing out the other difficulties in making the entire payment and if that is so made, the Tribunal may take into consideration the request and pass a fresh order giving some more time and if need be for giving some more concession for fixing the quantum of pre-deposit before taking up the appeal. 20. Accordingly, the petitioner is directed to approach the Tribunal and make the requisite deposit as fixed by the Tribunal in a fresh order to be passed upon taking into consideration the submissions of the petitioner and hear the appeal by fixing the time frame and after payment of the amount, matter would be fixed for final disposal and the parties can be heard and appeal be decided in accordance with law and also on the basis of the merits of the matter. 21. We make it clear that we are not giving any opinion with reference to the validity of the order dated 4.9.2003 passed by the Commissioner of Excise, which is subject matter of appeal before the Tribunal. This writ petition is, thus, disposed of. However, there is no order as to cost. D.K. Sinha, J.--J agree.