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2012 DIGILAW 557 (UTT)

Rishabh Velveleen Ltd. v. Union of India

2012-09-10

V.K.BIST

body2012
JUDGMENT : Instant petition has been filed challenging the order dated 23.03.2012 passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred as to the CESTAT). Further prayer has been made to issue a writ of mandamus directing the (CESTAT) to waive the condition of pre-deposit of duty and hear the appeal of the petitioner on the merits. 2. It is asserted in the petition that the petitioner is a Public Limited Company, based in Haridwar, Uttarakhand and is engaged in manufacture and sale of Flock Fabrics, falling under Central Excise Tariff Chapter Heading 59.07 and sub-Heading 5907.12 of the Central Excise Tariff Act, 1995. The unit of petitioner was established in the year 1989. Govt. of India, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion), New Delhi issued an Office Memorandum on 07.01.2003, which was the New Industrial Policy and other concessions for the State of Uttarakhand and Himachal Pradesh in which fiscal incentives were proposed to new units and to existing units on their substantial expansion. Consequent upon the new Policy dated 07.01.2003, the petitioner, who had earlier made some capital investments, ventured for making more capital investments in the plant in order to avail the benefit of fiscal incentives, as declared in the Industrial Policy by the Ministry of Commerce and Industry. The respondent no.1 issued a Notification on 10.06.2003 declaring that existing Industrial Units, as on 07.01.2003, who undertake substantial expansion by way of increase in installed capacity, by not less than twenty five percent, on or after 7th January, 2003, would be eligible to Central Excise exemption, for a period of ten years from the date of commencement of commercial production. The petitioner claimed exemption from payment of Central Excise Duty by filing declaration for a period of ten years as provided under the Notification dated 10.06.2003. All the plant and machineries purchased during the financial year 2002-03 were declared as capital work in progress. In order to cater to the increase in installed capacity of the plant, the petitioner applied to Uttarakhand Power Corporation Ltd. for enhancing its power load and after the power load was increased the petitioner deposited the security/system loading charges/service connection expenditure and the contracted load was released in November, 2003. In order to cater to the increase in installed capacity of the plant, the petitioner applied to Uttarakhand Power Corporation Ltd. for enhancing its power load and after the power load was increased the petitioner deposited the security/system loading charges/service connection expenditure and the contracted load was released in November, 2003. Thereafter, the subordinates of respondent no.3, disputed whether the benefit of the Central Excise exemption would be application to the petitioner unit or not, alleging that the benefit of exemption would not apply to such units, which commence the expansion programme on or after 07.01.2003 and thereupon a show cause notice was issued to the petitioner to which the petitioner responded. The matter was adjudicated upon by the Commissioner, Meerut vide order dated 26.10.2006. It is asserted that the IIT, Roorkee has given a report that the process of coating, flock dosing, flock fabric drying and flock fabric brushing operations are performed in continuous operations and if capacity of any of these operations was not increased, the installed capacity of the plant could not be increased. It is stated in the petition that some clarifications were issued by Central Board of Excise and Customs (CBEC)/respondent no.1 on the terms substantial expansion, governing all area based exemptions. The petitioner contested the orders passed by the Commissioner by filing an appeal before CESTAT, New Delhi, who, while disposing of the appeal, remanded the matter to the Commissioner, Central excise, Meerut-1 for reconsideration. After the matter was remanded back, the respondent no.3 i.e. Commissioner, Central Excise, Meerut-1 again vide order dated 29.10.2010 confirmed the demand of notices to the tune of Rs. 4,40,72,632/- and penalty thereon of equal amount. The petitioner again filed an appeal before the CESTAT bearing appeal number E/593-594/2011 under Section 35B of the Central Excise Act, 1944 alongwith stay application under Section 35F of the Central Excise Act, 1944 (hereinafter referred as to the Act), however the CESTAT, while disposing the stay application of the petitioner, vide the impugned order dated 23.03.2012 directed the petitioner to deposit the full amount of demand i.e. Rs. 4,40,72,632/- covering the impugned period of dispute from 10.09.2003 to 08.07.2004 within a period of eight weeks and report compliance by 28.05.2012. 3. I have heard Mr. P.R. Mullick, Advocate for the petitioner, Mr. Shobhit Saharia, Senior Standing Counsel for the respondents and perused the record. 4. 4,40,72,632/- covering the impugned period of dispute from 10.09.2003 to 08.07.2004 within a period of eight weeks and report compliance by 28.05.2012. 3. I have heard Mr. P.R. Mullick, Advocate for the petitioner, Mr. Shobhit Saharia, Senior Standing Counsel for the respondents and perused the record. 4. Learned counsel for the petitioner submits that the CESTAT has erred both on facts and law, while passing the impugned order, as factum of merit of the case, undue hardship and safeguarding the interest of revenue has to be seen before deciding the amount of pre-deposit of duty. He submitted that no duty could be demanded from the petitioner, inasmuch as, all the nine areas of manufacturing operation were installed and commissioned after 07.01.2003. He contended that the CESTAT did not pass any speaking order under Section 35F of the Act; has failed to appreciate the prima-facie case of the petitioner on merit; did not consider that if the said demand would ultimately arise then abatement of cum-duty price under Section 4 (4) (d) would apply and there would be undue hardship to the petitioner, inasmuch as, it was incurring cash loss in the past two years and the bankers were pressing hard for regularization of cash credit limits. Thus, the judgment of Apex Court in the case of Benara Valves Limited vs. CCE, reported in 2006 (204) ELT 513 (SC) was brushed aside. Emphasizing upon clause-b of the provisions contained in Central Excise exemption Notification dated 10.06.2003, which contains that ‘industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five percent, on or after the 7th day of January, 2003’, the petitioner had substantially complied to the provisions. He contended that the CESTAT failed to appreciate that the exemption was linked to installed capacity and not to investment in the unit, moreover all the nine areas of production activity i.e. tow cutting, dyeing, drying, sieving, coating, flock dosing, flock fabric drying, flock fabric brushing and post finishing activities were completed during 07.01.2003 upto 09.09.2003. He contended that the CESTAT failed to appreciate that the exemption was linked to installed capacity and not to investment in the unit, moreover all the nine areas of production activity i.e. tow cutting, dyeing, drying, sieving, coating, flock dosing, flock fabric drying, flock fabric brushing and post finishing activities were completed during 07.01.2003 upto 09.09.2003. He further contended that perversity in the order of CESTAT is apparent on the fact of the record, as it failed to consider that no Central Excise Duty had been charged or collected from the customer, as the petitioner was enjoying the benefit of Central Excise exemption contained in notification dated 10.06.2003, as such the price to the customer was cum-duty price and abatement of Central Excise Duty was allowable to the petitioner, which aggregated to Rs. 60,76,984/- in terms of judgment of the Apex Court in the case of CCE vs. Maruti Udyog Limited, reported in 2002 (141) ELT 3 (SC). It is submitted that not only is the petitioner increasing huge cash losses but also it is serviced by in adequate working capital facility. Besides it, the petitioner has to pay 100% advance for importing its raw materials i.e. adhesives, tow & fabric (against letter of credit or full advance), while on the other hand it has to allow huge credit to its debtors and the collection period of debts ranges from 90 to 120 days moreover, the bankers are constantly censuring the petitioner to regularize the cash credit account and other terms loans. It has been prayed to issue a writ of mandamus directing the CESTAT to waive the condition of pre-deposit of duty and hear the appeal of the petitioner on the merits of the appeal. 5. Learned Senior Standing Counsel for the respondent, first of all, raised preliminary objection vis-à-vis about the maintainability of instant writ petition under Article 227 of the Constitution of India, seeking a writ of mandamus and certiorari as well as maintainability of writ petition, in the light of statutory alternate remedy contained under Section 35-G of the Act, against the order passed by CESTAT. 6. 6. Learned counsel for the respondents submitted that instant petition, in exercise of jurisdiction vested under Article 227 of the Constitution of India, is patently not maintainable in its present form, as the petitioner has sought a writ, order or direction in the nature of certiorari as well as a writ of mandamus, however no prerogative writ can be sought under Article 227 of the Constitution of India. He placed reliance on the judgment of Apex Court in Shalini Shetty and anr. Vs. Rajendrar Shankar Patil, reported in 2010 (8) SCC 329 . 7. So far about the maintainability of writ petition on the ground of alternate remedy is concerned, learned counsel for the respondents contended that since vide the impugned order, the issue of liability of the petitioner in terms of Section 35F of the Act has been decided, the petitioner has efficacious alternate remedy of preferring an appeal under Section 35-G of the Act before the Division Bench of the High Court, which provides that appeal from every order shall lie before the High Court. He submitted that the interpretation of ‘every order’ has been a subject matter of large number of judicial pronouncements with respect to other enactments, including the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and by the words/ expression ‘every order’, it is signified “some order which affects right/rights or liability/liabilities of a party”. He placed reliance on the judgment of Division Bench of Allahabad High Court in Smt. Rajeshwari Misra and anr. Vs. Markandeshwar Mahadeo Trust, reported in AIR 1985 All 211 and full bench of Madhya Pradesh High Court in Kowa Spinning Ltd. and ors. vs. Debt recovery Tribunal and ors, reported in AIR 2004 MP-1. 8. Learned counsel for the respondents further contended that vide the impugned order the CESTAT while exercising its discretionary powers under proviso to Section 35F of the Act, has granted partial relief to the petitioner and admittedly, the condition of depositing the penalty to the tune of Rs. 4,40,72,632/- imposed under the Act is waived as well as the penalty of Rs. 15,00,000/- has also been waived, thereby the CESTAT has granted relief from pre-depositing more than four crore fifty five lac, though the same was otherwise required to be deposited as per the provision of Section 35F of the Act. 4,40,72,632/- imposed under the Act is waived as well as the penalty of Rs. 15,00,000/- has also been waived, thereby the CESTAT has granted relief from pre-depositing more than four crore fifty five lac, though the same was otherwise required to be deposited as per the provision of Section 35F of the Act. However, it is submitted that the petitioner has an alternate efficacious statutory remedy of preferring an appeal under Section 35-G of the Act. He further contended that the question of availing a statutory appeal under the Act, cannot be determined on the basis of apprehension of the party or as per its convenience or on the probabilities of getting the desired reliefs, as the same would be hit by the principles of forum convenience and for unscrupulous litigants forum hunting. 9. On this learned counsel for the petitioner contended that an appeal can only be filed against the final judgment and order passed by the CESTAT while finally deciding the lis in between the parties. He contended that question of facts and questions of law, both are before the Tribunal, who has to decide the same, on the other hand the Appellate Court has to deal with and adjudicate upon only the substantial question of law. He contended that the petitioner’s case is based on the facts, therefore Section 35F and 35G of the Act, should be read together, before arriving to a just decision of the matter because undue hardship and balance of conveyance is to be looked into matter sparingly. 10. Learned counsel for the respondents contended that insofar as reliance placed on the Benara Valves case (Supra), in that case law, the issue of maintainability of writ petition vis-à-vis Section 35-G of Act was not, at all, raised or involved and nor dwelled upon or referred to, hence this judgment does not lay down any law to the effect that writ petition is maintainable against an order passed under Section 35-G of the Act. 11. I have considered the arguments of learned counsel for the parties. Section 35-G of the Act provides appeal to High Court from every order passed in appeal by the Appellate Tribunal. Section 35-G of the Act is reproduced below:- “35G. 11. I have considered the arguments of learned counsel for the parties. Section 35-G of the Act provides appeal to High Court from every order passed in appeal by the Appellate Tribunal. Section 35-G of the Act is reproduced below:- “35G. Appeal to High Court-(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.” 12. Since, I am considering the maintainability of the writ petition on the ground of alternative remedy, I am not discussing the merits of the case argued by the learned counsel for the parties. Though there is no absolute bar for entertaining a writ petition under Article 226 and 227 of the Constitution of India, but such power should be exercised in rare cases where there is statutory alternative remedy. Such powers can be exercised where High Court finds that case is so strong that alternative statutory remedy should be ignored. But there is no such situation in the present case. Section 35-G of the Act in clear and categorical term provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal. Thus, there is no scope left to entertain the petition against the order passed by the Appellate Tribunal. In Benara Values’ case (supra) the issue of maintainability of writ petition vis-à-vis Section 35-G of the Act was not, at all, raised or involved and nor dwelled upon or referred to, hence the same does not lay down any law to effect the writ petition is maintainable under an order passed under Section 35-G of the act. 13. Consequently, writ petition is dismissed on the ground of alternative remedy of appeal under Section 35-G of the Act. 14. No order as to costs.