Annapurna Engineering Works vs C.E.S.T.A.T.

Harish Tandon, J.—The order disposing of an application for waiver of the pre-deposit condition is assailed in this writ petition. The Tribunal had allowed the waiver and directed the petitioners to deposit a sum of Rs. 70,00,000/- within the stipulated period with categorical observation that the default may result in the dismissal of the appeal [ 2013 (298) ELT 397 ]. While the writ petition was pending before this Court, the Tribunal took up an appeal and for non-compliance of the said order dismisses the same. The said order is also assailed by way of a supplementary affidavit.

According to the petitioners, the Tribunal has proceeded on the wrong premise that the petitioners have a substantial worth of Rs. 7.50 crores and have invested a sum of Rs. 1 crore and odd in the fixed deposit by overlooking the fact that the said fixed deposits were kept as a security for obtaining the orders from the Railways and Railways have paramount charge over the said fixed deposits. The petitioners further say that the Tribunal did not take into consideration the balance sheets and the other documents which sufficiently suggest that the order for deposit of Rs. 70 lakhs would cause undue hardship and the entire commercial activities of the petitioners would come to a halt.

This Court while entertaining the writ petition directed the petitioner to obtain a report from the valuer as well as Sub-registry Office as the petitioners disclosed to the Court that they have a land at Rajarhat, Kolkata worth more than a crore. The report annexed in the supplementary affidavit filed today shows that the land at Rajarhat will fetch more than Rs. 1.5 crore which according to the petitioner can be kept as a security for compliance of the directions passed by the Tribunal.

Section 35F of the Central Excise Act, 1944 requires the deposit of the duty demanded with the adjudicating authority by the person desirous of appealing against the decision or the order passed by the Authority. The proviso to the said Section bestowed power upon the Appellate Tribunal to dispense with such deposit subject to such conditions as may be deemed fit to impose so as to safeguard the interest of the Revenue. It further provides that while considering the issue relating to the dispensation of pre-deposit condition the Tribunal shall also take into account the undue hardship that may be caused to such person simultaneously with an issue relating to safeguard the interest of the Revenue. There cannot be straight jacket formula for the purpose of dispensation at a particular rate or an amount but depends upon the facts of each case. The Tribunal not only should consider the undue hardship that would be caused to the person who has filed an appeal but shall also bear in mind the interest of the Revenue to be protected. Neither the Act nor the rule provides a particular mode to safeguard the interest of the revenue.

In the present case this Court finds that a discretion is exercised by the Appellate Tribunal in allowing the waiver of the duty imposed in directing the deposit of Rs. 70 lakhs against the duty levied to the tune of Rs. 5 crores and penalty to the tune of Rs. 5 crores and odd.

Considering the balance sheet and the other documents annexed to this writ petition, this Court does not find any justification in reducing the amount as indicated above but of the opinion that if the said amount can be sufficiently secured which may not cause undue hardship to the petitioner but shall also secure the interest of the Revenue. The Tribunal ought to have adopted such mechanism. Since the property which according to the petitioner, is more than Rs. 1.5 crore, if be attached to the Revenue, would sufficiently protect the interest and the right to have the decision on merit so far as the appeal is concerned, can be restored.

Mr. Khaitan, learned Advocate appearing for the petitioner on instruction submits that to show the bona fide, his client shall deposit a sum of Rs. 20 lakhs. In addition to put the land situated at Rajarhat, which is worth more than Rs. 1.5 crore to be attached with the departments for protection of the interest of the Revenue. The respondent authorities however did not agree to the aforesaid statement and submissions as such course of action may invite further litigations in case of any default committed by the petitioner.

My attention is drawn to Section 11 of the Central Excise Act, 1944 which provides for an attachment for the purpose of recovery the duty or such sum recoverable from such person. The Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995 provides for an attachment of the property of the defaulter and the full mechanism to recover the dues by adopting the procedure for sale. By virtue of Section 12 of the Central Excise Act, 1944 the provisions of the Customs Act, 1962, relating to the levy and/or exemption, drawback, warehousing, offences, penalties, confiscation procedure relating to offences and appeals is applicable in regard to the like matters. By a Notification No. 68 of 63, dated 4th May, 1963, issued u/s 12 of the Customs Act, the provisions contained u/s 142 of the Customs Act is applicable in respect of a matter relating to the Central Excise. In exercise of power u/s 142 of the Customs Act, the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995 was framed which contains the full mechanism for attachment and the sale of the property for recovery of the dues.

By virtue of the aforesaid Notification issued u/s 12, the aforesaid provisions is applicable in case of dues of the Central Excise and its recovery thereof. This Court, therefore, feels that instead of depositing the entire sum of Rs. 70 lakhs the interest of the Revenue can be protected, if the petitioner is directed to deposit a sum of Rs. 20 lakhs and shall keep the said immovable property i.e. the land at Rajarhat attached to the Central Excise departments. Accordingly, the petitioner is directed to deposit a sum of Rs. 20 lakhs within 1[two months] from date with the Central Excise authority. In addition to the same, it is hereby ordered that the property at Rajarhat i.e. Premises No. 15-017 in Street No. 17 (Erstwhile Plot No. 18 in block No. - AK/HIGI-I), New Town, Police Station-Rajarhar, District-North 24 Parganas shall remain attached with the excise authority until further order that may be passed by the Tribunal. The petitioner shall deposit the original Deed of Sale with the excise authorities within two months from date simultaneously with the deposit of the 2[said amount]. The petitioner shall also file a declaration that the said property is free from any encumbrances, lien, charges and has not been kept as collateral security with any person or institution whatsoever. If the aforesaid directions are complied within the period stipulated hereinabove, the order of dismissal passed by the Tribunal shall stand vacated and the Tribunal shall proceed to decide the said appeal on merit upon giving an opportunity of hearing in accordance with law. In the event of default of the compliance of the above directions, the order of dismissal of an appeal shall remain and the authorities shall be free to take an appropriate action permissible under the law. The writ petition is thus disposed of without any order as to costs.

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1Words "two week" replaced with "two months", corrected vide Order dated 23-12-2013.

2Words "Title Deed" replaced with "said amount", corrected vide Order dated 23-12-2013.