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Judgment
K. Chandru, J.—The short question that arises for consideration is whether the Petitioner is entitled to have the benefit of an interim order
before this Court pending hearing of his stay application as well as an application to waive pre-deposit pending before the Customs, Excise and
Service Tax Appellate Tribunal (for short CESTAT)?
In the writ petition, when it came up on 24.11.2010, notice was taken by the Central Government Standing Counsel. An interim stay was
granted for a period of two weeks. Subsequently, it was extended from time to time. The Respondent has filed a vacate stay application in M.P.
No. 1 of 2011 together with supporting counter affidavit, dated 14.12.2010.
Heard the arguments of Mr. Joseph Prabakar, learned Counsel appearing for the Petitioner and Mr. K. Ravichandra Babu, learned Senior
Central Government Standing Counsel appearing for the Respondent.
By the impugned order, dated 29.10.2010, the Petitioner was informed that the Petitioner has filed an appeal arising out of O-in-O No.
181/2009, 184/2009, 59/2009 and 51/2010. The CESTAT had not stayed those orders and they have also not paid the penalty. Therefore, they
were directed to pay the duty and penalty. The Petitioner sent a reply, dated 4.11.2010 stating that since they have moved the CESTAT and have
also filed stay applications, recovery proceedings initiated by the Respondent was not valid. Notwithstanding the same, by a further order dated
15.11.2010, the Petitioner was informed that as per the Excise Manual, if stay application is filed, no coercive steps will be taken till the stay
application is disposed of by the Commissioner of Central Excise (Appeals) or the Appellate tribunal. But the said provision will apply only to the
first stage appeals. In normal circumstances, three months'' time will be given for filing an appeal against the order in appeal. In case where the
Commissioner decides the matter, maximum one month time will be given to comply with the order.
It is the case of the Petitioner that they have right of appeal u/s 35-B of the Central Excise Act, 1944. u/s 35F, pending appeal, the Appellant
will have to deposit the amount with the adjudicating authority and the duty demanded or penalty levied. However, proviso to Section 35F gives
power to CESTAT to dispense with such deposit on the basis of undue hardship to any person and subject to such condition the Tribunal may
deem fit to impose. But, in the present case, the Tribunal was yet to waive the condition of pre-deposit and no orders were passed on the stay
applications.
The learned Senior Central Government Standing Counsel stated that when the stay application was listed on 6.12.2010 before the CESTAT,
the Department was ready to contest the case, but however, the counsel for the Petitioner sought for a long adjournment and got the matter
adjourned to 16.5.2011. It does not show any bonafide on their part.
Notwithstanding the same, the counsel for the Petitioner referred to the order passed by this Court in W.P. No. 13659 of 2010 and stated that
the CESTAT must decide the application on merits and till such time, the recovery notice will be stayed. The order does not show that there was
any contest and no legal basis was also referred to. At the maximum, the said order can only be a discretionary order.
The counsel for the Petitioner also referred to a division bench judgment of the Rajasthan High Court in Shree Cement Ltd. Vs. Union of India
(UOI) and Others, for contending that in view of the circular issued by the Department, dated 2.3.1990, it binds the Excise officials and they
should not exercise coercive machinery of recovery during tendency of stay petition before the CEGAT.
But, however, the Board''s circular, dated 25.5.2004 also stated that the same is available only to the first stage appeal and not to further
appeals. The circular issued by the Central Board of Excise and Customs, dated 10.1.2007 clearly stipulated that in the absence of any stay by
CESTAT or the High Court, there is no impediment for the authorities to recover the amount.
Ultimately, in all these fiscal matters, even if any recovery is made, that is always subject to the order to be passed by the appellate tribunal or
by this Court. Therefore, it cannot be said that any person can be prejudiced by the order of recovery. On the other hand, persons like the
Petitioner who had filed defective appeal without pre-deposit and waiting for pre-deposit to be waived by taking recourse to the proviso to
Section 35F and also not moving the stay application when the matters were listed and getting long adjournment is only the ruse to gain time and to
defeat the amount being secured by revenue. The Petitioner having moved the CESTAT must seek remedy only before the CESTAT as it has got
power to grant an interim order.
In the present case, the Petitioner has moved the Tribunal with stay application and they cannot use this Court as stopgap arrangement for
securing an illegal order from this Court to postpone the payment. What they could not achieve before the CESTAT, they cannot achieve before
this Court in an ingenious manner. The power of this Court to judicially review the impugned order is extremely limited. This Court by the issuance
of a direction to the Respondent cannot for bear them from exercising their statutory power. Since the Petitioner had availed the option of appeal
remedy before the CESTAT, they cannot institute a parallel proceedings before this Court on any grounds. The Petitioner themselves had invoked
the discretion before the Tribunal to grant an interim order.
In this context, it is necessary to refer to a judgment of the Supreme Court in Raj Kumar Shivhare Vs. Assistant Director, Directorate of
Enforcement and Another, , wherein the Supreme Court while dealing with an alternative remedy available under the FEMA Act held that the Act
cannot be bypassed and the jurisdiction under Article 226 of the Constitution of India cannot be invoked. In the following passages found in
paragraphs 31 and 32, the Supreme Court had observed as follows:
When a statutory forum is created by law for redressed of grievance and that too in a fiscal statute, a writ petition should not be entertained
ignoring the statutory dispensation. In this case the High Court is a statutory forum of appeal on a question of law. That should not be abdicated
and given a go-by by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great
respect, fell into a manifest error by not appreciating this aspect of the matter. It has however dismissed the writ petition on the ground of lack of
territorial jurisdiction.
No reason could be assigned by the Appellant''s counsel to demonstrate why the appellate jurisdiction of the High Court u/s 35 of FEMA
does not provide an efficacious remedy. In fact there could hardly be any reason since the High Court itself is the appellate forum.
The Supreme Court in Modern Industries Vs. Steel Authority of India Ltd. and Others, held that when a remedy is available under the Interest
on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, the High Court cannot be justified in entertaining the writ
petition under Article 226.
Very recently, the Supreme Court in United Bank of India Vs. Satyawati Tondon and Others, dealt with SARFAESI Act and DRT Act and in
paragraphs 55 and 56, it had held as follows:
It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of
statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious
adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will
exercise their discretion in such matters with greater caution, care and circumspection.
Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injunction the Appellant from taking action in
furtherance of notice issued u/s 13(4) of the Act. In the result, the appeal is allowed and the impugned order is set aside. Since the Respondent has
not appeared to contest the appeal, the costs are made easy.
In the light of the above, the writ petition lacks in merit. Accordingly, the writ petition will stand dismissed. However, there will be no order as
to costs. Consequently, connected miscellaneous petitions stand closed.