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Judgment
M.R. Shah, J.—Rule. Shri Darshan Parikh, learned counsel waives service of notice of rule on behalf of the Department. In the facts and circumstances of the case and with the consent of learned advocates appearing for respective parties, the petition is taken up for final hearing today. By way of this petition under article 226 of the Constitution of India, the petitioners have prayed for an appropriate writ, direction, order quashing and setting aside the impugned order dated November 7, 2012/December 3, 2012 passed by the Customs Excise and Service Tax Appellate Tribunal (hereinafter referred to as "CESTAT, Ahmedabad"), as regards deposit of Rs. 50 lakh as pre-deposit to consider the case on merits on remand.
Facts leading to the present petition in nut-shell are as under:
That a show-cause notice was issued by the Commissioner of Central Excise, Ahmedabad III, on April 11, 2008 by which the petitioner was called upon to show cause as to why the service tax amounting to Rs. 3,45,21,135 + education cess Rs. 6,01,077 + secondary and higher education cess Rs. 1,59,209 totalling to Rs. 3,52,81,421 should not be demanded and recovered from them in cash for the period from September, 2004 to February, 2008 by invoking the extended period of five years under the first proviso to section 73(1) of the Finance Act, 1994 read with rule 14 of the Cenvat Credit Rules, 2004 as well as the interest thereon at applicable rate should not be charged/recovered from them u/s 75 of the Finance Act, 1994 read with rule 14 of the Cenvat Credit Rules, 2004 and the penalty should not be imposed u/s 76 of the Finance Act, 1994 for failure to make the payment of service tax payable, which is short-paid by them in term of section 68 of the Finance Act, 1994 as well as the penalty should not be imposed upon them u/s 78 of the Finance Act, 1994 read with rule 15(4) of the Cenvat Credit Rules, 2004 for the failure to assess service tax liability correctly inasmuch as service tax has been short-paid in cash by the reason of suppression of facts or contravention of provisions of Finance Act, 1994 or of the Rules made therein with intent to evade the payment of service tax. That the petitioner-company replied to the same by reply dated June 9, 2008. That thereafter the Commissioner of Central Excise passed an order-in-original dated March 30, 2009 and held that there was an excess utilisation of the Cenvat Credit Rules and accordingly the demands raised in show-cause notice came to be confirmed.
Being aggrieved and dissatisfied with the order-in-original dated March 30, 2009, the petitioner-company preferred an appeal before the CESTAT, Ahmedabad along with the stay application and by an order dated January 6, 2010, the Tribunal waived the requirement of pre-deposit of service tax demanded, interest thereon, penalties, etc., and allowed the stay application and simultaneously decided the appeal also and remanded the matter back to the Commissioner for fresh adjudication in terms of the discussion in the said order and after giving opportunity to the petitioners to present their case before final decision is taken. The Tribunal also passed an order that the appellants (petitioners herein) shall co-operate with the Revenue in conducting verification to the correctness of the data submitted by them.
That thereafter, after remand, the adjudicating authority passed a fresh order on June 26, 2012 and confirmed the demand raised in the show-cause notice. At this stage, it is required to be noted that while passing the order-in-original, the Commissioner specifically observed that despite ample opportunities accorded to the appellants, they have failed to furnish relevant documents proving their contention evidencing that they have nothing to prove in support of their claim and thereafter on the basis of the material available on record and considering the submissions made on behalf of the petitioners passed the order-in-original dated March 30, 2009 confirming the demand of Rs. 3,52,81,421 and further passed an order of interest as well as penalty.
Feeling aggrieved and dissatisfied with the order passed by the Commissioner, Central Excise, Ahmedabad III (order-in-original), the petitioner again preferred an appeal before the CESTAT, Ahmedabad along with the stay application. During the course of hearing of the stay application, it was contended on behalf of the petitioner that the order passed by the Commissioner is against the principles of natural justice inasmuch as the Commissioner relied upon the reports of the Assistant Commissioner dated March 7, 2011 and April 19, 2011 and the copies of the reports were not given to them and as such it was requested on behalf of the petitioner to remand the matter back to the original adjudicating authority. It appears that while hearing the stay application, the Tribunal took up the appeal also for hearing and by the impugned order, the Tribunal remanded the matter back to the original adjudicating authority. However, observing that the appellants (petitioners herein) have not extended full co-operation and have not given necessary details as per the earlier directions of the Tribunal and consequently the appellant did not fulfil their obligation which has resulted in the order-in-original, the Tribunal considered that the appellant could be required to put to some condition. The Tribunal also observed that it has become necessary to ensure that the appellant co-operates with the Department and therefore, while remanding the matter back to the original adjudicating authority, the Tribunal issued the direction, directing the appellant to deposit an amount of Rs. 50 lakhs within eight weeks as a precondition of deposit considering the case on the merits.
Feeling aggrieved and dissatisfied with the impugned order passed by the CESTAT, Ahmedabad in so far as directing the petitioner-original appellant to deposit a sum of Rs. 50 lakhs before its case on remand is considered on the merits, the petitioners have preferred the present special civil application under article 226 of the Constitution of India.
Shri Paresh Dave, the learned advocate appearing on behalf of the petitioners have made only one submission with respect to the jurisdiction of the Tribunal to issue direction to pre-deposit some amount while passing the order of remand u/s 35C of the Central Excise Act, 1944 (hereinafter referred to as "Act").
Shri Paresh Dave, the learned advocate appearing on behalf of the petitioners has submitted that once the order-in-original is set aside by the Tribunal in exercise of powers u/s 35C of the Act and the matter is remanded to the original adjudicating authority, as such there will not be any liability to pay the duty, penalty, interest, etc., unless and until a fresh order of adjudication is passed and therefore, the Tribunal has no jurisdiction to pass an order of pre-deposit while remanding the matter to the original adjudicating authority and as a condition of pre-deposit of considering the case on the merits on remand.
It is further submitted by Shri Paresh Dave, the learned advocate appearing on behalf of the petitioners that imposition of condition precedent for setting aside the order while remitting back the matter for de novo consideration is impermissible as per the statutory provision of section 35C of the Act. It is submitted that having reached the conclusion that the order-in-original requires to be set aside and remanded to the original authority for de novo consideration, the Tribunal can only give direction about how to proceed further with the inquiry and imposing the condition precedent for setting aside the order is not in accordance with the statutory provision. It is submitted that as per section 35C of the Act, the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. It is submitted that the terminology "direction" in the said provision means giving certain guidance or command on the basis of which the original adjudicating authority is required to pass a fresh order. It is submitted that there is a difference and distinction between terminology "direction" to the lower authorities to do de novo adjudication proceedings in a particular way and the terminology "pre-condition" for setting aside the order appealed. It is, therefore, submitted that the direction issued by the Appellate Tribunal directing the petitioner-original appellant to deposit a sum of Rs. 50 lakhs while remanding the matter to the original adjudicating authority, by way of precondition before considering the case on merits on remand, is wholly without jurisdiction and beyond the powers conferred u/s 35C of the Act.
Shri Paresh Dave, learned advocate appearing on behalf of the petitioners-original appellants has heavily relied upon the decision of the Madras High Court in the case of National Oxygen Limited Vs. Commissioner of Customs, as well as decision of the Allahabad High Court in the case of Summerking Electricals (P) Ltd. Vs. CEGAT, as well as the decision of the Delhi High Court in the case of Satvik Industries Vs. Commissioner of Central Excise, in support of his above submissions.
Shri Paresh Dave, learned advocate appearing on behalf of the petitioners has further submitted that even the finding recorded by the original adjudicating authority as well as the Tribunal that the petitioner did not extend the co-operation before the adjudicating authority is factually incorrect. It is submitted that in fact the petitioner did produce certain documents and therefore, it cannot be said that there was no co-operation at all by the petitioner. Shri Dave, learned advocate appearing on behalf of the petitioners has submitted that even otherwise it cannot be said that in the aforesaid decision, there is any decision by the Punjab and Haryana High Court with respect to the powers of the Tribunal u/s 35C of the Act. It is submitted that as such in the said decision the High Court has not dealt with the powers of the Tribunal u/s 35C of the Act.
Making the above submissions and relying upon the above decisions, it is requested to allow the present special civil application and quash and set aside the impugned direction issued by the Appellate Tribunal of deposit of Rs. 50 lakhs by the petitioner, while remanding the matter back to the original adjudicating authority, as a precondition to consider the case on merits on remand.
Present petition is opposed by Shri Darshan Parikh, learned counsel appearing on behalf of the Department. It is submitted that in the facts and circumstances of the case, more particularly, when order of remand was required to be passed by the Appellate Tribunal at the request of the petitioner and when it was found that the petitioner-original appellant did not co-operate before the original adjudicating authority and therefore, while remanding the matter to the original adjudicating authority, the Appellate Tribunal issued direction directing the petitioner-original appellant to deposit a sum of Rs. 50 lakhs only, against the total liability of Rs. 3,52,81,421, no error or illegality has been committed by the Tribunal.
Now, so far as the power of the Appellate Tribunal to issue such a direction of deposit of some amount while remanding the matter back to the original authority, it is submitted by Shri Parikh, learned counsel appearing for the Department that considering section 35C of the Act, the Tribunal has been invested with the discretionary power to issue such direction as it deems fit which is inclusive of directing deposition of some amount (looking to the conduct of the assessee) and it may not be restricted to issuance of direction with respect to how to pass a fresh order by the adjudicating authority on merits (as sought to be contended on behalf of the petitioners). Therefore, it is submitted that on facts and even sometimes to protect the interest of the Revenue and looking to the conduct of the assessee and if it is found that the assessee has tried to delay the proceedings and has not cooperated like in the present case, the Tribunal may issue direction as it deems fit, more particularly, to deposit some amount while remanding the matter and may direct the assessee to deposit amount before its case is considered on merits by the original adjudicating authority on remand.
Shri Parikh, learned counsel appearing for the Department has heavily relied upon the decision of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, in support of his above submissions. It is submitted that the Punjab and Haryana High Court while considering the scope and power of the Appellate Tribunal u/s 35C of the Act, has observed and held that there is no bar u/s 35C of the Act to issue direction of deposit of some amount and/or impose condition of deposit of some amount while remanding the matter back to the original authority. It is further submitted that against the decision of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, the SLP before the hon''ble Supreme Court has been dismissed.
Making above submissions and relying upon above decision, it is requested to dismiss the present special civil application.
In reply and with respect to the decision of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, against which SLP is dismissed by the hon''ble Supreme Court, Shri Dave, the learned advocate for the petitioners has relied upon number of decisions submitting that dismissal of SLP at the admission stage cannot be said to be confirmation of the order of Punjab and Haryana High Court on merits. It is further submitted that even on facts also the decision of the Punjab and Haryana High Court would not be applicable as Punjab and Haryana High Court did not go into detail with respect to the power of the Appellate Tribunal to issue such directions, u/s 35C of the Act and simply rejected the petition by observing that the matter is remanded to the original adjudicating authority and no substantial question of law arise. It is submitted that on the other hand, the decision of the Madras High Court is in detail and to the point. Therefore, it is requested to allow the present special civil application.
Now, so far as the decisions of the Madras High Court and Allahabad High Court relied upon by the learned advocate appearing for the petitioners are concerned, Shri Parikh, the learned counsel appearing for the Department has submitted that on facts, the said decisions would not be applicable. It is submitted that so far as the decision of the Allahabad High Court is concerned, while quashing and setting aside the order-in-original on the ground that same was in breach of principles of natural justice, while remanding the matter back to the original adjudicating authority, the Appellate Tribunal passed an order of pre-deposit u/s 35F of the Act. It is submitted that once the appeal was disposed of by the Appellate Tribunal, there was no question of pre-deposit of duty and/or liability u/s 35F of the Act and therefore, the same was rightly quashed and set aside by the Allahabad High Court. It is submitted that therefore the decision of the Allahabad High Court would not be applicable to the facts of the present case. It is submitted that similarly the decision of the Madras High Court also, on facts, would not be applicable to the facts of the present case.
Having heard the learned advocates appearing for respective parties at length, the short question which is posed for consideration of this court is whether in exercise of powers u/s 35C of the Act and while remanding the matter back to the original adjudicating authority, the Appellate Tribunal can issue direction directing the appellant-assessee to deposit some amount before his case is considered on merits by the original adjudicating authority on remand?
While considering the aforesaid question, provision of section 35C of the Act is required to be considered which reads as under:
35C Orders of Appellate Tribunal.--(1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary.
(1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of any appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.
(2) The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under subsection (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central Excise or the other party to the appeal:
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the other party, shall not be made under this sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard.
(2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed:
Provided that where an order of stay is made in any proceedings relating to an appeal filed under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order:
Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated.
(3) The Appellate Tribunal shall send a copy of every order passed under this section to the Collector of Central Excise and the other party to the appeal.
(4) Save as provided in section 35G or section 35L, orders passed by the Appellate Tribunal on appeal shall be final.
On fair reading of section 35C of the Act, the Appellate Tribunal is conferred with the power and has a wide discretion to pass such orders as it thinks fit, confirming, modifying, or annulling the decision or order appealed against or refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. The terminology "directions" in the aforesaid provision cannot be restricted to the directions of the lower authorities to do de novo adjudication proceedings in a particular way and/or giving certain guidance to the adjudicating authority to pass a fresh order on merits, as sought to be contended on behalf of the petitioners. To read into something to the above while considering the terminology "direction" would be restricting powers of the Appellate Tribunal to issue such directions as it deems fit and to add something which is not there in the statute. In a given case if it is found that the matter is required to be remanded to the original adjudicating authority because of the lapse on the part of the assessee and if it is found by the Appellate Tribunal that before the original adjudicating authority the assessee has not co-operated like in the present case, however, the assessee is to be given additional opportunity, the Tribunal may issue direction directing the appellant-assessee to deposit some amount while remanding the matter to the original adjudicating authority and before his case is considered on merits by the original adjudicating authority on remand. The aforesaid direction as such cannot be said to be a order of pre-deposit as per section 35F of the Act. Such a direction of deposit of some amount while remanding the matter to the original authority can be said to be imposing of condition of deposit of some amount before any de novo adjudication by the original authority on remand which was necessitated due to the reasons attributed to the assessee. In a given case, if it is found by the Tribunal that the order of remand is required to be passed because of the reasons which are not attributed to the assessee and/or because of any error and/or fault on the part of adjudicating authority, the Tribunal may not issue such direction of deposit. However, to say that the Appellate Tribunal lacks total jurisdiction of issuing any such direction of deposit of some amount while remanding the matter to the original adjudicating authority for de novo adjudication u/s 35C of the Act, cannot be accepted.
Now, so far as the reliance placed upon the decision of the Allahabad High Court in the case of Summerking Electricals (P) Ltd. Vs. CEGAT, by the learned advocate for the petitioners is concerned, on considering the said decision, it appears to us that the said decision shall not be applicable to the facts of the case on hand and/or the same shall not be of any assistance to the petitioners. In the case before the Allahabad High Court while quashing and setting aside the order-in-original and remanding the matter back for de novo adjudication, the Appellate Tribunal directed the assessee to deposit partial amount of duty, i.e., pre-deposit u/s 35F of the Act and to that the Allahabad High Court held that once the appeal was disposed of by quashing and setting aside the order-in-original, no such order of pre-deposit of any amount u/s 35F of the Act can be passed. The Allahabad High Court in the said decision had no occasion to consider the scope and ambit of power of the appellate authority to issue such direction u/s 35C of the Act.
Now, so far as the decision of the Madras High Court in the case of National Oxygen Limited Vs. Commissioner of Customs, relied upon by the learned advocate on behalf of the assessee is concerned, on considering the reasoning given by the Madras High Court (paragraphs 16 to 18), with respect we axe not in agreement with the view taken by the Madras High Court. As stated hereinabove, if it is held that while remanding the matter back to the original authority for de novo adjudication, the Appellate Tribunal cannot issue any direction of deposit of some amount before the case is considered on merits by the original authority to remand and the only direction which can be issued would be to do de novo adjudication proceedings in a particular way and the Appellate Tribunal can issue the direction in the form of certain guidance for the lower adjudicating authority considering the same, the original authority is required to pass a fresh order for de novo adjudication, would tantamount to restricting the powers of the Appellate Tribunal conferred u/s 35C of the Act and thereby to add something which is not there in the statute. The power of the Tribunal to issue such direction as it deems fit, while remanding the matter to the lower authority for fresh adjudication, are absolute and the same cannot be restricted. Absolute discretion is vested with the Tribunal while passing the order u/s 35C of the Act and while remanding the matter back to the original adjudicating authority for fresh adjudication as it deems fit.
Now, so far as the reliance placed upon the decision of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, by the learned counsel for the Revenue and the submission that the SLP against the order of Punjab and Haryana High Court has been dismissed and the submission made by the learned counsel appearing for the petitioners that dismissing the special leave petition, it cannot be said to be confirming the order passed by the Punjab and Haryana High Court is concerned, it is true that dismissing the SLP in limine cannot be said to be confirming the order passed by the High Court and therefore, we do not say for a moment that on dismissing the SLP in limine and at the admission stage, would tantamount to confirming the order of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, However, the fact remains that the same can be said to be a decision of the High Court. In any case, we have decided the present petition independently and have given our own findings and our judgment is solely based on the decision of the Punjab and Haryana High Court in the case of Shiv Sewa Sadan Vs. CESTAT, The contention raised for and on behalf of the petitioners that this decision of Punjab and Haryana High Court does not deal with powers of the Tribunal u/s 35C of the Act is also not acceptable, inasmuch as, the court has sufficiently dealt with this very issued while rejecting the contention of legal infirmity in the order under challenge.
Now, so far as the impugned direction issued by the Appellate Tribunal directing the petitioners-assessee to deposit a sum of Rs. 50 lakhs while remanding the matter to the original adjudicating authority for fresh adjudication and on such deposit there shall be a fresh adjudication is concerned, it is to be noted that in the present case the payment under the show-cause notice for an amount of Rs. 3,52,81,421 + interest + penalty and earlier the order-in-original was passed against which the petitioners assessee preferred appeal and there was an order of remand by the Appellate Tribunal for fresh adjudication and after giving an opportunity to the assessee to present their case before the final decision is taken and there was a specific observation and/or direction by the Appellate Tribunal that the appellants (assessee) shall co-operate with the Revenue in conducting verification to the correctness of the data submitted by them. On remand, when the original adjudicating authority passed an order which was submitted before the Appellate Tribunal, the adjudicating authority specifically observed that the petitioners are not co-operating with the Revenue in conducting verification of the document and that they have failed to furnish relevant documents proving their contention evidencing that they have nothing to prove in support of their claim, despite ample opportunities accorded to the assessee. Even the Appellate Tribunal has also specifically given the finding that the assessee had not extended full co-operation and had not given necessary, details as per the earlier directions of the Tribunal. However, to give one another opportunity to the assessee and considering the request made on behalf of the appellant-assessee, the Appellate Tribunal thought it fit to remand the matter to the original adjudicating authority. However, observing that appellant-assessee did not fulfil their obligation which has resulted in order-in-original and the matter is to be remanded, the Tribunal has thought it fit to impose some condition of deposit of some amount before there is a fresh adjudication on remand. While issuing such a direction it is specifically observed by the Tribunal that appellants have contributed substantially to the impugned order being passed against them; that the appellants have not extended full co-operation and have not given necessary details as per the earlier directions of the Tribunal and the appellants did not extend co-operation to the adjudicating authority and consequently no verification could be conducted and the order-in-original came to be passed, nevertheless, another opportunity is required to be given to the appellants. Not only that, even the learned advocate appearing on behalf of the assessee "also" agreed that this time they would ensure that the documents are submitted and co-operation is extended, meaning thereby as such on behalf of the assessee it was conceded that they did not submit relevant documents and did not extend the co-operation. It is also required to be noted and it appears from the impugned direction that while issuing such direction the Appellate Tribunal was also conscious of the fact that in the normal course, at the said stage, when the matters are remanded, pre-deposit is not insisted upon. However, it is observed that in this case, it has become necessary to ensure that the appellant co-operates with the Department and in the facts and circumstances of the case, the appellant/assessee be required to deposit amount of Rs. 50 lakhs. At this stage it is required to be noted that we also called upon the learned advocate appearing on behalf of the petitioners to make submission with respect to reduction of the amount of deposit of Rs. 50 lakhs, to which there is no positive response and no such request is made. Even otherwise it is required to be noted that the petitioners have never pleaded any financial difficulty/crunch. Under the circumstances, we are of the opinion that no error and/or illegality has been committed by the Appellate Tribunal issuing the direction while remanding the matter back to the original adjudicating authority, directing the petitioner assessee to deposit a sum of Rs. 50 lakhs, which calls for interference of this court in exercise of powers under article 226 of the Constitution of India. In view of the above and for the reasons stated above, it is held that there is no bar u/s 35C of the Central Excise Act, 1944 that while referring the case back to the original authority, the Tribunal cannot impose any condition and/or issue any direction of deposit of some amount before any fresh adjudication on remand and it is held that while remanding the case back to the original authority in exercise of powers u/s 35C of the Central Excise Act, 1944, the Appellate Tribunal may issue any direction as it deems fit which can be inclusive of deposit of some amount, however, that would depend upon the facts and circumstances of each case and consequently present special civil application deserves to be dismissed and is accordingly dismissed. Rule is discharged.