Crest Steel & Power Pvt. Ltd. vs Commr. of Cus. & C. Ex.

Navin Sinha, Actg. C.J.

I.A. No. 01/2013 has been filed to condone delay of approximately 1290 days in filing the case. We have heard learned counsel for the parties for condoning the delay. Considering the institution of Writ Petition (T) No. 1023/2009 by the Petitioner earlier, followed by the institution of Tax case No. 4/2009 and the observation in Writ Petition (T) No. 3008/2010 preferred against the order dated 12-2-2009 of the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi (hereinafter called ''Tribunal'') dismissing the Appeal, granting liberty to avail alternative remedy of appeal, we deem it proper in the facts and circumstances of the case to condone the delay. Aggrieved by a demand of CENVAT duty for Rs. 1,91,40,224/- along with equal amount of penalty and interest passed on 19-09-2008 by Commissioner, Excise, the petitioner preferred an Appeal before the Tribunal. It also sought unconditional stay for pre-deposit of the entire amount. The Tribunal on 7-1-2009 ordered for pre-deposit of Rs. 50,00,000/- subject to which realization of the balance amount would remain stayed. The petitioner failed to pay to the amount leading to dismissal of the Appeal on 12-2-2009.

Learned counsel for the Petitioner submits that the order dated 7-1-2009 was passed ex-parte without considering the request for adjournment. The Petitioner did not sit quiet after the order dated 7-1-2009 but preferred Writ Petition (T) No. 1023/2009 against the same and which was disposed on 19-2-2009 to file a Tax Appeal. Tax Case No. 4/2009 was then filed afresh. In the meantime the final order dated 12-2-2009 dismissing the Appeal itself for failure to deposit the pre-deposit amount came to be passed: Tax Case No. 4/2009 therefore became infructuous and was withdrawn to challenge the fresh order dated 12-2-2009. Writ Petition (T) No. 3008/2010 challenging the order dated 12-2-2009 was disposed with liberty to avail alternate remedy of Appeal. Thus the present application. The Petitioner therefore does not fall in the category of a negligent and indolent litigant. It was bona fidely pursuing remedies considered just and proper in the law.

Reliance has been placed on Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and Another, to submit that the power with regard to pre-deposit under Section 35F of the Central Excise Act, 1944 (hereinafter called ''the Act'') was required to be exercised reasonably and fairly as undue hardship in deposit has to be considered in the facts and circumstances of each case.

Since the order dated 7-1-2009 was passed behind the back of the Petitioner, it was deprived of the right and opportunity to convince the Tribunal with regard to its undue hardship in pre-deposit of Rs. 50,00,000/- as ordered by the Tribunal. A bona fide prayer for adjournment had been made for the date of hearing fixed on 7-1-2009 and no order had been passed with regard to the same. The Petitioner is now ready and willing to comply the order 7-1-2009 by pre-deposit of Rs. 50,00,000/-. The order dated 12-2-2009 dismissing the Appeal for failure to deposit the same may be set aside and the Appeal be restored for fresh disposal on merits in accordance with law. Since the petitioner was bona fidely pursuing remedies before this Court against the orders dated 7-1-2009 and 12-2-2009 it was not a case for imposing any interest on the pie-deposit amount as urged on behalf of the Respondents.

Learned counsel for the Respondents submits that the demand raised on the Petitioner was with regard to public money liable to be paid under statutory provisions. No reasonable explanation has been offered on behalf of the Petitioner for non-appearance on 7-1-2009 or that it was not aware of the date of hearing. The order itself reveals that they had been granted an earlier adjournment also. No explanation worth acceptance has been furnished for nonappearance on 7-1-2009. If that were not enough, the petitioner did not appear on 12-2-2009 also and which is evident of the fact that even after the scheduled date of 7-1-2009 it never took necessary steps before the Tribunal for protection of its interest, as otherwise it would have appeared on 12-2-2009 and made necessary request accordingly.

Reliance was placed on 2010 (249) E.L.T. 321 (S.C.) (Dinesh International Ltd. v. Union of India) imposing 9% interest on delayed payment of pre-deposit and restoring the Appeal subject to that condition. This is without prejudice to the contention of the Respondents that in the facts of the case, the present case deserves to be dismissed on merits as action has already been initiated for recovery of the principal amount of Rs. 1,91,40,224/- along with penalty and interest

We have heard and considered the submissions on behalf of the parties.

Section 35F of the Act provides for deposit of the duty demanded and penalty levied before the Appellate Tribunal. The Proviso vests the Tribunal with discretion in a case of undue hardship to dispense the deposit subject to such conditions as it may deem fit to impose so as to safeguard the interests of Revenue.

The order dated 7-1-2009 reveals that the matter was fixed for hearing before the Tribunal on 22-12-2008, but was adjourned at the request of the Petitioner. It, therefore, had full knowledge of the next date of hearing on 7-1-2009. The Petitioner has not disputed and cannot dispute this fact. Instead of appearing on 7-1-2009 before the Tribunal, the Petitioner faxed a letter to the Tribunal that another Appeal of a sister concern was fixed for hearing on 14-1-2009 and another Appeal of the Petitioner was fixed on 15-1-2009 and therefore, the subject Appeal may also be adjourned to 14-1-2009 or 15-1-2009. Alternatively a common date of hearing may be given in all the three cases.

It is apparent that no reasonable explanation has been furnished by the Petitioner for non-appearance on 7-1-2009 much less any unavoidable reason or circumstances. A litigant can certainly seek an adjournment of a case but not as a matter of right much less can it take the Tribunal or Court for granted in adjourning the matter at the wish of the litigant. Adjournment of the case on a prefixed date is the discretion of the Court to be exercised reasonably and prudently keeping all aspects and interest of the parties in mind. Nothing prevented the Petitioner from ensuring appropriate representation on its behalf on 7-1-2009 and making the same prayer. If the Petitioner adopted a presumptive stand in its favour it has only itself to blame. If that were not enough, the petitioner did not bother to even ascertain as to what was next date fixed before the Tribunal and again ignored appearance on 12-2-2009 at its own risk. Adjournment before a Court or a Tribunal cannot be sought by sending a Fax letter. If that were to be so the entire system of adjudication would itself collapse for uncertainty of hearing.

The submission that the Petitioner was not negligent or indolent litigant because he had filed Writ Petition (T) No. 1023 /2009 followed by Tax Case No. 4/2009 and Writ Petition (T) No. 3008/2010 does not appeal to us. By filing the aforesaid Writ Petitions and Tax Case, the Petitioner essentially sought to take advantage of its own wrong and retained a benefit unlawfully by failure to make pre-deposit even under order dated 7-1-2009. If the Petitioner was acting bona fide nothing prevented it from appearing before the Tribunal on 12-2-2009 and seeking extension of time for pre-deposit as ordered on 7-1-2009. Nothing has been demonstrated before us as to what was the undue hardship which prevented it from making the pre-deposit or unavoidable reason for non-appearance on both dates before the Tribunal and how it took precedence over the interest of the Revenue. In the facts of the present case, we find it difficult to hold that the Petitioner was bona fidely pursuing legal remedies. On the contrary, we are of the opinion to the converse with regard to the conduct of the Petitioner as he has managed to retain the benefit of what was otherwise a statutory liability. In Benara Valves (supra) it was observed as follows :--

"12. As noted above there are two important expressions in Section 35-F. One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka that under Indian conditions expression "undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances."

In Dinesh International Ltd. (supra) pre-deposit of Rs. 45,00,000/- was not made leading to dismissal of appeal. Notwithstanding the fact that the pre-deposit was made after delay of 16 months the Supreme Court restored the appeal subject to payment of 9% interest on the pre-deposit amount.

In the present case, the period is for in excess of 16 months. If the Petitioner is now willing to deposit the pre-deposit amount there is no reason why he could not have made the same request on 12-2-2009 or in the earlier round of litigations filed by it. Though counsel for the Respondents has prayed for 12% interest, we are not inclined to grant the same as we are of the opinion that it may be excessive. If petitioner deposits the sum of Rs. 50,00,000/- with interest at the rate of 9% per annum from 12-2-2009 within a maximum period of 30 days from today, the Tribunal shall proceed to adjudicate the Appeal on merits. The order dated 12-2-2009 is set aside conditionally. If the petitioner does not make the necessary deposit within a period of 30 days from today, the writ petition itself shall stand dismissed. The Appeal is disposed with the aforesaid observations and directions.