Hanila Era Textiles Ltd. vs Union of India (UOI)

P.C.: Heard Shri Bhatt, learned senior counsel for the Appellant and Shri Desai, learned senior counsel for the Respondents. Perused appeal.

This appeal is directed against the order of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai ("Tribunal" for short) whereby and whereunder the appeal filed by the Appellant was dismissed for noncompliance of the order directing pre-deposit in the sum of Rs. 3 crore u/s 35F of the Central Excise Act, 1944 ("Act" for short).

The Facts:

The facts giving rise to the present appeal relevant to the issue involved, in nutshell, are as under:

The Appellant herein is a 100% EOU engaged in the manufacture of various yarn products attracting central excise duty under the Central Excise Tariff Act, 1985. The Appellant submitted an application for permission to sell yarn produced by it in DTA to Development Commissioner, SEEPZ which was granted to the extent of Rs. 16,88,78,212/- as against Rs. 19,29,90,000/- claimed by the Appellant. The order to the extent it denied permission was challenged in Writ Petition No. 2388/2000 before this Court. This Court was pleased to direct the Development Commissioner to grant full entitlement. Accordingly, the Appellant requested the Development Commissioner to grant further permission for the balance entitlement of Rs. 12,82,90,000/- as directed by this Court vide its order dated 31st October, 2001 passed in Writ Petition No. 2388/2000, which was ultimately granted by the Development Commissioner vide his order dated 9th January, 2002.

The Development Commissioner, vide his order dated 4th June, 2003 reviewed the aforesaid order and cancelled the permission. The review order was passed by the Development Commissioner without show-cause-notice to the Appellant and without affording any opportunity of hearing in that behalf. The said order of review was challenged by the Appellant by filing Writ Petition No. 1718/2003 before this Court which is still pending.

The Assistant Commissioner of Central Excise, Khopoli Division Mumbai issued show-cause-notice dated 25th July, 2003 demanding duty in respect of the goods sold by the Appellant in terms of the permission dated 7th June, 1999. The said show cause notice is challenged by the Appellant in Chamber Summons No. 241/2003 in Writ Petition No. 1718/2003 and the same is also pending.

The Appellant submitted written submission dated 22nd February, 2005 to the Commissioner, Central Excise (Adj.) resisting the show cause notice dated 25th July, 2003.

The Commissioner of Central Excise adjudicated and confirmed the show-cause-notice vide order-in-original dated 12th August, 2005 and demanded duties of excise equivalent to the aggregate duties of customs under proviso (i) to Section 3(1) of the Central Excise Act, 1944 to the extent of Rs. 3,73,82,248/-.

The appeal filed to the Tribunal against the aforesaid order resulted in remanding the matter to the Commissioner of Central Excise for consideration afresh vide order dated 25th August, 2006.

On remand, impugned order-in-original was passed by the Commissioner of Central Excise, Raigad on 30th September, 2008 confirming the duty demand of Rs. 11.92 crore and penalty against the earlier demand of Rs. 3,73,82,248/-.

Aggrieved by the aforesaid order, the Appellant preferred appeal before the Tribunal. The Tribunal, vide its order dated 3rd September, 2009 directed the Appellant to pay Rs. 3 crore by way of pre-deposit u/s 35F of the Act within a period of eight weeks. The compliance was to be reported on 9th November, 2009.

The aforesaid order directing pre-deposit was a subject matter of challenge in Writ Petition No. 2195/2009 filed before this Court. During the pendency of the said petition, appeal was dismissed by the Tribunal vide order dated 11th June, 2010 for non-compliance of the order of pre-deposit. Consequently, Writ Petition No. 2195/2009 came to be dismissed vide order 21st June, 2010 holding it to be infructuous. Now under order dated 6th August, 2010, the Respondents have attached the goods of the Appellant. The Appellant has now filed present appeal challenging the orders dated 11th June, 2010, 3rd September, 2009 together with attachment order dated 6th August, 2010 and prayed for interim reliefs in terms of prayers made in the appeal.

Rival Submissions:

Mr. Bhatt, learned senior counsel appearing for the Appellant urged that the order directing pre-deposit was a subject matter of challenge in Writ Petition No. 2195/2009, as such it was obligatory on the part of the Tribunal to wait till the order of this Court deciding question of pre-deposit. That the Tribunal was, thus, not justified in dismissing the appeal for non-compliance of the order of pre-deposit. He, thus, submits that the impugned order dismissing appeal be set aside and the appeal be restored to the file of the Tribunal. In addition to this, it is also urged that the order dismissing appeal was in breach of principles of natural justice as such impugned orders are void ab initio.

Mr. Desai, learned senior counsel appearing for the Respondents-Revenue vehemently opposed the aforesaid submission made by learned Counsel for the Appellant. He urged that Writ Petition No. 2195/2009 was filed on 7th November, 2009 and the same was deliberately kept pending right up to June, 2010 i.e. for seven months without seeking any order. No attempt was made to get the matter circulated and obtain appropriate orders from the writ Court.

Mr. Desai further submits that the Tribunal''s order directing pre-deposit was suffered by the Appellant on 3rd September, 2009. The petition was filed on 7th November, 2009. The order of pre-deposit was to be complied with within a period of eight weeks and compliance was to be reported on 9th November, 2009. He, thus, submits that just two days before the expiry of period meant for compliance of the order of pre-deposit, Appellant filed writ petition. On the top of it, it was deliberately kept pending till June 2010. No orders were obtained. Consequently, appeal filed before the Tribunal was rightly dismissed by the Tribunal for non-compliance of the order of pre-deposit.

Mr. Desai submits that had the bona fides of the Appellant been clear, the Appellant would have obtained urgent circulation from the writ Court. According to him, writ petition was deliberately kept pending for a period of more than seven months. It was lying in the registry. He submits that the Tribunal was perfectly justified in rejecting appeal for non-compliance of the order of pre-deposit.

Mr. Desai, thus, submits that this is not a fit case for entertaining appeal and grant of relief to the Appellant. At any rate, he submits that no substantial question of law is involved in the appeal warranting consideration thereof. He, thus, prayed for dismissal of appeal in limine with heavy costs.

Consideration:

Having heard rival parties, in our considered view, Mr. Desai is justified in contending that no substantial question of law is involved in this appeal.

The undisputed facts are that order of pre-deposit was passed on 3rd September, 2009 which was to be complied with within a period of 8 weeks i.e. on or before 9th November, 2009. Whereas writ petition challenging the order of pre-deposit was filed on 7th November, 2009 i.e. just two days before the expiry of time granted to comply with the order of pre-deposit. No steps were taken by the Appellant to get the petition circulated and obtain appropriate orders from the writ Court. The petition was kept pending in the registry right upto 15th June, 2010. No steps were taken even before the Tribunal to get the period of eight weeks extended so as to comply with the order of pre-deposit dated 3rd September, 2009. Under these circumstances, the question before us is: whether the Tribunal was justified in dismissing appeal for want of compliance of the order of pre-deposit dated 3rd September, 2009.

At this stage, it is useful to refer to the judgment of the Hon''ble Supreme Court in the case of Tilokchand and Motichand and Others Vs. H.B. Munshi and Another, ; wherein the question of delay was considered by the Hon''ble Supreme Court in moving Court in furtherance of his right to seek the remedy. The Hon''ble Supreme Court observed as under:

If then there is no period prescribed what is the standard for this Court to follow? I should say that utmost expedition is the sine qua non for such claims. The party aggrieved must move the Court at the earliest possible time and explain satisfactorily all semblance of delay. I am not indicating any period which may be regarded as the ultimate limit of action for that would be taking upon myself legislative functions. In England a period of 6 months has been provided statutorily, but that could be because there is no guaranteed remedy and the matter is one entirely of discretion. In India I will only say that each case will have to be considered on its own facts. Where there is appearance of avoidable delay and this delay affects the merits of the claim, this Court will consider it and in a proper case hold the party disentitled to invoke the extraordinary jurisdiction.

In the instant case, the Appellant appears to have calmly abandoned or at any rate put into cold storage his writ remedy under Article 226 of the Constitution of India. There is no explanation from the Appellant as to what prevented them from getting their petition circulated before the Court and obtain appropriate orders. In the circumstances, it cannot be said that the Appellant is not guilty of gross delay in pursuing the writ remedy that was open to them in the first place. In our opinion, it does not matter whether the petition had been formally lodged in the Court or not. If the Appellant had sought a remedy under the extra-ordinary jurisdiction of this Court, then it ought to have moved the Court to obtain appropriate orders and ought not have allowed the time to elapse creating rights in favour of the Respondents.

In the aforesaid view of the matter, the Appellant was guilty of keeping the petition pending for seven months and not obtaining appropriate orders from the writ Court. It was not obligatory on the Tribunal to grant further time for compliance of order of pre-deposit without there being any such request from the Appellant before expiry of the time already fixed by it. The appeal was, thus, rightly dismissed for non-compliance of the order of pre-deposit.

The aforesaid view of ours is in consonance with the view of this Court in the case of P. Narayan Pillai v. T.V. Rangrajan, 1974 Mh. L.J. 352; wherein, in more or less similar facts, writ Court had refused to entertain petition.

We may place it in record that, during the course of hearing, it was suggested to the Appellant to unconditionally comply with the order of pre-deposit so that Revenue can be persuaded to agree for consent order to see that the Appellant gets an opportunity to prosecute their appeal on merits. However, Appellant refused to comply with the order of pre-deposit without putting any conditions. In the circumstances, we are left with no other alternative but to dismiss the appeal.

In the result, appeal is dismissed in limine for want of substantial question of law with no order as to costs.