H.V. Axles Ltd. vs Union of India (UOI)

Soumitra Pal, J.—The Court: Let four affidavits-of-service filed in court today be kept with the records.

In the writ petition, H.V. Axles Ltd., a company incorporated under the provisions of the Companies Act, 1956 and stated to be 100% subsidiary holding company of M/s. Tata Motors Ltd. is petitioner No. 1 and Manager (Finance) of the petitioner No. 1 is petitioner No. 2.

The petitioner No. 1 is engaged in the manufacturer of automative axles and other items on job work basis out of the raw materials supplied by M/s. Tata Motors Ltd.

The petitioners have challenged the orders dated 15th June, 2009 and the order dated 9th October, 2009 passed by the learned Customs, Excise and Service Tax Appellate Tribunal East Zonal Bench, Kolkata on several grounds.

The Tribunal by its order dated 15th June, 2009 had directed the petitioner to deposit an amount of Rs. 4 crores within a period of eight weeks. According to the petitioner, since the application for stay was not considered by the Tribunal the petitioners had filed an application for modification of the said order dated 15th June, 2009. However, the Tribunal without considering the merit of the miscellaneous application had held that there was no manifest error in the order dated 15th June, 2009 and had dismissed the miscellaneous application.

Learned Counsel for the petitioner has submitted that since the cost of production does not include the interest expenditure which is supported by the standards maintained by the Institute of Cost Works and Accountants of India and as the coordinate bench of the Tribunal in the order passed in Nirma Limited v. CCE 2006 (200) E.L.T. 213 had held that the interest per se is not included in the cost of production as per CAS-4 as interest expenditure is purely a finance cost, the Tribunal before passing the order should have considered the issue in that perspective. In fact, it was conceded by Mr. Sreedharan, learned advocate for the petitioner, that the issue is not of hardship but a question of law which is supported by a circular issued by CBEC being Circular No. 692/08/2003-CX., dated 13-2-2003. Moreover, since the Apex Court in Honda Siel Power Products Ltd. Vs. Commissioner of Income Tax, Delhi, has held that if there is a manifest error, the Tribunal is justified in rectifying its mistake, the Tribunal while passing the order dated 9th October, 2009 should have considered the issue in the said perspective.

Perused the order dated 9th October, 2009 passed by the Tribunal. It is evident that the Tribunal before holding that there was no manifest error in the stay order did not go into the merits of the miscellaneous application. In my view, the Tribunal should have considered the miscellaneous application on merit. Therefore, the order dated 9th October, 2009 cannot be sustained and is, thus, set aside and quashed.

The Tribunal is directed to consider the miscellaneous application afresh and shall pass a reasoned order preferably within a period of twelve weeks from the date of communication of this order after giving the petitioner an opportunity of hearing.

I make it clear that I have not gone into the merits of the case and all points are left open to be dealt with by the Tribunal.

The writ petition is allowed.

Since the writ petition is disposed of at the stage of admission without calling for filing of affidavits, the allegations made in the petition are deemed not to have been admitted by the respondents.

There will be no order as to costs.

All parties concerned are to act on a signed copy of the minutes of the operative part of this order on usual undertakings.