Maneta Automotive Components (P.) Ltd. vs Commissioner of Central Excise

Ajay Kumar Mittal, J.—Ajay Kumar Mittal, J.-This appeal has been preferred by the assessee u/s 35G of the Central Excise Act, 1944 (in short "the Act") against the order dated 20.1.2014 (Annexure A-1) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "the Tribunal"), claiming the following substantial question of law:--

Whether in facts & circumstances of the present case the Appellate Tribunal is correct in directing the Appellant to deposit Rs. 40 lacs as a pre-condition to hear the matter on merits when the entire issue is covered by the ruling of coordinate bench in Appellant''s own case for the previous period?

The facts, in brief, necessary for adjudication of the present appeal as narrated therein are that the appellant is a 100% Export Oriented Unit (EOU) and is engaged in the manufacture of Back Plates and Anti Noise Shims. A show cause notice dated 1.5.2012 (Annexure A-2) was issued by the respondent for the period from 01.04.2011 to 31.1.2012 that the appellant was not entitled to the benefits of exemption from basic customs duty and special additional duty in terms of provisions of Foreign Trade Policy. The appellant had been applying to Development Commissioner for fixation of norms under Foreign Trade Policy, however, the same had still not been finalized. In response to the show cause notice dated 1.5.2012 (Annexure A-2), the appellant submitted reply dated 29.5.2012 (Annexure A-5) to the respondent. The respondent vide Order-in-Original dated 18.1.2013 (Annexure A-6) confirmed the duty demand of Rs. 1,47,89,284/- u/s 11A of the Act besides levying equal amount of penalty. Aggrieved by the order dated 18.1.2013 (Annexure A-6), the appellant filed an appeal before the Tribunal. Along with the appeal, the appellant also filed stay application. The Tribunal vide order dated 20.1.2014 (Annexure A-1) directed the appellant to deposit Rs. 40 lacs as a pre-condition to hear the appeal on merits whereas the Tribunal for the prior period vide stay order dated 6.2.2013 (Annexure A-7) on the identical facts had taken a prima facie view in favour of the appellant and passed interim order of pre-deposit of Rs. 10 lacs. Hence, the present appeal.

Learned counsel for the appellant submitted that for the earlier year, the Tribunal had directed payment of Rs. 10 lacs only as a pre-deposit as a condition precedent for hearing of the appeal. It was urged that the liability for the earlier was on account of duty and penalty which was about Rs. 5 crores whereas in the present case, it was Rs. 3 crores and the Tribunal has directed the appellant to deposit Rs. 40 lacs. Relying upon the judgment of the Hon''ble Apex Court in Vishnu Traders v. State of Haryana [1995] Supp 1 SCC 461, it was urged that there should be principle of consistency and binding precedent and uniformity in the exercise of judicial discretion respecting similar cases. The requirement of Rs. 40 lacs as a pre-deposit in the present case was unreasonable and unjustified.

After hearing learned counsel for the appellant, we do not find any merit in the appeal. In the matter of interim orders, no strict rules of precedents are applicable. However, in the present case, the Tribunal while directing the appellant to deposit Rs. 40 lacs as a pre-deposit for hearing of the appeal has noticed as under:--

It is admitted fact that duty free raw material was imported by appellant in terms of Customs Notification above. Had the raw material not been imported, the appellant would have been at par with domestic players. Peculiarly appellant availed customs duty exemption at the cost of exchequer. Scrap was inbuilt in the duty free material imported. Ignorance of Customs duty forgone on the scrap aspect would place domestic players in disadvantageous position and shall run counter to the principle laid down in M/s. Hyderabad Asbestos Cement Products and Another Vs. Union of India and Others, . Therefore, as a course of equality before law, we direct the appellant to make deposit Rs. 40 lakhs within four weeks from today and make compliance on 26.02.2014. We may add that an interim order has no presidential value and we are guided by the ratio laid down by Apex Court in the case of Empire Industries Limited and Others Vs. Union of India and Others, , Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, , Benara Valves Ltd. and Others Vs. Commissioner of Central Excise and Another, and Vijay Prakash D. Mehta and Another Vs. Collector of Customs (Preventive), Bombay, .

In the present case, the appellant has been required to pre-deposit Rs. 40 lacs on demand of duty and penalty of Rs. 3 crores which is about 13.3396 which cannot be said to be unreasonable. Even otherwise, from the argument of the learned counsel for the appellant, it would emerge that on combined liability of two periods of Rs. 8 crores, the appellant would be depositing Rs. 50 lacs only which cannot be held to be excessive in any manner. The quantum required to be pre-deposited would vary if the total demand increases.

Adverting to the judgment in Vishnu Traders''s case (supra) relied by the learned counsel for the appellant, it was in the facts and circumstances of that particular case that the observations were noticed by the Hon''ble Supreme Court and was also held that in the matters of interlocutory orders, the principle of binding precedents do not apply. No help can be derived by the appellant from the aforesaid pronouncement.

In such a situation, it can be said that no substantial question of law arises. In view of the above, finding no merit in the instant appeal, the same is hereby dismissed. A prayer was made by the learned counsel for the appellant to extend the time for pre-deposit which according to him was expiring today. However, in the interest of justice, we extend the time to deposit the amount of Rs. 40 lacs up to 31.3.2014. It is directed that if the appellant in the present case deposits the amount of Rs. 40 lacs by 31.3.2014, the appeal shall be heard on merits in terms of order dated 20.1.2014.