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Judgment
H.N. Devani, J.—By this petition, the petitioner has prayed for the following substantial relief:
[A] Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari, or any other appropriate writ, order or direction quashing and setting aside the impugned order dated 26.11.2007 at Annexure-D passed by the CESTAT, Ahmedabad.
The petitioner company is a registered export oriented unit and is engaged in the manufacture of Dyed Polyester Filament Yarn. Pursuant to search carried out by the officers of the respondents, show cause notice came to be issued by the respondent No. 2 invoking larger period of limitation and seeking to recover Central Excise duty of Rs. 91,99,802/- u/s 11(A)(1) of the Central Excise Act, 1944 (the Act) as also the interest and penalty thereon. The respondent No. 2 confirmed the demand of Rs. 91,99,802/- u/s 11(A)(2) of the Act and imposed penalty of equal amount with applicable rate of interest. Being aggrieved, the petitioner filed an appeal u/s 35B of the Act along with an application u/s 35F of the Act seeking waiver of pre-deposit of the duty and penalty amount. Vide the impugned order dated 27th November, 2007 the Tribunal held as follows:
[4] We have carefully considered the submissions and the grounds of appeal. There is, prima facie, strong evidences against M/s Navpad Textiles Industries Ltd. regarding clandestine removal of unaccounted production using forged/duplicate/parallel invoices, and the same are corroborated by several evidences like excess stock found on the day of visit, private records, entries in the computer, confession statements of the employees and directors of M/s Navpad Textiles Industries Ltd. and corroborative statements of as many as 14 recipients of unaccounted of goods. Therefore, we hold that the department has proved a strong prima facie case against M/s Navpad Textiles Industries Ltd. In a strong prima facie case of clandestine removal like this, the company showing losses appears nothing unusual.
[5] We hold that the applicant, M/s Navpad Textiles Industries Ltd., have not made out a strong case for waiver of pre-deposit of dues as per the impugned order and therefore we direct that the applicant shall deposit a sum of Rs. 50 lakhs (Rupees fifty lakhs only) towards duty within 12 weeks and report compliance on 4-2-08. Subject to deposit of the amount as above, the deposit of balance amount of duty and the entire amount of penalty is waived and recovery thereof stayed. Failure to comply with this order will result in dismissal of the appeal without further notice to the applicant.
[6] As regards the penalties on other applicants, we waive pre-deposit of the same and grant stay of recovery of the same.
The learned Counsel for the petitioner has submitted that the petitioner had specifically contended in the memo of the stay application that the petitioner unit has been declared a "sick industrial undertaking" by the Board of Industrial and Financial Reconstruction (BIFR) and that the company has an accumulated loss of more than Rs. 16 crores and in support of the said contention had also produced Chartered Accountant''s certificate as well as the relevant balance sheet for the years ending 31.03.2005 and 31.03.2006. The petitioner company had also relied upon the following decisions in support of the contention that the petitioner company being declared a sick unit by the BIFR u/s 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, and the duty demand being for the period prior to the said declaration by the BIFR, unconditional stay be granted and the pre-deposit requirement be dispensed with:
Sangfroid Remedies Ltd. v. Union of India 1998 (103) ELT 5 (SC).
Vijay Packaging Systems Ltd. v. Commissioner of Customs and Central Excise, A.P., 2000ECR769(SC) .
Fabworth (I) Ltd. v. Commissioner of Central Excise and Customs, Nagpur 2002 (150) ELT 1063 (Tri-Kol).
It was submitted that the Tribunal has not even remotely considered the binding decisions that have a direct bearing on the issue of grant of waiver of pre-deposit amount. It was vehemently contended that the Tribunal has not addressed itself to the issue regarding the petitioner having been declared to be a sick industrial unit by the BIFR and has directed the petitioner to deposit Rs. 50 lakhs instead of granting full waiver of pre-deposit.
The Supreme Court in the case of Indu Nissan Oxo Chemicals Ind. Ltd. v. Union of India Civil Appeal No. 5795 of 2007 has in the context of the provisions of Section 129-E of the Customs Act, which are pari materia to the provisions of Section 35F of the Central Excise Act, laid down thus:
Two significant expressions used in the provisions are ''undue hardship to such person'' and ''safeguard the interest of revenue''. Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view.
The Tribunal in its impugned order has recorded the submission of the petitioner that their company had been declared a sick industrial undertaking by the BIFR and has accumulated losses of over Rs. 16 crores. After considering the submissions and the grounds of appeal, the Tribunal has held that the department has a strong prima facie case against the petitioner. The Tribunal has observed that in a prima facie case of clandestine removal like the present case, showing losses appears to be nothing unusual. After recording the aforesaid findings the Tribunal has directed the petitioner to deposit a sum of Rs. 50 lakhs, which is approximately 50% of the duty amount. In the background of the facts and findings recorded by the Tribunal, it is apparent that the Tribunal has addressed itself to the issue of financial hardship as well as the fact that the petitioner has been declared a sick industrial unit by the BIFR and has therefore, directed pre-deposit of only about 50% of the duty demand. In the circumstances, the contention advanced by the learned Counsel for the petitioner that the Tribunal has not addressed itself to the issue of the petitioner having been declared as a sick industrial unit by the BIFR does not merit acceptance.
The main plank of the submissions advanced by the learned Counsel for the petitioner is that the petitioner having been declared a sick industrial unit by the BIFR, the Tribunal ought to have granted full waiver of the pre-deposit. By an order of even date passed in Special Civil Application No. 2968 of 2008, this Court has considered a similar issue and has after considering the claim of the petitioner therein in the light of the decisions on which reliance had been placed by the learned Counsel for the parties, upheld the impugned order of the Tribunal whereby the petitioner therein was directed to deposit part of the duty amount. Though a distinction was sought to be drawn in the present case, on the ground that specific averments were made in the application for waiver and that the balance sheet for the relevant period had also been annexed, in effect and substance, the controversy involved in both the petitions is the same. In the circumstances, the present case is squarely covered by the said decision.
For the foregoing reasons as well as for the reasons stated in the judgement and order of even date rendered in Special Civil Application No. 2968 of 2008, it cannot be stated that there is any infirmity in the order of the Tribunal so as to warrant any intervention by this Court. The petition, therefore, does not merit acceptance and is, accordingly, rejected.
The petitioner is granted four weeks from today to comply with the directions made by the Tribunal in its order dated 27th November, 2007.