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Judgment
This appeal by the assessee is directed against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 25 July 2011 on an application for waiver of pre-deposit u/s 35-F of the Central Excise Act 1944.
The appeal is admitted on the following substantial questions :
(a) Whether in the facts and circumstances of the case, the Hon''ble CESTAT was justified in directing the Appellants to deposit Rs. 2,11,00,000/- u/s 35F of the Act?
(b) Whether in the facts and circumstances of the case, the Hon''ble CESTAT was right in holding that the Appellants did not make out a prima facie case for total waiver of pre-deposit?"
With the consent of the learned counsel, the Appeal is taken up for hearing and final disposal.
The Appellant manufactures M.S. ingots falling under Chapter 72 of the Central Excise Tariff Act, 1985 and for which purpose the Appellant established an induction furnace at Bidkin, Aurangabad. The Appellant is in appeal before the Tribunal against an order of the Commissioner dated 11 February 2009 by which a demand of duty in the amount of Rs. 2.21 Crores has been confirmed after granting an abatement of duty under Rule 96ZO(2) of the Central Excise Rules, 1944 in the amount of Rs. 2 Crores. A penalty in the amount of Rs. 2.21 Crores has been imposed under Rule 96ZO(1). The Appellant moved an application for waiver of pre-deposit before the Tribunal. The Tribunal by its impugned order dated 25 July 2011 has directed the Appellant to deposit an amount of Rs. 2.11 Crores u/s 35-F, granting a waiver to the extent of Rs. 10 lacs.
The Annual Capacity of Production (ACP) of the Appellant was determined by the Commissioner u/s 3A(2) of the Central Excise Act, 1944 for Assessment Years 1997-98, 1998-99 and 1999-2000. The Commissioner by his order dated 26 February 2004 determined the ACP of the Appellant at 25,600 MT. Based on the ACP for the year 1998-99 a demand for duty was raised in the amount of Rs. 1.92 Crores. By a separate order passed by the Commissioner on 27 February 2004 a demand for differential duty in the amount of Rs. 1.64 Crores together with interest and penalty was made on the assessee. The assessee had sought a redetermination of duty on the basis of actual production by a letter dated 3 August 1999 and submitted details showing that the production during1998-99 was 3741.565 MT. This plea was rejected by the Commissioner on the ground that the assessee did not submit any evidence in support of its claim in regard to the actual production for 1998-99.
The assessee had filed five appeals before the Tribunal. Of the appeals, Appeals E/18 and 19/2005-MUM pertained to the determination of the ACP under the provisions of Section 3A of the Central Excise Act, 1944 which as noted earlier had been determined as 25,600 M.T. Before the Tribunal, which disposed of all the appeals on 9 July 2008 the assessee withdrew Appeals E/18 and 19/2005-MUM on the ground that the determination of the actual capacity was acceptable. However, the other four appeals being serially E/14 to 17 of 2005 were remitted back by the Tribunal to the adjudicating authority for reconsideration.
In pursuance of the order of remand the Commissioner passed an order dated 11 February 2009 inter alia raising a demand of duty in the amount of Rs. 2.21 Crores together with a penalty in the like amount. That is the order which is the subject matter of an appeal before the Tribunal in which an application for waiver of pre-deposit was made.
Before the Tribunal the submission which was urged by the Appellant was that for the period 1998-99 and 1999-2000 the adjudicating authority has not considered the plea of the assessee for a redetermination of its actual production. The Tribunal declined to entertain this plea on the ground that upon the dismissal of Appeals E/18 and 19/2005-Mumbai as withdrawn, the assessee had virtually withdrawn its contention that the duty liability for 1998-99 should be redetermined on the basis of actual production.
On behalf of the assessee, learned counsel submitted that - (i) The Appeal against the determination of the ACP was withdrawn since the assessee had no grievance in regard to that determination; (ii) Having regard to the provisions of Section 3A(4) this does not preclude the assessee from establishing that the actual production of notified goods in his factory is lower than the production determined under sub section (2) on the basis of the ACP; (iii) Appeals E/18 and 19/2005 arose out of the determination of the ACP u/s 3A(2) and the withdrawal of those appeals would not preclude the assessee from seeking a determination under sub-section (4) of Section 3A; (iv) The assessee has other arguable points on merits including the submission that the jurisdiction u/s 3A could not have been invoked since the provision was deleted by the Finance Act of 2001. In the present case, it was urged that the order of adjudication was passed after the deletion of the provision though as a matter of fact, the notice to show cause had been issued prior to the commission of the Section. In this regard it was urged, relying on the judgments of the Supreme Court in Rayala Corporation (P) Ltd. and M.R. Pratap Vs. Director of Enforcement, New Delhi, ; Kolhapur Canesugar Works Ltd. and Another Vs. Union of India and Others, and General Finance Co. and Another Vs. Assistant Commissioner of Income Tax, Punjab, , that the invocation of the provisions of Section 6 of the General Clauses Act cannot be made where the statutory provision is omitted and the statute is not repealed.
On the other hand counsel appearing on behalf of the Revenue has supported the reasoning of the Tribunal and has urged that the withdrawal of the earlier appeals precluded the assessee from seeking a determination of its duty on the basis of its actual production.
Prima facie, at this stage, it appears that the Commissioner had passed separate orders determining the actual capacity of production [based on the provisions of Section 3A(2) read with Rule 96ZO]. Two appeals were filed by the assessee before the Tribunal, which were withdrawn on 9 July 2008 on the ground that the assessee was accepting that determination. The assessee sought to urge that the other four appeals (Appeal Nos. E/14, 15, 16 and 17/2005) should be remanded back on the ground that the adjudicating authority had not considered the fact that the factory of the assessee had remained closed for more than seven days for which an abatement of duty should be allowed. The remand was specifically sought for that purpose. The Tribunal accepted the plea and in the interests of justice remitted the proceedings back to the adjudicating authority. On remand, the assessee contended that the figures relating to its actual production during 1998-99 were available to the department through the statutory record maintained by the assesse and the returns which were submitted to the department. The Commissioner allowed the benefit of an abatement of duty for the period during which the factory of the assessee was closed in the total amount of Rs. 2 Crores and directed the assessee to deposit the balance of Rs. 2.21 Crores.
The grievance of the assessee before the Court is that the Tribunal has erred in coming to the conclusion that the mere withdrawal of Appeals E-18/2005 and E-19/2005 would preclude the assessee from contending that its actual production was less than what was determined on the basis of ACP. The Tribunal has noted that in Appeal E-19/2005 the assessee had contended inter alia that its actual production for the year 1998-99 was less than the ACP determined by the Commissioner and the assessee wanted the production to be redetermined on the basis of actual production and its duty liability to be refixed accordingly. In this regard, the Tribunal has observed that by withdrawing Appeal E-19/2005 the assessee withdrew its contention that the duty liability for the year 1998-99 should be redetermined on the basis of actual production. The Tribunal also noted that in the written submissions which were filed before the Commissioner in the remanded proceedings, the assessee admitted that these appeals against the ACP determination for 1997-98 and 1998-99 have been dismissed as withdrawn. Insofar as 1999-00 is concerned, it is not in dispute that the ACP determination was not challenged.
On this basis, the Tribunal has ordered that the assessee should make a reasonable pre-deposit which it proceeded to determine on the basis of inter alia the net demand of duty confirmed against the assessee by the Commissioner after allowing abatement of duty for the period of non-operation of the induction furnace. Moreover, the Tribunal deducted a further amount of Rs. 10 lacs from the amount to be pre-deposited by the assessee.
Counsel appearing on behalf of the assessee has submitted that the proceedings should be remanded back to the Tribunal for a fresh determination. We are not inclined to accede to this prayer at the present stage. Continuous remands by the High Court to the Tribunal, particularly at the interlocutory stage when issues of pre-deposit arise only add to the burden of litigation before the Tribunal and eventually result in the postponement of the date on which a revenue liability has to be fulfilled. In the present case, there have already been several orders of remand by the Tribunal and by this Court. In the meantime, the Revenue is deprived of its entitlement to dues.
Having regard to all the facts and circumstances, therefore we are of the view that while we are not inclined to set aside the order of the Tribunal in its entirety and to remand the proceedings, some consideration must be given to the submissions of the assessee which are recorded in the earlier part of this judgment, which prima facie do deserve some consideration at the hearing of the appeals. At this stage, it would not be appropriate for this Court to make any final determination of the submissions raised including on the question of jurisdiction since these are matters which must be considered by the Tribunal at the stage of the hearing of the appeals. Having regard to the facts and circumstances of the case, we are of the view that the ends of justice could be met if the order of the Tribunal is modified so as to direct the assessee to deposit an amount of Rs. 75 lacs before the Tribunal within a period of four weeks from today. The order of the Tribunal shall stand modified accordingly. In view of the aforesaid directions, the question of law as framed shall stand answered accordingly. All rights and contentions in the main appeal are kept open. The Petition is accordingly disposed of.
There shall be no order as to costs.