Shree Ram Steel Industries vs Commissioner of Central Excise

Ajay Kumar Mittal, J.—This order shall dispose of CWP Nos. 11991 and 12005 of 2012 as identical issues are involved in both the petitions. For brevity, the facts are being taken from CWP No. 11991 of 2012. This petition has been filed against the Stay Order dated 9-2-2012 (Annexure P-3) passed by the Customs, Excise and Service Tax Tribunal, New Delhi (in short "the Tribunal") holding that the appeal of the petitioner would be dismissed automatically without any further hearing in the case on account of non-deposit of an amount of Rs. 2.5 crores by M/s. Vishwakarma Alloys Ltd. (M/s. VAL) as directed in the impugned Order dated 9-2-2012 and order dated 8-5-2012 (Ann. P-4) directing the petitioner to deposit the whole amount of penalty imposed by the respondent-Commissioner.

The facts relevant for disposal of the present writ petition are that respondent No. 1 levied duty u/s 3 of the Central Excise Act, 1944 (hereinafter referred to as "the Act"). As per the said Section, the goods specified in First Schedule or the Second Schedule of the Central Excise Tariff Act and manufactured in India shall be subject to duty at the rate specified in the tariff. The duty levied u/s 3 of the Act can be discharged by way of payment in cash or it may be paid by utilizing Cenvat credit, i.e. duty paid on inputs. As per the Cenvat Credit Scheme, any assessee paying duty on inputs or capital goods which are used in the manufacture of finished goods is entitled to credit of duty paid on inputs and capital goods and the same is credited in books like credit in pass-book in banking system. The credit entered in the registers can be used for the payment of duty on finished goods and the amount in the credit balance is debited at the time of discharge of duty liability. The petitioner during the period in question i.e. 2002-04 was registered with the Department as a registered dealer. Investigation was conducted against M/s. VAL and the factory premises were inspected on 19-4-2006. During search, shortage of raw material was noticed and a show cause notice regarding the same was issued to M/s. VAL. During enquiry regarding past transactions, it was found that M/s. VAL was purchasing raw material from various registered dealers including the petitioner and was taking Cenvat credit on the basis of invoices issued by the said dealers. During the period in question, the petitioner sold scrap involving duty amounting to Rs. 7,98,000/- to M/s. VAL. After completion of investigation, respondent No. 1 issued a show cause notice dated 3-9-2007 calling upon the petitioner to show cause as to why penalty under Rule 25 of the Central Excise Rules, 2002 be not imposed upon it. It was also mentioned in the show cause notice that the petitioner and other dealers have only supplied invoices to M/s. VAL and have not sold the material. The reply to the said show cause notice was filed. Respondent No. 2 vide order dated 8-5-2010 imposed penalty of Rs. 7,98,000/-, i.e. equal to the amount of credit passed to M/s. VAL. Feeling aggrieved, the petitioner as well as M/s. VAL and various other dealers and transporters filed appeals before the Tribunal. Along with the appeals, stay applications were also filed. The said applications came up for hearing on 9-2-2012 before the Tribunal. The Tribunal vide order dated 9-2-2012 (Annexure P-3) directed M/s. VAL to make pre- deposit of Rs. 2.5 crores within a period of eight weeks. However, the requirement of pre-deposit in the case of all the dealers was dispensed with and it was ordered that in case M/s. VAL fails to make pre-deposit, the appeals of all the parties would stand automatically dismissed. M/s. VAL failed to deposit the amount. On misc. application having been filed by the revenue, the matter of the petitioner as well as other parties was taken up by the Tribunal. The Tribunal vide order dated 8-5-2012 directed the petitioner and others to deposit the penalty amount imposed on them within four weeks. Hence, the present writ petition against the impugned orders dated 9-2-2012 and 8-5-2012.

In the written statement, respondent No. 1 has submitted that the orders passed by the Tribunal are justified.

We have heard learned counsel for the parties.

Learned counsel for the petitioner submitted that the similar order dated 9-2-2012 (Annexure P-3) has been modified by this Court in CWP No. 8433 of 2012 (M/s. Victory Impex v. Commissioner of Central Excise, Ludhiana and Another) decided on 31-5-2012 wherein it has been held that the appeal filed by the petitioner cannot be dismissed for want of pre-deposit by M/s. VAL Ltd. Further, it was urged that once the Tribunal had waived the condition of pre-deposit of penalty in the case of the petitioner vide order dated 9-2-2012, the Tribunal was not justified in passing order on miscellaneous application on 8-5-2012 directing the petitioner to deposit the penalty amount imposed on them by reviewing its earlier order.

After giving our thoughtful consideration to the respective submissions of learned counsel for the parties, we find that the order dated 8-5-2012 requiring the petitioner to deposit the penalty amount imposed on them by reviewing the order dated 9-2-2012 exempting the petitioner from pre-deposit is not justified.

In CWP No. 8433 of 2012 (M/s. Victory Impex v. Commissioner of Central Excise, Ludhiana and Another), order dated 9-2-2012 passed by the Tribunal was under challenge to the extent it provided for automatic dismissal of the petition therein in the event of failure of M/s. VAL to deposit its liability. This Court had held that once the Tribunal had waived the condition of pre-deposit in the case of the petitioner, there cannot be automatic dismissal of the appeal of the petitioner on account of non-deposit by M/s. VAL.

The Tribunal has reviewed its earlier order. dated 9-2-2012 vide order dated 8-5-2012. A perusal of order dated 8-5-2012 shows that no reasons have been given for taking a different view from the ore taken earlier on 9-2-2012 granting complete waiver to the petitioner. Accordingly, taking totality of the facts and circumstances as noticed hereinabove into consideration, the order dated 8-5-2012 (Annexure P-4) is set aside and the order dated 9-2-2012 (Annexure P-3) is modified to the extent that the condition of waiving of pre-deposit in the case of the petitioner is upheld and the Tribunal shall now hear the appeal of the petitioner on merits in accordance with law without insisting for pre-deposit. In view of the above, the present petitions are allowed to the extent as indicated above.