Simplex Electronics Pvt. Ltd. vs Commissioner of Cus., C. ex. and Service Tax

K.M. Joseph, C.J.�Appellant in all these appeals is the same Company. It essentially seeks to rely on the Notification issued under the Central Excise Act granting exemption to units, which commenced commercial production before 31st March, 2010. There are various other conditions, which are attached with the availing of the benefit of the exemption Notification. Against the proceedings taken for recovery and assessing the appellant to central excise and also penalty, appellant preferred appeals before the Tribunal. It also made applications for waiver of pre-deposit. The applications were considered originally by the Judicial Member and the Technical Member. The Judicial Member was of the view that, in the circumstances of the case, appellant had made out a case for complete exemption from pre-deposit. On the other hand, the Technical Member was of the view that there appears to be no material to show that the appellant had commenced commercial production before 31st March, 2010, which was the requirement under the Notification and, hence, took the view that the appellant must make the pre-deposit of 50 per cent of the excise duty. The matter was referred to a third Member. The third Member agreed with the Technical Member. Therefore, by a majority of opinion, the Tribunal directed pre-deposit of 50 per cent of the excise duty. Central Excise Appeal Nos. 11 of 2013 and 12 of 2013 were filed feeling aggrieved by those orders. This Court was not inclined to grant a stay. Instead, it passed the following order on 30th December, 2013:

"Mr. P.R. Mullick, Advocate for the appellant.

Ms. Vijai Laxmi, Advocate holding brief of Mr. Shobhit Saharia, Advocate for the respondent.

Admit.

Parties are permitted to bring on record all materials, which were used before the Tribunal.

List for hearing in its turn.

We are unable to grant any interim order, inasmuch as, appellant has accepted the fact that before 31st March, 2010, he did not maintain any of the records, which he was required to maintain under the Excise Laws pertaining to production. However, we make it absolutely clear that in the event, appellant succeeds, he shall be entitled to return of the duty paid."

Resultantly, inasmuch as the appellant did not make the pre-deposit, which was ordered by the Tribunal and, in respect of which, stay was declined, since there was a non-deposit of the mandatory pre-deposit ordered by the majority of the Tribunal; the two appeals filed by the appellant against the assessment orders came to be dismissed. The final orders passed in the said appeals are impugned by way of Central Excise Appeal Nos. 6 of 2014 and 7 of 2014.

When these matters came up, we heard the learned counsel appearing on behalf of the appellant and the learned counsel appearing on behalf of the respondent.

The learned counsel for the appellant would point out that it is a case, where the authority has placed reliance on the statement of one of its employees primarily for finding that the commercial production had not commenced prior to 31st March, 2010. Even though a request was made to make the said employee available for cross-examination, that was turned down. This cuts the root of the case of the assessing authority leaving it bereft of any foundation for holding that there was no commercial production prior to 31st March, 2010. Still further, he would submit that what the Notification requires is the commencing or the beginning of commercial production. According to him, the findings of the authority in this regard are unsustainable, as production had indeed started. Next, the learned counsel for the appellant would point out that, in such matters, the opinion of the officer of the Government becomes crucial. He drew our attention to the opinion of the officer of the Government, who, according to him, was an officer of the Industries Department, who was on deputation with SIIDCUL. According to him, a perusal of the officer''s report would show that commercial production had indeed commenced prior to 31st March, 2010. Furthermore, he also drew our attention to the fact that this is a case, where the Judicial Member was inclined to give the appellant a complete exemption from pre-deposit.

Per contra, no doubt, the learned counsel for the respondent would point out that the orders, which have been passed, are unassailable, as the commercial production had not commenced prior to 31st March, 2010. He further contended that a perusal of the order passed by this Court in regard to Central Excise Appeal Nos. 11 of 2013 and 12 of 2013 would show that the application for stay of the order of the Tribunal was turned down and that order had become final as it had not been challenged before the Apex Court and, therefore, the appeals have become infructuous and, resultantly, the appeals against the final order must also fail as, without making the pre-deposit, the appeals are not maintainable. He further contends that the appeals can be maintained in law only if there are substantial questions of law and there are no substantial questions of law in these cases. In other words, he would say that a finding can be said to give rise to substantial question of law only when it is perverse and the orders passed in these cases cannot be treated as perverse. It is further pointed out that the certificate of the officer relied on by the Government has not been issued by the Government as such and there is no material to show that the officer, who gave the certificate, was on deputation as such or was authorized to issue such certificate.

The learned counsel for the appellant would point out that, in the order refusing stay by this Court, the Court had empowered the appellant to make available the documents, which were produced before the Tribunal. He would, therefore, submit that the documents are produced and he would submit that the matter must be decided on merits.

Appellant has been assessed to a fairly huge sum of money. In one appeal, which is Central Excise Appeal No. 12 of 2013 and which is against the order of pre-deposit, as well as in Central Excise Appeal No. 7 of 2014, which is an appeal from the consequential final order; the amount involved is Rs. 1,76,87,618/-. In the other appeals, being Central Excise Appeal Nos. 11 of 2013 and 6 of 2014, the amount involved is Rs. 21,15,878/-.

On the one hand, we notice that the appellant has a case based on the Notification granting complete exemption and the crucial question is, whether commercial production had commenced within the time indicated in the Notification. We have already noticed the contentions of the appellant. We also note that this is a case, where the Judicial Member was of the view that there must be a complete exemption from making the compulsory pre-deposit. Still furthermore, appellant also drew our attention to the fact that the provision stands amended and, as things stand, in respect of appeals, which are pending, appellant needs to make only initial deposit of 7.5 per cent of the amount demanded. But, we cannot apply the said yardstick to a case, which already stood dismissed.

We are not unmindful of the interim order passed by this Court refusing stay; but, we also cannot overlook the fact that the appeals are left pending and the appellant was given an opportunity to produce the documents produced before the Tribunal. The final orders are merely resultant orders or dependent orders passed consequent upon the non-compliance of the pre-deposit. We would think that, in the facts of this case, interest of justice would also require that the matter be adjudicated on merits; but, it cannot be an unconditional order, as is sought for by the appellant. We cannot ignore the fact that the Judicial Member is inclined to grant complete exemption from making pre-deposit. We cannot also totally ignore, at this stage, the fact that the appellant''s employee was not made available for cross-examination. No doubt, as found by the court, appellant was not maintaining the records. We are also of the view that the impugned orders directing pre-deposit of 50 per cent cannot be sustained.

After ascertaining the stand of the learned counsel for the appellant and also of the learned counsel for the respondent, both agree that the appellant can be given an opportunity to make good its contentions in the appeals and the matter be decided on merits, on the condition that the appellant will deposit a sum of Rs. 40 lacs in Central Excise Appeal No. 7 of 2014, read with Central Excise Appeal No. 12 of 2013, and a sum of Rs. 5 lacs in Central Excise Appeal No. 6 of 2014, read with Central Excise Appeal No. 11 of 2013, and, on deposit of the said sum, the matter can be heard on merits. In view of the circumstances and also the consent, which we hereby record, of both the appellant and the respondent through their counsel, we dispose of these appeals as follows:

"If the appellant deposits a sum of Rs. 40 lacs in Central Excise Appeal No. 7 of 2014, read with Central Excise Appeal No. 12 of 2013, within a period of three months from today, the impugned orders will stand set aside and the appeals will be heard and decided on merits.

Likewise, if the appellant deposits a sum of Rs. 5 lacs in Central Excise Appeal No. 6 of 2014, read with Central Excise Appeal No. 11 of 2013, within a period of one month from today, the impugned orders will stand set aside and the appeals will be heard and decided on merits.

If the amount of Rs. 40 lacs is not deposited within the time as mentioned above, Central Excise Appeal No. 7 of 2014, read with Central Excise Appeal No. 12 of 2013 will stand dismissed. Similarly, if the amount of Rs. 5 lacs is not deposited within the time as mentioned above, Central Excise Appeal No. 6 of 2014, read with Central Excise Appeal No. 11 of 2013 will stand dismissed."