Surtex India Ltd. vs Cestat

Ajay Kumar Mittal, J.—C.M. No. 31708-CII of 2012 : C.M. is allowed and the delay of 71 days in refiling the appeal is condoned.

CEA No. 51 of 2012

This appeal has been preferred by the assessee under Section 35G of the Central Excise Act, 1944 (in short, "the Act") against the order dated 13-12-2011 (Annexure A-1) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal") and for setting aside the orders dated 9-6-2009 (Annexure A-3) passed by Respondent No. 2 and dated 8-3-2010 (Annexure A-5) passed by the Tribunal.

A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee was issued Letter of Permission dated 22-3-1994 to establish a 100% Export Oriented Unit (EOU) for manufacturing and export of home furnishings. After completion of various formalities, the assessee imported capital goods valued at Rs. 6,24,94,390/-, raw material valued at Rs. 12.17 lacs and also procured raw material to the tune of Rs. 30.45 lacs from the market. After importation, the capital goods were installed in the EOU for manufacture of goods for export. The assessee also reported the date of commencement of commercial production on 1st April, 1998 to the Development Commissioner, in compliance with Condition No. 3 of Letter of Permission. This fact was admitted in the SCN dated 23-5-2002 issued by the Development Commissioner. On 25-8-1999, the Superintendent, Central Excise Range-II, Panipat visited the factory and found the unit running. By utilizing the imported capital goods imported raw materials and raw material procured from the local market, the assessee manufactured goods for export and goods valued at Rs. 63.80 lacs. The Development Commissioner vide letter dated 12-9-2002 ordered for cancellation of Letter of Permission. However, during the personal hearing on 26-11-2002, the Development Commissioner withdrew the order of cancellation of Letter of Permission and restored the EOU status. The approval for revocation of order of cancellation of Letter of Permission was conveyed to the assessee vide letter dated 3-12-2002. The appellant EOU was allowed in principle debonding vide letter dated 29-11-2002 on the ground to pay duty on goods, lying in stock or to export the same. Accordingly, the assessee worked out the duty liability of Rs. 12,15,599/- as per Para 5(a) of notification dated 3-6-1997 which provided the clearance of capital goods on payment of the amount equal to the customs duty leviable on such goods on depreciated value and the rate in force on the date of payment of such duty. The assessee deposited the liability of Rs. 12,15,599/- vide challan dated 31-1-2003 as custody duty on the depreciated value of the capital goods and informed the department in this regard vide letter dated 28-2-2003. The department issued a show cause notice dated 18-8-2004 for recovery of differential duty and interest and imposition of penalty. The assessee filed reply dated 29-10-2004 to the said show cause notice. The Commissioner vide order dated 29-11-2005 confirmed the duty and ordered recovery of interest and imposing penalties on the company as well as Directors Shri Surender Pal Singh and Ravinder Pal Singh. Feeling aggrieved, the assessee filed an appeal along with an application for waiver of pre-deposit before the Tribunal. The Tribunal vide interim order dated 16-3-2006 allowed the application and the pre-deposit of the remaining amount of duty and penalty was waived for hearing of the appeal. However, the Tribunal vide final order dated 22-1-2009 (Annexure A-2) set aside the order of the Commissioner and remanded the matter for de novo consideration keeping the issue open. The Commissioner vide order dated 9-6-2009 (Annexure A-3) confirmed the order dated 29-11-2005 except the interest liability. Being dissatisfied, the assessee filed an appeal along with stay application (Annexure A-4) before the Tribunal. The Tribunal vide order dated 8-3-2010 (Annexure A-5) directed the assessee to pre-deposit Rs. 1,00,00,000/- as a condition precedent for hearing of the appeal. The assessee filed an application dated 4-5-2010 (Annexure A-6) for modification of the order dated 8-3-2010 (Annexure A-5). The Tribunal vide order dated 13-12-2011 (Annexure A-1) dismissed the application. Thereafter, the department issued notice dated 15-10-2012 (Annexure A-7) to the assessee for recovery of arrears of customs duty. Hence, the present appeal.

Learned counsel for the appellant submitted that the liability has been illegally fastened on the appellant. It was urged that the requirement of Rs. 1,00,00,000/- as a pre-deposit as directed by the Tribunal was unfair and excessive under the circumstances.

Learned counsel for the Revenue opposed the prayer made by the learned counsel for the appellant and submitted that the amount as directed by the Tribunal was reasonable and justified.

The primary dispute that arises for consideration in this appeal relates to the quantum of pre-deposit to be made by the appellant as a condition precedent for the hearing of the appeal by the Tribunal. After hearing learned counsel for the parties and keeping in view the totality of the facts and circumstances of the case, a sum of Rs.30 lacs in addition to the amount already deposited, be deposited as a condition precedent for hearing of the appeal by the Tribunal which would meet the ends of justice.

The appeal stands disposed of accordingly.

A prayer was made by the learned counsel for the appellant to grant the time for pre-deposit. In the interest of justice, we allow the appellant to deposit the amount of Rs.30 lacs in addition to the amount already deposited, upto 30-6-2014. It is directed that if the appellant in the present case deposits the amount of Rs. 30 lacs as directed by 30-6-2014, the appeal shall be heard on merits by the Tribunal in accordance with law.