Truemake Ginning Machinery vs Union of India (UOI)

D.A. Mehta, J.—Heard Mr. P.M. Dave, the learned Advocate for the petitioners and Mr. R.M. Chhaya, the learned additional standing counsel on behalf of respondent, appearing on advance copy. RULE. For the reasons that follow hereinafter, the petition is taken up for final hearing and disposal today itself with the consent of the learned Counsel for the parties.

The petitioners prefered appeals before the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT) accompanied by applications seeking stay of demand. On 6-9-2004, CESTAT passed an order on the stay applications directing the petitioners to make a pre-deposit of Rs. 20 lakhs and report compliance on or before 10-12-2004. Admittedly, the petitioners complied with the said order and hence, the order of making further pre-deposit and recovery of further amounts was stayed in terms of the order dated 6-9-2004.

In light of the provisions of Section 35C(2A) of the Central Excise Act, 1944 (the Act), the respondent authority addressed a communication dated 19th September, 2005 (Annexure "D") calling upon the petitioners to pay up the pending amount immediately within three days of the letter. It is the case of the petitioners that, on receipt of the said communication on 27th September 2005, the petitioner realized that the stay order stood vacated by virtue of second proviso below Section 35C(2A) of the Act, and hence, had moved an application seeking extension of the stay. It is the case of the petitioner that the said application was prepared on 1st October, 2005, and dispatched through courier on 3rd October, 2005, The submission, therefore, on behalf of the petitioners is that, till the Tribunal decides the extension application, the petitioners may be protected against coercive recovery.

As against that, Mr. R.M. Chhaya contended that the total demand outstanding as on 19th September, 2005 was to the tune of Rs. 4.93 crores and except for pre-deposit of Rs. 20 lakhs, the petitioners had not made any further payment in light of the stay order of the Tribunal. However, as in terms of second proviso read with first proviso to Section 35C(2A) of the Act, as the Tribunal had not been able to dispose of the appeal within a period of 180 days, the stay order stood vacated and the respondent authority was entitled to pursue its remedy of recovery of outstanding dues in accordance with the provisions of the Act. Inviting attention to the conduct of the petitioner, it was submitted that equitable jurisdiction was being invoked by the petitioners, but they had failed to show that they were entitled to equity in the facts and circumstances of the case.

During the course of hearing, Mr. Dave on behalf of the petitioners has placed reliance on decisions of this Court rendered on 27-9-2004 in case of Mercury Laboratories Ltd. v. Union of India in Special Civil Application No. 10545 of 2004 and Shree Jagdamba Polymers Ltd. v. Union of India in Special Civil Application No. 10619 of 2004, to submit that, in similar circumstances, this Court has been indulgent enough to protect similarly situated assessees wherein extension application had been filed belatedly.

On 5-1-2005, the respondent authority collected four cheques totalling to Rs. 20 lakhs and the details thereof are available in communication at Annexure "F". They are as under:

Cheque No. & Date Amount

917884 dated 10-10-2005 5,00,000/-

917885 dated 17-10-2005 5,00,000/-

917886 dated 24-10-2005 5,00,000/-

917887 dated 31-10-2005 5,00,000/-

In the facts and circumstances of the case, the petitioners are directed to approach CESTAT and seek early hearing of the extension application. However, in the meantime, it will be open to the respondent authorities to encash each of the four cheques referred to hereinbefore on the respective dates, if the petitioners are not able to obtain extension of the stay order by the respective dates. The respondent authorities shall not encash any cheque after a simple copy of the order of CESTAT, if any, is presented before them by the time any of the four cheques becomes due on the respective dates.

Subject to the aforesaid direction, the respondent authorities shall not proceed with any coercive recovery till a period of eight weeks from today, and if the petitioners fail to procure and present before the respondent authorities a plain copy of the order on the extension application by end of eight weeks from today, followed by a certified copy, the respondent authorities would be free to pursue remedy of recovery in accordance with law.

The petition is allowed accordingly to the aforesaid extent. Rule made absolute to the extent indicated. There shall be no order as to costs.