Uptron India Ltd. vs Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi and others

H. N. Tilhari, J.—These three writ petitions arise from the order dated 26th October, 1993 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in the matters of applications Nos, 803 of 1993, 804 of 1993 and 805 of 1993, in Appeals Nos. E848 of 1993, E 849 of 1993 and E 850 of 1993 filed by Uptron India Limited as three writ petitions raised one and the same question of law and based on common findings. The three writ petitions are disposed of by one common judgment, a copy of which shall be placed in the other two as well.

These writ petitions raise short question of law relating to interpretation of Section 35F of the Central Excise and Salt Act, 1994.

The brief facts of the case are that from the orders passed by the Collector of Central Excise (Appeals), Allahabad, the three above mentioned appeals had been filed before the Tribunal under Section 35B of the Central Excise and Salt Act, 1944. The appellant alongwith the appeals moved an application for an order of dispensing with the requirement of deposit of duty demanded and penalty levied. The copy of that application had been annexed as Annexure No. 10 to the writ petition. By order dated 261093, contained in Annexure No. 13, passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, the Appellate Tribunal directed and the material portions of paragraph 5 of the order reads as under :

"Keeping in view the facts and circumstances of the case and prima facie merits of the case and liquidity position, we are of the view that ends of justice will be met if the appellants deposit Rs. 5,00,000/ (Rupees Five Lacs only) within three months from today. The appellants shall report compliance within four months from today. We further order that during the pendency of the appeal, the revenue authorities shall not pursue the recovery proceedings for the duty amounts. In; case the appellants fail to comply with the terms of this order, the stay order shall stand automatically vacated. The matter is listed for mention on 3rd March, 1994."

Feeling aggrieved from this order dated October 26, 1993 contained in o. 13, the petitioner Uptron India Ltd. has comeup before this Court under Article 226 of the Constitution of India and has filed the present writ petition.

Notice of this petition has been served on opposite parties 1 to 3 and on behalf of opposite parties 1 to 3 the Senior Central Government Standing Counsel on 711994, has accepted the service of the notice and the copies of the petition.

The short question before the Court is whether such an order could be passed under Section 35F and particularly the proviso thereof. The learned Counsel for the petitioner has contended that as Company would have suffered undue hardship on being required to deposit the duty demanded the Tribunal ought to have passed an order dispensing with the deposit of the duty demanded as required under the main provision of Section 35F. He submitted that in view of the provisions of the proviso to Section 35F of the Central Excise and Salt Act, 1944 the petitioner ought to have been completely exempted from making the deposit requisite under the main part or enacting part of that section and that there was no question of bifurcating the demand of duty.

Shri R. N. Trivedi submitted that power was given to dispense with the requirement from making of such deposit on the proof of condition precedent i. e. undue hardship and if that condition was shown to exist then the duty of the appellate authority was to be dispense with the deposit of the duties i. e. the duties imposed under the Act, pending the appeal and as well as further use of coercive methods against the petitioner i. e. the appellant Company He submitted that even the directions to the Company to deposit Rs. 5 Lacs, has got tendency of causing nothing but undue hardship. That on behalf of the opposite parties, the learned Senior Standing Counsel, Dr. Ashok Nigam submitted that the question of dispensing with the deposit can be made under and subject to conditions which the Tribunal may deem fit and proper and, therefore, if the Appellate Tribunal thereunder required the petitioner to deposit the sum of Rs, 5 Lacs within three months, it did not commit any error of law or jurisdiction because it was open to it to impose certain conditions and by compelling the appellant to deposit at least Rs. 5 Lacs within the aforesaid period mentioned in the order and that was done in the interest of

revenue. Dr. Nigam further submitted that if there was a mere case of dispensing with the deposit and not staying the further proceeding of recovery it could have been said that order requiring deposit of Rs. 5 Lacs is bad but as the appellate authority has further stayed the recovery proceedings, and so the order need not be interfered with & the petition should be dismissed. Dr. Nigam further submitted even it is open and it is in the discretion of Tribunal to dispense with deposit partly or fully as it is in its discretion to do as it thinks fit and proper to do in view of law laid down by the Supreme Court in the case Navin Chand Chhotey Lal v. E. & C. Central Board, New Delhi (AIR 1971 Supreme Court 2280),

I have examined and considered the contentions of the learned Counsel for the parties i. e. Shri R. N. Trivedi, learned Senior Advocate for the petitioner and Dr. Ashok Nigam, learned Senior Central Govt. Standing Counsel. Before I proceed to express any opinion in respect of any finding or matter involved in this petition, in my opinion, it will be just and proper to refer and quote Section 35F of the Central Excise and Salt Act, 1944 which reads as under :

"Section 35F Deposit, pending Appeal, of duty demanded or penalty levied

Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the Control of Central Excise Authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied ;

Provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of revenue."

A reading of section per se shows that under it there is a requirement of law whereunder the persons desirous of filing appeal against such decision or order of the Central Excise Authorities demanding the duty in respect of goods or penalty levied, shall, pending the decision of the appeal, deposit with the adjudicating authority the duty demanded and the penalty levied. The requirement of Section 35 is that the duty demanded shall be deposited with the adjudicating authority, not with the appellate authority. Proviso further provides the powers to appellate authority that if in the opinion of the appellate authority, the deposit of duty demanded or penalty levied would cause undue hardship to the person filing the appeal then the appellate authority or the Appellate Tribunal may and has been empowered to, dispense with such deposit and may pass an order for dispensing with such deposit subject to terms and conditions it deems fit and proper in the interest of revenue. The expression "Dispense with" ''Such deposit" is very material in. the proviso. "Such deposit'''' refers to the deposit of duty demanded or penalty levied and referred to in the main part of Section 35F. It means the deposit of the duty demanded and penalty imposed and required to be made with the adjudicating authority, can be dispensed with if such deposit would in the opinion of Tribunal cause undue hardship to the appellant. When the power has been conferred to dispense with such deposit, the provision has got to be interpreted that to mean and refer to the duty whatever may be demanded or penalty imposed. The proviso does not use "such a deposit or part of such deposit". Such deposit refers to the entire deposit which is to be made to adjudicating authority during the pendency of the appeal and in such a case it will necessarily amount to granting the stay of recovery of those amounts. The condition may be imposed but imposed of condition will not be such that will scrape down the scope of provision or the expression "such deposit" or otherwise limits of scope of "such deposit". The condition may be like the one calling appellant to furnish security or to terms as to furnishing of undertaking Bank guarantees to pay off or deposit the entire sum of duty or penalty or imposed within the specified period but it cannot be said that appellant should deposit 50% of sums demanded as duty levied or penalty.

If the arguments advanced by the learned Senior Standing Counsel to the effect that it is discretionary with the appellate authority to either dispense with the part of such duty of penalty or to dispense with the entire requisite deposit it will be entering into the field of legislative by adding some word in the language used by the legislation or part amount in the proviso itself and in that case it will have to be read either that the appellate authority or Tribunal may in its discretion dispense with such deposit either in full or in part or the expression used in the section has to be read as the appellate authority or Tribunal may dispense with such deposit or part of such deposit. Thus it would be adding some words in the language used by the legislature i.e. ''''such deposit" after the expression the expression "or part of such deposit" to be added. It is settled principle of law that while interpreting this Act it is (not) ? open to add the words or expression in this section, as may amount to the entering into the field of legislation allotted to the legislature, as such it is not possible to accept the contention of the learned Senior Standing Counsel Dr. Ashok Nigam. The case relied by Dr. Ashok Nigam is not applicable to the present case and is distinguishable. In Navin Chand Chhotey Lal v. E. & C. Central Board (Supra) the proviso to Section 129 of the Customs Act discloses that the Legislature has used very specifically the expression "it may in its discretion dispense with such deposit........ and their Lordships of the Supreme Court taking this expression in view in the above mentioned case have been pleased to observe "but in the Act by the proviso to subsection 1 of Section 129 which has been quoted above."

The discretion has been given to the appellate authority either to waive the deposit of entire amount of penalty or duty or to reduce the quantum to be so deposited......"So material distinction is that in the proviso under Section 129 of the Customs Act, Legislature has used very clearly the expression ''in its discretion'' while in the proviso to the Central Excise and Salt Act, 1944, this expression does not find place. It is trite principle of law that when power is given to do certain thing and certain conditions are prescribed in which that power is to be exercised or relief is to be given then if those conditions are shown to exist then it becomes the duty of the authority to grant that relief. Here the finding has been recorded by the appellate Tribunal that undue hardship is going to be caused to the appellant if they are required to deposit the duty demanded which in total comes to Rs. 26,29,550.00. Once this finding has been arrived at and has been recorded, the appellant became entitled to ask for and to be granted the relief of dispension of requirement of making such deposit i. e. deposit referred to in the principal or enacting clause of Section 35F of the Act & expression ''may'' there appears to have been used as empowering provision, empowering the Tribunal to grant the relief of dispension in the condition mentioned therein. It became, as such, its duty almost to grant that relief, may be subject to certain conditions but those conditions could not be of the nature as to completely scrape down the scope of expression ''such deposit'' which refers to deposit which the appellant is required to make under the principal clause or the principal enacting part of this section.

The learned Senior Standing Counsel further submitted that as recovery had been stayed that recovery proceedings shall remain stayed so the petitionerappellant was required to deposit Rs. 5 Lacs and as such this part of the order have not to be read as a part of order of dispensing with the deposit but is an order staying recovery. I am unable to accept this contention. When under the provision contained in the proviso, appellant is to be granted the relief, may be of temporary nature of dispension from such deposit being made by him and such deposit refers to the deposit referred to the principal clause of the section then if on one hand, petitioner or appellant is granted that relief that he is dispensed with from making the deposits of the duty assessed or fine imposed with the adjudicating authority on one hand and on the other hand, it is said that no recovery proceedings are yet open unless separate order is granted for which there is no separate provision. It may be tantamount to giving a relief on one hand and taking it by another. Such cannot be read to be the intention of the legislature. In this view of the matter I am unable to accept the contention of the learned Senior Counsel.

As accepting the said argument may lead also and amount to give the death blow to the developing Industries and, as such, in my opinion, that part of the order which requires the appellant to deposit the sum of Rs. 5 Lacs within three months appears to be bad i.e. the applicant is made to deposit Rs. 5 Lacs, in order to enable him to give the benefit of dispension order that condition imposed by the authority appears to be bad and illegal and without jurisdiction. This condition is separable from the order of dispension. As such, it is directed that the direction made by the appellate authority that the appellant should deposit Rs. 5 Lacs within three months shall be deemed to be inoperative and is hereby quashed. The other part of the order dispensing with the deposit of the duty to the tune of Rs. 26,29,550.00 shall remain operative and implied effect of dispension order is that no recovery shall be made from the petitioner during the pendency of the appeal and till final disposal of the appeal by the Appellate Tribunal. The hearing of the appeal may be expedited and it is expected that the Appellate Tribunal will expedite the hearing in the interest of revenue and shall see that the appeal is finally disposed of as early as possible and in every case within a period of four months from the date of production of the copy of this order either by the petitioner or by the Government Counsel or Counsel for the Department.