Vijay Plas Fabs (P) Ltd. vs Cestat, Chennai

K.B.K. Vasuki, J.—All the writ petitions are filed for identical relief to quash the Final Order dated 22-6-2006 in Final Order Nos. 528 to

531/2006 and to consequently direct, the first respondent to restore to hear the appeal on merits without insisting upon the pre-deposit upon duty

and penalty.

The order under challenge, the nature of the relief sought for and the facts based on which the relief sought for and the issue involved in all the

four writ petitions are one and the same as such the common order is being passed in all the four writ petitions.

The petitioner is engaged in the manufacture of HDPE/PP circular Woven Socks and articles of plastics falling under Chapter 39 of the Central

Excise Tariff Act and is eligible to avail the benefit of CENVAT credit of duty paid on the inputs and capital goods for the period 2000-2001 and

the assessee was as par Rule 8 of Central Excise Rules permitted to pay the duty on fortnightly basis. As there was some default on the part of the

petitioner to pay duty, the petitioner is by order dated 31-1-2001 passed by the Deputy Commissioner of Central Excise, barred from availing the

facility of payment of duty on fortnightly basis and he was directed to pay the duty in Account-Current. According to the petitioner, he is as per

Central Excise rules permitted to utilise CENVAT credit for the payment of duty on clearance of the final product and as the petitioner was during

the relevant point of time in acute financial problem the demand was complied with from and out of CENVAT credit account and not through

personal ledger account. However, the petitioner was issued with show cause notice under Rule 8 of Central Excise Rules thereby treating the

payment of duty out of CENVAT credit account as in contravention of Central Excise duty rules and treating the petitioner as defaulter in payment

of duty and the petitioner was demanded to pay duty of Rs. 13,74,365/- paid through CENVAT credit account. The petitioner has duly replied

the show cause notice thereby explaining in detail as to how the payment of duty CENVAT credit account is proper as per amended rules and as

to how no penal provision can be attracted by reason of his having discharging his liability by utilising CENVAT credit account. Not accepting such

contention raised on the side of the petitioner, the Deputy Commissioner of the Central Excise who is original adjudicating authority passed the final

order-in-original numbers 22 to 25/2004 on the same date an 26-10-2004, thereby confirming the duty liability in addition to imposing penalty on

the petitioner company of Rs. 11,07,635/-.

Aggrieved against the same the petitioner filed separate appeals before the first respondent who is the first appellate authority. The petitioner has

filed the appeals along with two applications one to dispense with the pre-deposit of duty and penalty as required u/s. 35F of Central Excise Act

and other petition to stay the operation of the order of the adjudicating authority. The 1st respondent entertained the appeals along with the

petitions and has passed orders which according to the petitioner is without giving notice to the petitioner company, thereby directing the petitioner

company to pre-deposit 50% of the duty confirmed by the adjudicating authority within four weeks as pre-condition to waive pre-deposit and to

stay recovery in respect of the penalty amount and the balance amount of duty and the applications stood adjourned to report compliance to 22-6-

2006 and the same is followed by Final Order on 22-6-2006 in and under which the appeals are dismissed for non-compliance of the conditional

order with regard to pre-deposit of 50% amount as required u/s 35F of the Central Excise Act. The final order so passed on 22-6-2006 in all the

four appeals by the 1st respondent/first appellate authority are now challenged in these four writ petitions.

According to the learned counsel for the petitioner, the orders impugned herein thereby dismissing his appeals for failure to make pre-deposit of

50% of the duty amount as per the order which is passed ex-parte without notice to the company without considering the prima facie case and

balance of convenience in favour of the petitioner company amounts to failure to properly exercise the discretion vested in the first appellate

authority. It is further contended, by the learned counsel for the petitioner, that when the original order of assessment itself is under serious

challenge before the first appellate authority on the ground that the duty amount is already paid through CENVAT credit account, the condition

imposed to pay 50% of the duty amount is onerous and is amounting to double payment. It is also argued by the learned counsel for the petitioner,

that the correctness and the validity of the original orders are for the first time challenged before the first appellate authority on merits in the light of

judgment of the Bombay High Court in Lloyds Steel Industries Limited Vs. Union of India (UOI), which supports the main claim of the petitioner.

According to the learned counsel for the petitioner when there are conflicting decisions on the same issue the claim made by the petitioner requires

thorough examination and any condition to pay 50% of the amount to entertain the appeal filed against the same will render the petitioner''s right to

avail the statutory remedy not meaningful and ineffective, and the conditional order in the absence of strong prima facie case in favor of the revenue

and in spite of the payment of duty by the petitioner through CENVAT account cannot be allowed to stand.

Per contra, the learned standing counsel for the respondent Customs department would oppose the reliefs sought for in these writ petitions, both

in law and on facts. The main legal objection raised on the side of the respondents is that the writ petitions are not maintainable without exhausting

the statutory remedy provided u/s. 35G of the Central Excise Act to High Court. The respondents has also filed detailed counter as to how the

order passed by the lower appellate authority and the circumstance set out therein, are proper and justified. The learned standing counsel for the

respondent has drawn the attention of this court through the entire order impugned herein as per which the petitioner was duly sent notice by the

lower appellate authority for the hearing on the date on which the conditional order was passed and the notice was returned unserved as addressee

is not available and the lower appellate authority has by referring the same and by observing that it is for the petitioner to Intimate the change of

address proceeded to pass orders in the absence of the petitioner and on the failure of the petitioner to make his due appearance to report

compliance, the final order was passed by dismissing the appeals for non-compliance of the conditional order as contemplated u/s. 35F of the Act.

Heard the rival submissions made on both sides.

Both the learned counsel for the petitioner as well the standing counsel for the respondents cited authorities for and against their respective

contention raised on both sides. But as the maintainability of the writ petition on the ground of alternative remedy is seriously questioned before this

court this court is inclined to first dispose of the maintainability issue. The learned counsel for the petitioner has cited catenna of judgments in

support of his argument that the writ jurisdiction can be invoked not withstanding the availability of alternative remedy which are (1) ITC Ltd. and

Another Vs. Union of India (UOI) and Others, (2) Thressiamma Vs. Union of India (UOI), in Thressiamma v. Union of India; (3) Collector of

Central Excise, Meerut Vs. Modi Rubber Ltd., (4) 2007 (215) E.L.T. 500 (Tri-LB) in Noble Drugs Ltd. v. Commissioner of C.Ex., Nasik; (5)

National Oxygen Limited Vs. Commissioner of Customs, in National Oxygen Ltd. v. Commissioner of Customs, Chennai; (6) Union of India

(UOI) Vs. Classic Credit Ltd., and (8) 2009 (242) E.L.T. 321 (Bom.) in Samruddhi Industries v. CESTAT, Mumbai.

Whereas the learned standing counsel for the respondent has by relying upon the latest judgment of the Supreme Court reported in Raj Kumar

Shivhare Vs. Assistant Director, Directorate of Enforcement and Another, , seriously argued that the Supreme Court on identical situation

dismissed the writ petition with liberty given to the appellant to file the statutory appeal along with application to condone the delay with further

direction to the appellate authority to consider the question of limitation sympathetically having regard to the provisions of Sec. 14 of the Limitation

Act. The learned counsel for the respondents has drawn the attention of this court to various observation laid down by the Supreme Court in the

matter of entertaining the writ petition without exhausting the appeal remedy. Though the case dealt with by the Supreme Court arises under

FEMA Act the order challenged before the Supreme Court is the order directing the appellant to make pre-deposit and the writ petition was

dismissed on the ground of territorial jurisdiction and the order was challenged before the Apex Court. The Apex Court has suo moto entertained

the issues relating to the availability alternative remedy and has proceeded to deal with the matter and finally dismissed the writ petition. The

Supreme Court has in unequivocal terms held that only under exceptional circumstances as laid down in para 42 of the judgment of the Supreme

Court i.e., when there is complete lack of jurisdiction and violation of rules and principles of natural justices or when the Tribunal acted under

provision of law which is declared as ultra vires the High Court can exercise jurisdiction not withstanding the availability of alternative remedy and

in other cases High Court should refuse to entertain the writ petition. As the relevant provision of law in the case dealt with by the Supreme Court

is para material the same in the present case the observation of the Supreme Court that no writ petition can be entertained, when there is alternative

remedy is applicable to the present case in equal force. On this score alone the relief sought for in this writ petition has to necessarily fail.

However, it is submitted on the side of the petitioner that as the Appellate Tribunal to which further remedy lies itself is High Court the petition

need not be dismissed in toto and in order to enable the petitioner to file fresh appeal along with application to condone delay etc., the present writ

petition can be returned for being converted into CMA and the same may be after suitably converted so posted before the appropriate bench

constituted for disposal of tax matters and if such course Is adopted no serious prejudice Is likely to be caused to the department/revenue. In my

considered view, the submission so made appears to be just and reasonable particularly in view of the fact that the writ petition is filed within the

period of limitation i.e., 180 days as specified u/s. 35G of Central Excise Act to prefer further appeal before the appellate Board.

Thus in order to safeguard the interest of both the parties and to give a quietus to the litigation which is pending from 2006 the writ petition is

ordered to be returned for being converted as CMA for disposal as per law.

In the result, the writ petition is directed to be returned for being converted into CMA u/s. 35G of the Central Excise Act and for being posted

for disposal before the appropriate Bench.