Santogen Export Ltd vs The Commissioner Of Central ...
2017 Latest Caselaw 6418 Bom

                                                  23-CEXA-188-2015.DOC




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       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
            ORDINARY ORIGINAL CIVIL JURISDICTION


           CENTRAL EXCISE APPEAL NO. 188 OF 2015



 1. Santogen Exports Ltd.
 A Company registered under the
 Companies Act, 1956 having its office at
 Tex Centre, N. 402 / 403, 4th Floor, 26-A,
 Chandivali, Saki Vihar Road, Andheri (E),
 Mumbai - 400 072.                                       ...Petitioner

         Versus

 1. The Commissioner of Central Excise,
 Raigad having his office at 4th Floor,
 Utpad Shuil Bhavan, Plot No.1, Sector-17,
 Khandeshwar, Navi Mumbai 400 206.                  ...Respondent


 Mr. Prakash Shah, with Mr. Jas Sanghvi, i/b PDS Legal for
      Appellant.

                               CORAM:   A.S. OKA &
                                        RIYAZ I. CHAGLA, JJ.

DATE : 21ST AUGUST 2017.

O R A L J U D G M E N T :- (Per Riyaz I. Chagla J.)

1. The Appellant by the present Appeal is challenging

order dated 15th June 2015 passed by the Customs, Excise

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& Service Tax Appellate Tribunal, West Zonal Bench at

Mumbai (in short "Appellate Tribunal") by which the Appeal

filed by the Appellant was held to be not maintainable as the

Appellant had not deposited 7.5% as required under Section

35F of the Central Excise Act, 1944 ( in short "the Act") and

the Appeal was dismissed.

2. The Appellant is a 100% Export Oriented Unit ("EOU")

having its factory at village Tambati, Tal. Khalapur, Dist.

Raigad, inter alia engaged in the manufacturing Terry Towels.

The Appellant had been issued licenses under Section 58 of

the Customs Act, 1962 for operating bonded warehouse and

permission under Section 65 of the Customs Act 1962 for

carrying out "in bond manufacturing" in the said warehouse.

The Central Government vide Notification No. 8/97-C.E.

Dated 1st March 1997, as amended, exempted the finished

products, rejects and waste or scrap specified in the schedule

to the Central Excise Tariff Act, 1985 (5 of 1986) and

produced or manufactured, in a 100% EOU wholly from the

raw materials produced or manufactured in India and allowed

to be sold in India as specified in the said Notification. The

23-CEXA-188-2015.DOC

Appellant filed declaration claiming benefit of the said

Notification dated 1st March 1997 as amended. The Appellant

submitted requisite details of Terry Towels to the

Superintendent of Central Excise, Range - Khopoli - II.

Show Cause-cum-Demand notices were issued to the

Appellant for recovery of alleged deferential Excise Duty. The

Appellant by letter dated 5th January 1998 submitted a

detailed reply to Show Cause-cum-Demand Notice dated 4th

September 1997. The Assistant Commissioner of Central

Excise, Khopoli adjudicated the show cause notices and vide

orders dated 24th March 1999 decided the case and held that

the invoice price was available and the invoice value was

acceptable for DTA sale by 100% EOU. The order held that

the Notification did not debar the use of imported

consumables provided the other conditions of the said

notification was satisfied and the benefit under the said

Notification was allowed. The demands of differential Central

Excise Duty were accordingly dropped. The department

preferred an Appeal before the Commissioner (Appeals)

against the order-in-original. The Commissioner (Appeals) by

order dated 19th June 2000 dismissed the department's

23-CEXA-188-2015.DOC

Appeal and upheld adjudicating authority's orders-in-original

dated 24th March 1999. The department preferred one

Appeal before the Appellate Tribunal (although two Appeals

had been disposed off by the Commissioner (Appeals)) and

the Appellate Tribunal by order dated 5th August 2008 set

aside the finding of the authorities below and held that the

product is a consumable and not a raw material and remitted

the case to the adjudicating authority for fresh decision.

Since the Appellate Tribunal had remanded the proceedings,

without indicating that the remanded proceedings will be

restricted in relation to only one order-in-original, the

Appellant filed an application for rectification of mistake in the

said order. The Appellate Tribunal dismissed the application

for rectification of mistake. The Appellant was unable to

appear at the personal hearing fixed before the adjudicating

authority on account of a lock out and requested for

adjournment. On the date when the Commissioner of Central

Excise granted a personal hearing, the notice of the hearing

dated 22nd February 2010 had not been received by the

Appellant. The Commissioner of Central Excise, Raigad, by

exparte order-in-original dated 31st March 2010 confirmed

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the total demand of Rs. 2,57,55,014/- in respect of 11 show

cause notices issued for the period between February 1997

to November 2000 against the Appellant along with interest.

Further penalty was imposed of an equal amount of

Rs.2,57,55,014/- under the Central Excise Rules, 1944. The

ICICI bank, JVPD, Vile Parle Branch, Mumbai transferred an

amount of Rs.36,57,904.50 from the Appellants account to

the Commissioner Account, Central Excise towards recovery.

The Appellant upon coming to know of the order-in-original

requested the Commissioner to send the copy of the said

order-in-original.

3. Being aggrieved by the said order-in-original passed by

the Respondent, the Appellant preferred an Appeal before the

Appellate Tribunal along with an application for waiver of pre-

deposit. A show cause notice was issued by the Appellate

Tribunal to the Appellant informing the Appellant that the

transferred amount of Rs.36,57,904.50 to be treated as the

pre-deposit amount for the purpose of the Appeal preferred

by the Appellant was insufficient. The Appellant submitted

that the transfer which was appropriated towards the dues of

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151.87 lakhs was in excess of the amount required to be

deposited i.e. 7.5% of the amount recoverable under Section

35F of the Act. The Appellate Tribunal after hearing the

Appellant dismissed the Appeal holding that the Appellant

had not deposited 7.5% amount as required under Section

35F of the Act and that the Appeal is not maintainable.

4. The learned counsel appearing for the Appellant has

submitted that the deposit of 7.5% amount under Section 35F

of the Central Excise Act had been complied with as the

amount of Rs.36,57,904.50 had been transferred by ICICI

bank towards the recovery and which amount was sufficient

to meet the requirement of pre-deposit. The learned counsel

appearing for the Appellant has therefore, submitted that the

impugned order has erroneously disregarded the said

amount which had been transferred towards the recovery

and held that no deposit amount of 7.5% is required under

Section 35F of the Act.

5. We have considered the submissions of the learned

counsel appearing for the Appellant. We observe that the

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total amount recoverable by the Respondent is a sum of

Rs.6,65,65,049/- and the amount recoverable for which the

present Appeal had been filed comes to a sum of

Rs.5,15,10,018/-. The Deputy Commissioner of Central

Excise had appropriated the amount of Rs.36,57,904.50

towards the recoverable dues of Rs.151.87 lakhs which is

apparent from the internal letter issued in May 2015 (Exhibit

R to the Appeal). We are of the view that the Respondent

always has discretion to appropriate the amount recovered

against particular dues. We find that the Appellate Tribunal

has justifiably considered that for the amount of

Rs.5,15,10,018/- is recoverable for which the concerned

Appeal had been filed by the Appellant before the Appellate

Tribunal, no amounts had been appropriated. We are also of

the view that from the total amount recoverable of

Rs.6,65,65,049/- for the period 2005 till 2010, only a sum of

Rs.36.58 lakhs had been recovered. We find no infirmity in

the impugned order which has held that since the amount of

7.5% has not been deposited as mandated under Section

35F of the Central Excise Act, the Appeal is not maintainable

and accordingly dismissed.

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6. We accordingly dismiss the present Appeal with no

order as to costs.

       (RIYAZ I. CHAGLA J.)            ( A.S. OKA, J.)