Eicher Motors Limited vs Union Of India And Ors.
1992 Latest Caselaw 251 Del

JUDGMENT

B.N. Kirpal, J.

(1) The challenge in this writ petition is to the order passed by the Customs, Excise and ld (Control) Appellate Tribunal who have directed that on the petitioner depositing a sum of Rs. 8 Lakhs there will be stay of realisation of pre-deposit of the duty amounting to Rs. 23,17,959.24 and penalty of Rs. 7 Lakhs, and have further directed that the appeal would be heard on the payment of the said amount of Rs. 8 Lakhs .

(2) Briefly slated the facts are that the petitioner is a manufacturer of motor vehicles. The petitioner manufactures and supplies chassis to the body builders. These chassis are supplied after the excise duty has been paid and clearance obtained from the department. The body builder manufactures complete bus by fabricating the body on the chassis and, after paying a duty of Rs. 8,400.00 , returns the bus to the petitioner. The petitioner carries out inspection of the said bus and thereafter the same is sold to various customers.

(3) The excise authorities, apart from recovering duty on the chassis manufactured by the petitioner and a fixed duty on the bus manufactured by the body builder, also demanded a duty of Rs. 8,400.00 from the petitioner at the time when it sold the bus to its customers and the vehicle was removed from its premises. The amount demanded by way of duty from the petitioner was Rs. 23,17,959.24 and, in addition thereto, a penalty of Rs. 7 Lakhs was also levied.

(4) Against the order passed by the Collector of Central Excise, Indore, an appeal was filed to the aforesaid Tribunal and a prayer was made for dispensing with a pre-deposit of the aforesaid duty and penalty. It was contended before the Tribunal, in support of the petitioner's application for grant of stay, that full amount of duty had been paid on the vehicle and, as no further duty was payable by the petitioner itself, the requirement of pre-deposit should be dispensed with and the realisation of the demand stayed.

(5) The Tribunal vide its order dated 27th february, 1991, observed that the merits of the case are contentious and arguable and it would not be proper for the Tribunal to make any observation on the merits as the matter was subjudice. It then observed that keeping in view the totality of the facts and circumstances of the case the petitioner herein should deposit a sum of Rs. 8 Lakhs.

(6) The grievance of the petitioner before us is that it was incumbent upon the Tribunal to have examined whether the demand raised by the excise authorities against the petitioner was at all justified. The contention of the learned counsel for the petitioner is that the excise authorities are Realizing double the amount of duty. According to the learned counsel no further duty than what has already been realised by the excise authorities from the petitioner and the body builder, was payable.

(7) At the outset it has been contended by Mr. Lokur that this Court has no jurisdiction to entertain this petition. The submission of the learned counsel is that Article 323B of the Constitution of India bars the entertaining of any petition when a Tribunal has been set up under the said Article. The learned counsel submits that in the present case the Tribunal which has been set up is one under Article 323B and, furthermore, section 35C(4) specifically states that the orders passed by the Appellate Tribunal on appeal shall be final. Mr. Lokur also relies upon the observations of the Supreme Court in the case of S.P. Sampath Kumar v. Union of India and others, , and contends that the jurisdiction of the High Court is completely oust.

(8) In our opinion there is no merit in the aforesaid contention. Article 323B no doubt contemplates the creation of tribunals by proper legislation and under sub-article (3), the law which is framed under Article 323B(1) can provide for the exclusion of jurisdiction of all courts except the jurisdiction of the Supreme Court under Article 136 of the Constitution. In the present case, however, the Tribunal has not been constituted under a law framed under Article 323B. The Tribunal has been set up by making appropriate amendments in Chapter Via of the Central Excises and Salt Act, 1944. Under section 35B appeals have been provided to the Appellate Tribunal.

(9) There is no provision in this Act which oust the jurisdiction of the High Court. When section 35-C(4) provides that the orders passed by the Tribunal on appeal are final, it only means that unless and until those orders further challenged either by way of reference or a writ petition, the said orders are final and binding. Section 35-C(4) cannot be so construed as ousting the jurisdiction of the High Court. In fact the legislature has enacted the Customs and Excise Revenues Appellate Tribunal Act, 1986. The preamble of this clearly states that it has been enacted in pursuance of Article 323B of the Constitution. Furthermore, section 26 of the said Act specifically excludes the jurisdiction of all courts except the Supreme Court of India. This Act, however, has not come into operation so far. As and when this Act is made operative the jurisdiction of the High Court will be ousted in relation to those matters which are covered by the said Act. The enactment of this Act clearly shows that with the setting up of the Appellate Tribunal under section 35B of the. Central Excise Act the jurisdiction of the High Court was not ousted.

(10) The decision of the Supreme Court in Sampath Kumar's case (supra) has no application here. Sampath Kumar's case was dealing with the setting up of the Administrative Tribunals which were constituted under Article 323A of the Constitution. That Act specifically ousted the jurisdiction of the High Court, similar to section 26 of the 1986 Act. Sampath Kumar's case is therefore, clearly distinguishable. It was then submitted by Mr. Lokur that this Court has no territorial jurisdiction to entertain this writ petition. In support of his contention he has relied upon the decision of a Division Bench of this Court in Seth Banarsi Dass Gupta v. Commissioner of Income-tax, Delhi, 2nd (1978) Ii Delhi 1. The submission of Mr. Lokur is that as the Collector of Excise which has jurisdiction over the petitioner is in Madhya Pradesh, therefore, this Court has no territorial jurisdiction to decide this writ petition. We cannot agree with this submission. Banarsi Dass's case (supra) was dealing with the problem as to which court should hear a reference made under section 66 of the Income-tax Act, 1922. It was in those circumstances that the court held that a reference would be heard by the High Court who has jurisdiction over a Commissioner of Income-tax who is one of the parties to the reference. On the other hand, in order to decide the question of jurisdiction of a High Court hearing a writ petition what has to be seen are the provisions of Article 226 of the Constitution.

(11) Article 226(1) clearly stipulates that writ petition can be filed, inter alia, before a court within whose territory the authorities whose orders are sought to be challenged arte situate. The grievance of the petitioner is against the order passed by the Tribunal at Delhi. Therefore, apart from the fact that the Union of India itself is situated in Delhi, as the impugned order is passed in Delhi, this court has territorial jurisdiction to hear this writ petition. It was then submitted by the learned counsel for Union of India that on merits the petitioner has no case. According to Mr.Lokur after the body builder builds the body the bus comes back to the premises of the petitioner who inspects the same, carries out tests and then sells it to the customers. The learned counsel submits that ownership in the bus always remains with that of the petitioner and when the ownership is transferred and the delivery of the vehicle is made, then the petitioner is liable to pay the duty of excise on the bus.

(12) On a query raised by us it has been admitted by the learned counsel for the respondents that excise department has, in the present case, received excise duty from the petitioner on the chassis manufactured by it. In addition thereto it has also received excise duty from the body builder. The total sum of the two excise duties so received is not less than the excise duty which would have been payable by the petitioner if the petitioner itself had carried out all the operations. In other words, by the petitioner manufacturing the chassis and getting the body built by another manufacturer, who also pays tax on the body so manufactured, excise department has not lost any revenue. It the respondents stand is correct the effect would be that the respondents would be Realizing more revenue than what would have been payable by the petitioner if it had carried out all the operations itself. This is for the reason that the respondents want to realise from the petitioner, once again, duty under item 87.02 at the rate of Rs. 8,400.00 per motor vehicle. This duty has in fact been paid by the body builder.

(13) We are conscious of the fact that the Tribunal has observed, in the impugned order, that it has not applied its mind to the merits of the case. The aforesaid observations have been made by us only to show that the petitioner has a strong prima facie case. In our opinion, when an order on a stay application is passed by the Appellate Tribunal, the same should not be lightly interfered with by a Court under Article 226 of the Constitution. Even though this Court has jurisdiction to hear petition against such orders, it must be on rare occasions that the Court should interfere with an interlocutory order. We are in full agreement with the principles for interference with interlocutory orders laid down by a Division Bench of this Court in Escorts Limited v. Union of India. 1991 (52) E.L.T. 27, and would like to reiterate that hardship alone should not be a criterion for interfering under Article 226 of the Constitution. What is important, while exercising jurisdiction under Article 226, is that in addition to Financial hardship, the petitioner should also make out a good prima facie case. In the present case, we are satisfied that the Tribunal has failed to exercise its jurisdiction properly. It overlooked the fact that there was considerable merit in the contentions of the petitioner. This circumstance should have been .kept in view while deciding the stay application. The petitioner could have been put to other terms, but we see little justification in requiring the petitioner to deposit a sum of Rs. 8 lakhs by way of pre-deposit especially when revenue authorities have admittedly realised the entire excise duty which would have been payable if all manufacturing operations have been carried out by the petitioner itself.

(14) For the aforesaid reasons this writ petition is allowed. Order dated 27th February, 1991, passed by the Tribunal is quashed and it is directed that the petitioner need not deposit any further amount of excise duty or penalty as a condition to the hearing of its appeal. The Tribunal should hear and dispose of petitioner's appeal on merits without insisting on pre-deposit of the duty and penalty.

(15) There will be no- order as to costs.