Delhi High Court
Natraj Plast Industries Ltd. vs Commissioner Of Central Excise on 17 September, 2010
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CEAC Nos.10, 11, 12, 13, 14 & 15 of 2009
% Decision Delivered On: 17th September, 2010.
1) CEAC No.10/2009 & CM No.18884/2009
NATRAJ PLAST INDUSTRIES LTD. . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
2) CEAC No.11/2009 & CM No.18896/2009
DINESH KUMAR GUPTA . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
3) CEAC No.12/2009 & CM No.18906/2009
SUNIL MITTAL . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
CEAC No.10 of 2009 Page 1 of 9
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
4) CEAC No.13/2009 & CM No.18908/2009
GAURAV GUPTA . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
5) CEAC No.14/2009 & CM No.18910/2009
ADITYA PLASTIC . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
6) CEAC No.15/2009 & CM No.18912/2009
ADITYA PLASTIC . . . Appellant
through : Ms. Seema Jain with Ms.
Manpreet Sethi and Ms. Savita
Singh, Advocates
VERSUS
COMMISSIONER OF CENTRAL EXCISE . . .Respondent
CEAC No.10 of 2009 Page 2 of 9
through: Mr. Mukesh Anand with Mr. R.C.S.
Bhadoria and Mr. Sailesh Tiwari,
Advocates.
CORAM :-
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether Reporters of Local newspapers may be allowed
to see the Judgment?
2. To be referred to the Reporter or not?
3. Whether the Judgment should be reported in the Digest?
A.K. SIKRI, J. (ORAL)
1. All these appeals arise out of common proceedings, which was
triggered on the issuance of show cause notice dated 02nd
January, 2007 alleging that M/s. Natraj Plast Industries Ltd. had
availed the CENVAT Credit wrongly and illegally. It is not
necessary to go into the details thereof. Keeping in mind the
controversy involved in these appeal, suffice is to state that after
eliciting reply to these appellants who were served with show
cause notice and giving them hearing, the Commissioner, Central
Excise, Delhi passed the Order-in-Original dated 31.03.2008 for
recovery of wrongly availed CENVAT Credit as well as penalties on
all these appellants. In addition, recovery of interest in respect of
alleged illegally availed CENVAT Credit by M/s. Natraj Plast
Industries was ordered. All these appellants preferred appeals
before the Customs Excise & Service Tax Appellate Tribunal
(hereinafter referred to as „the Tribunal‟) under Section 35B of the
Central Excise Act, 1944 (in short „the Act‟). Along with the
appeals, the appellants preferred applications for stay as well
against the Order-in-Original passed by the Commissioner of
Central Excise with request that the condition of pre-deposit of
duty and penalty under Section 35F of the Act be dispensed with
and appeal be heard without any such pre-deposit. It was also
stated by M/s. Natraj Plast Industries in its appeal that a sum of
`20 lakhs have already been deposited before the issuance of
show cause notice. These applications were taken up together
and orders were passed on 19.05.2008. As per these orders, the
appellants were directed to make a further deposit of `40 lakhs in
addition to the amount already deposited, within a period of eight
weeks. The last paragraph of that order containing direction,
reads as under:
"6. It is also submitted by applicant that `20 lakhs has
already been deposited by the applicant. In view of the
fact the inputs, on which credit is availed, are cleared
without payment of duty, we find it is not a fit case for
waiver of duty. After taking into consideration the facts
and circumstances and financial hardship into the
account, applicants are directed to make a deposit an
amount of ` forty lakhs in addition to the amount had
already been deposited, within a period of eight weeks.
On deposit of above-mentioned amount, the pre-deposit
of remaining amount of duty and penalty are waived.
Compliance reported on 17th November 2008."
2. The appellants challenged this order of pre-deposit by filing Writ
Petitions in this Court. These writ petitions were dismissed vide
orders dated 14.11.2008. However, at the same time, for making
payment of `40 lakhs, further period of three months was granted
to the appellant. The appellants deposited the said amount with
the respondent within the period granted by this Court. There was
a delay of three days in depositing a sum of `3 lakhs out of the
aforesaid amount, which was condoned by the Tribunal itself.
3. The narration of the aforesaid facts would disclose that the orders
dated 15.09.2008 passed by the Tribunal on pre-deposit have
been complied with.
4. When the matters came up for hearing before the Tribunal on
08.07.2009, the appellants were confronted by the Tribunal with
altogether different circumstance. It was pointed out by the
Tribunal that in its orders dated 15.09.2008, no directions
regarding waiver of interest amount were given and, therefore,
the appellants were required to deposit the entire interest as per
the directions of the Commissioner in the impugned Order-in-
Original. The counsel for the appellant took adjournment on that
date stating that he had no instruction in the matter. Case was
adjourned to 22.7.2009 on which position remained the same.
The matter was again adjourned to 21.08.2009. As on that date
nobody appeared on behalf of the appellants, the Tribunal
dismissed all the appeals on the ground that there was no
compliance of Section 35F of the Act, insofar as orders regarding
pre-deposit of interest are concerned. These orders are
challenged by means of the instant appeals and following two
questions of law are raised for determination:
(a) Whether the Tribunal Committed an error in
dismissing the appeal of the appellant, in spite of the
appellant having complied with the stay order of the
Tribunal?
(b) Whether the Tribunal was right in dismissing the
appeal of the appellant for failure to deposit interest,
when there was no direction to deposit interest in Stay
Order?
5. We admit these appeals on the aforesaid two questions. We have
also heard the matter finally with the consent of the counsel for
the parties.
6. Relevant portion of the order of the Tribunal on the stay
application/waiver of pre-deposit has already been extracted
above. It is clear from the reading of the order that the Tribunal
had directed the appellants to make a deposit of further sum of
`40 lakhs (in addition to the amount of `20 lakhs, which had
already been deposited). It was clearly stipulated in the order
that "on deposit of above-mentioned amount, the pre-deposit of
remaining amount of duty and penalty are waived". No doubt in
that order, remaining amount of duty and penalty is waived and
order does not expressly states anything about the interests.
However, at the same time, it is also to be noticed that no specific
direction is given in the said order in respect of directing the
appellants to deposit the interest. Therefore, any reasonable
person reading the aforesaid order can have legitimate
expectation that on depositing of `40 lakhs, no further amount is
directed to be deposited vide impugned Order-in-Original. We
may emphasize that this was an order on an application for waiver
of pre-deposit inasmuch as, as per the provisions of the Act,
unless the amount is deposited, the appeals preferred by the
appellants could not be heard. It is because of this reason, stay of
the impugned Order-in-Original passed by the Commissioner was
sought and the appellants wanted complete waiver of pre-deposit.
In that backdrop, when the aforesaid order is read whereby the
appellants were directed to deposit `40 lakhs, the intention
becomes clear, viz., the appeals of the appellants would be heard
on merits on deposit of `40 lakhs.
7. Be as it may, it is not even necessary to venture into the
implications of the aforesaid orders. It is because of the reason
that provisions under Section 35F of the Act are clear and explicit
in this behalf. Section 35F reads as under:
"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 [
Commissioner (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 [
Commissioner (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 :
[Provided further that where an application is filed
before the Commissioner (Appeals) for dispensing with
the deposit of duty demanded or penalty levied under the
first proviso, the Commissioner (Appeals) shall, where it is
possible to do so, decide such application within thirty
days from the date of its filing.]
[Explanation.--For the purposes of this section
"duty demanded" shall include,--
(i) amount determined under section 11D;
(ii) amount of erroneous CENVAT credit taken;
(iii) amount payable under rule 57CC of Central Excise
Rules, 1944;
(iv) amount payable under rule 6 of CENVAT Credit Rules,
2001 or CENVAT Credit Rules, 2002 or CENVAT Credit
Rules, 2004;
(v) interest payable under the provisions of this Act or the
rules made thereunder.]"
8. Explanation inserted in this Section clearly states that for the
purpose of this Section "duty demanded would also include
amount payable under the provisions of the Act or the Rules made
thereunder". It is for this reason that the provisions provide is for
waiver of duty demanded or penalty levied. It does not mention
about the "interest" at all insofar as stay of interest component is
concerned, that is taken care of in the explanation. Once there is
a stay of "duty demanded", the interest payable under the
provision of the Act for the Rules would also be stayed.
9. There is yet another aspect, which has lost sight of by the Tribunal
while passing the impugned Order-in-Original dated 21.08.2009
dismissing the appeal. As per the Order-in-Original, interest is
demanded only from M/s. Natraj Plast Industries Ltd. on the
purported wrong availment of CENVAT/MODVAT Credit. There was
no interest payable by other appellants. Therefore for alleged
non-payment of interest, appeals of other appellants in any case
could not have been dismissed.
10. We, thus, answer both the questions in the affirmative holding
that the Tribunal erred in dismissing the appeals of the appellants.
Consequently, the impugned Order-in-Original dated 21.08.2009
passed in case of all these appellants is set aside. The appeals
are restored to their original numbers. The Tribunal shall hear
these appeals and decide the same on merits.
11. Learned counsel for the respondent, at this stage, requests that
direction should be given to the Tribunal to decide the appeals in
a time bound period. It is not necessary to give any such
direction. However, we hope and expect that the appeals shall be
decided as expeditiously as possible.
12. Party shall appear before the Tribunal on 18th October, 2010.
(A.K. SIKRI)
JUDGE
(MANMOHAN SINGH)
JUDGE
SEPTEMBER 17, 2010
pmc
