Jharkhand High Court
M/S Bharat Ingots And Steel Co. (P) ... vs Union Of India Through The ... on 30 January, 2023
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P (T) No. 5708 of 2022
M/s Bharat Ingots and Steel Co. (P) Ltd. --- --- Petitioner
Versus
1. Union of India through the Commissioner of
Central Excise and Service Tax, Jamshedpur.
2. Assistant Commissioner, Central Excise,
Jamshedpur Division-III, Jamshedpur. --- --- Respondents
---
CORAM: Hon'ble the Acting Chief Justice
Hon'ble Mr. Justice Deepak Roshan
---
For the Petitioner: M/s. Sumeet Gadodia, Ranjeet Kushwaha,
Aakansha Mittal, Prakash Narayan, Advs.
For the Respondents: Mr. Amit Kumar, Advocate
---
06/30.01.2023 Heard learned counsel for the parties.
2. The writ petition was preferred with the prayer to quash the
order in original no.24-25/Commissioner/2022 dated 28.10.2022 passed by
the respondent no.1 (Annexure-10). Petitioner contended that this was the 3rd
order in original passed in relation to the same period December 2001 to
October 2006 on the basis of the show-cause notice dated 19th March 2007
that petitioner had suppressed production of MS Ingots and clandestinely
removed the goods without payment of excise duty. The adjudicating
authority relied upon the technical opinion report of productivity of Induction
Furnace prepared by one Dr. N.K. Batra of IIT, Kanpur and reports of All
India Induction Furnace Association.
3. After the first round of adjudication, petitioner went in appeal
and the order was remanded to the original authority vide appellate order
dated 10th December 2008 (Annexure-5). Once again the adjudicating
authority passed an order in original upholding the same demand which was
then taken in appeal to learned CESTAT, Kolkata and decided vide order
dated 28th November 2017 (Annexure-8). The order of learned CESTAT,
Kolkata reads as under :-
"1. All the appeals have been filed by the appellants against the
different Order-in-Original and Order-in-Appeal for the different
period, but issue in all the appeals is identical, hence, all the
appeals are disposed of by this consolidated order for the sake of
convenience.
2. The brief facts of the case are that the appellants are
engaged in the manufacturing of M.S. Ingot and alike products. On
the basis of the informant, the consumption of electricity was
checked which found on higher side. So, a case of clandestine
removal was made out against each assessee. Aggrieved by the
same, the appellants have filed the present appeals.
3. Regarding pre-deposit M/s. Bharat Ingot Steel Co. (P) Ltd.,
Bhalotia Mild Steel Pvt. Ltd., Kama Steel Pvt. Ltd., Makers Casting
India Pvt. Ltd., Shree OM Metals Ltd. and Union Enterprises the
appellants have approached the Hon'ble Calcutta High Court. The
Hon'ble Calcutta High Court has set aside the Tribunal's Order
demanding the pre-deposit. Being aggrieved, the department has
filed appeal before the Division Bench, where neither any stay nor
any interim order has been passed. Let it as may be.
4. With this background we heard both sides and perused the
appeal record.
5. After hearing the lengthy arguments, it appears that
Adjudicating Authority has relied on the technical opinion report
submitted by Late Shri N.K. Batra, who is no more and cannot be
cross-examined for the reasons given in his report. In the instant
cases, there is no other evidence except electric consumption to
support the charge of clandestine removal.
6. When it is so then we set aside all the impugned orders and
remand to the Adjudicating Authority for denovo assessment by
collecting the corroborative evidence but by providing reasonable
opportunity to the appellant/assessee. Fresh evidences, if any, may
be admitted as per law.
7. In the result, the appeals are allowed by way of remand."
4. Petitioner contends that even after the second remand the
adjudicating authority has once again upheld the same demand vide the
impugned order in original (Annexure-10) relying upon the report of Dr. N.K.
Batra. Therefore, petitioner has been compelled to approach this Court.
However, on being confronted with the presence of an alternative remedy
under Section 35G of the CEA 1944, petitioner has sought waiver of pre-
deposit through I.A. No.11581 of 2022. Petitioner unit is closed since 20 th
September 2006 as per the statements made at para-13 and its registration has
also been surrendered. It is contended that the financial position of the
petitioner as submitted before the learned CESTAT in Appeal Application
No.E/435 of 2010 for financial years 2006-07, 2007-08 and 2008-09
(Annexure -1A-1 to the IA) clearly shows that the profit and loss statement is
running in minus Rs.71,22,565.21 for the financial year 2008-09. Learned
counsel for the petitioner has also referred to the findings of the adjudicating
authority in the impugned order in original at paragraph-3.3 and 3.5 which are
extracted hereunder :-
"3.3 I find that the calculation of manufacture of excisable goods
viz M S Ingots has been done in the show cause notices on the basis
of consumption of electricity @ 1000 units per MT of M S Ingots
manufactured. The noticee stated that their consumption of
electricity for one MT of production of M S Ingots is 2000-2200
units. There is auxiliary consumption of units which includes
consumption of electricity for pump house, bundling machine,
labour quarters, staff colony, plant lighting, industrial man coolers,
pollution control equipments, welding machines, cranes for
dispatches etc., water filtration system, exhaust fans and blower
fans. However, these activities are not unique to the noticee. They
are to be found in other units as well. They are general in nature
and have been taken care of in the Technical Opinion Report of Dr.
N K Batra of IIT, Kanpur. The noticee's contention that the said
report is based on the process adopted in USA/Russia and not in
India, specially in Jharkhand, is not acceptable because I am of the
opinion that the report has taken into consideration all the factors
prevalent in India including the erratic supply of electricity. The
report has taken 555 units to 1026 units of electricity for
production of 1 MT Ingots but the show cause notice has taken the
upper figure of 1000 units, to take care of any possible eventuality.
.....................
3.5 On examination of the evidence given in the show cause
notice, I find that the Jharkhand State Electricity Board authorities
were maintaining the "Report of Load Survey Data" which
provides details of half hourly consumption of electricity of various
units. The said report for the month of August, 2005 was procured
by the investigating team. The report when examined in the context
of daily production report of the noticee indicates that there was nil
recorded production in their Daily Production Register (Daily
Stock Account), a statutory document, even when the flow of
electricity was continuous as on other days when production was
shown. For instant, on 15.08.2005, 16.08.2005 and 26.08.2005,
there was no recorded production but the electricity consumed was
as usual. The noticee has not contested this specific allegation, in
their defence reply, which shows that they consumed substantial
quantity of electricity to manufacture excisable goods but did not
account for the same in their books of account. The Department
has shown specific evidence, which has not been refuted by the
noticee. Therefore, I do not find merit in the argument of the
noticee that the allegations have been made on the basis of
assumptions and presumptions."
5. It is submitted that the adjudicating authority also did find that
the last report of electricity consumption is of August 2005 and on
15.08.2005, 16.08.2005 and 26.08.2005 there were no recorded production
but the electricity consumed was as usual. At para-3.7 of the impugned order
the assessing authority has gone on to record despite clear direction of learned
CESTAT that there is no end to investigation and whatever investigation was
conducted by the department in the instant case is sufficient to prove the
allegation of showing less production of MS Ingots and the resultant evasion
of Central Excise duty.
6. Learned counsel for the petitioner submits that there is a
requirement of pre-deposit under the amended Section 35F of the Central
Excise Act introduced w.e.f. 6th August 2014. It is submitted that the amended
provision does not allow waiver of pre-deposit before the appellate authority
or learned CESTAT. Therefore, petitioner on grounds of extreme financial
hardship has invoked the jurisdiction of this Court under Article 226 of the
Constitution of India to allow waiver of pre-deposit so that the appeal can be
decided on merits by learned CESTAT.
7. Learned counsel for the petitioner has relied upon the decision
rendered by Coordinate Bench of this Court in the case of Satya Nand Jha
Vrs. Union of India & Ors, reported in 2016 SCC Online Jhar 2323,
para-19 and 21. It is submitted that the special leave petition preferred by the
petitioner was dismissed by the Apex Court vide order dated 7 th November
2016 in Special Leave to Appeal (Civil) No.31297/2016. Reliance has also
been placed upon a decision of Delhi High Court rendered in the case of
Shubh Impex Vrs. Union of India & Ors. reported in 2018 SCC Online Del
8793, para-8 where the learned court had, considering the financial condition
and background of the petitioner, waived the pre-deposit however subject to
payment of Rs.5,00,000/- for preferring an appeal before the learned CESTAT.
Learned counsel for the petitioner submits that the total demand is of Rs.12.50
crores. Petitioner is not in a position to deposit 10% of the total demand for
preferring an appeal before the learned CESTAT. Therefore, he may be
granted relief, so far as the waiver of pre-deposit is concerned, in exercise of
the power under Article 226 of the Constitution of India in the circumstances
in which the petitioner is placed. It is submitted that the requirement of pre-
deposit was waived by learned Calcutta High Court vide order dated 24th
April 2014 in the appeal preferred against the 1st order in original passed in
W.P. 1007(W) of 2014 (Annexure-7).
8. Learned counsel for the respondents has opposed the prayer on
the limited plea of waiver of pre deposit relying upon the decision of Kerala
High rendered in W.P.(C) No.25453/2021 judgment dated 24 th March 2022,
para-8 and 9 and also the decision of this Court rendered in the case of Raj
Jaiswal Vrs. Union of India & Anr. W.P.(T) No.532 of 2020 and other
analogous cases, judgment dated 31st July 2020.
9. Learned counsel for the petitioner has distinguished the decision
rendered by this Court in the case of Raj Jaiswal by relying upon the
observations made by this Court at para-12 of the judgment. It is submitted
that in the case of Raj Jaiswal there was no separate prayer for waiver of pre-
deposit and moreover the plea was based upon the financial hardship of the
Director Gyan Chand Jaiswal who had expressed his financial difficulty in
making pre-deposit in all the three appeals. There was no material or
document to support inability of the petitioner company to make mandatory
pre deposit.
10. We have considered the submissions of learned counsel for the
parties on the limited plea of waiver of pre deposit now being pressed through
I.A. No.11581/2022 since there is an alternative remedy of appeal before the
learned CESTAT against the impugned order in original under Section 35B of
the CEA. It is true that the amended provisions of Section 35F do not permit
of any waiver. The vires of the aforesaid provision has been upheld by this
Court in the case of Satya Nand Jha (supra). This Court however has also
held that waiver of pre-deposit can be allowed in extreme cases in exercise of
writ jurisdiction under Article 226 of the Constitution of India by holding at
para-19 and 21as under :-
"19. We are not in agreement with this contention also, mainly for
the reason that in such extreme cases always the assessees can take
recourse to the writ jurisdiction under Article 226 of the Constitution
of India. Few extreme cases will not make the substituted Section 35F
of the Act, 1944 unconstitutional. All care can be taken with respect to
such types of cases under Article 226 of the Constitution of India.
"Ubi jus, ibi remidum" - where there is wrong, there is remedy.
Exceptional assessee can always take shelter of writ jurisdiction,
otherwise, section itself has waived 92.5% or 90% of the deposit of
the tax and has compelled only for 7.5% or 10% of the duty demanded
or penalty imposed to be deposited. The newly substituted Section 35F
of the Central Excise Act, 1944 is more than reasonable in
comparison to earlier provision of Section 35F. It appears that now a
days it has become a fashion to challenge even those provisions,
which are more than reasonable, in the court of law and these
petitions are not exception to this trend.
..................
21. Thus, in extreme cases, the assessee-petitioner can take
recourse under Article 226 of the Constitution of India.
(xi) It has been held by Hon'ble Supreme Court in the case
of State of Tripura V. Manoranjan Chakraborty, reported in
(2001) 10 SCC 740, at paragraph nos.3 & 4 as under:-
"3. As we see it, the point in issue is no longer res integra.
This Court in Gujarat Agro Industries Co. Ltd. v. Municipal
Corpn. of the City of Ahmedabad dealing with an analogous
provision, where discretion to waive pre-deposit was limited
only to the extent of 25 per cent of the tax, was upheld by this
Court. To the same effect is the decision of this Court in Shyam
Kishore v. Municipal Corpn. of Delhi.
4. For the reasons contained in the said decisions, we
hold that the impugned provisions are valid. It is, of course,
clear that if gross injustice is done and it can be shown that for
good reason the court should interfere, then notwithstanding
the alternative remedy which may be available by way of an
appeal under Section 20 or revision under Section 21, a writ
court can in an appropriate case exercise its jurisdiction to do
substantive justice. Normally of course the provisions of the
Act would have to be complied with, but the availability of the
writ jurisdiction should dispel any doubt which a citizen has
against a high-handed or palpable illegal order which may be
passed by the assessing authority." (Emphasis Supplied)
11. The opinion of the learned Coordinate Bench of this Court in Satya
Nand Jha holds good till date. It further appears that Delhi High Court has also
taken a similar view in the case of Shubh Impex (supra). Exercise of
discretionary power under Article 226 of the Constitution of India is made to
remedy extreme cases where the statutory provision does not permit of any
exception. In the present case the petitioner unit is closed since 20.09.2006. The
profit and loss statement enclosed as Annexure-1A-1 to the I.A. shows that for
three consecutive financial years 2006-07, 2007-08 and 2008-09 the same is
running in losses. The impugned demand is to the extent of Rs.12.50 Crores. The
pre-deposit of 10% would come to Rs.1.25 crores which this Court finds would
be onerous for the petitioner unit which is closed since 20th September 2006 to
furnish in order to effectively avail of the remedy of appeal before learned
CESTAT. It is the 3rd round of litigation. The case of Raj Jaiswal are
distinguishable on facts from the present case as has also been pointed out by the
learned counsel for the petitioner. Moreover, the judgment of Kerala High Court
has not taken into consideration the decision of this Court in the case of Satya
Nand Jha (supra). However, we do not wish to make comments on the merits of
the case of the parties. On being satisfied with the circumstances urged by the
petitioner, the requirement of pre-deposit of 10% of the duty and penalty
imposed or both for preferring appeal before learned CESTAT is waived. I.A.
No.11581/2022 stands allowed. The writ petition is disposed of. I.A.
No.10569/2022 for stay is closed.
(Aparesh Kumar Singh, A.C.J)
Shamim/ (Deepak Roshan, J)
