Karnataka High Court
M/S. Bpl Sanyo Utilities And Appliances ... vs Union Of India And Others on 17 March, 1999
Equivalent citations: 1999ECR68(KARNATAKA), 1999(108)ELT621(KAR), ILR1999KAR3380, 2000(1)KARLJ612
ORDER
1. By this petition, the order dated 31-1-1999 passed under Section 35-F regarding waiver of pre-deposit and the stay of recovery of excise duty have been assailed. The Writ Petition No. 3696 of 1998 which was filed, came to be disposed of, on 7-12-1998, A contention was raised that the order passed by the Assistant Commissioner of Central Excise dated 13-11-1998 is against the principles of natural justice and the documents were not confronted nor attention of the petitioner was drawn and the writ petition be entertained. This Court found that the Appellate Authority has the jurisdiction to entertain the appeal even in those cases where the principles of natural justice have been violated and since the matter has to be examined on the basis of record and correspondence, the petitioner was directed to file an appeal. The application for stay was also directed to be disposed of within two weeks from the date of the submission of copy of judgment. The Commissioner of Customs and Central Excise (Appeals) considered the various questions raised by the petitioner including those documents which were relied on by the adjudicating authority and a copy of which was not provided. It is observed that, these documents are internal office documents and the existence/authenticity of these documents has not been disputed. It was found that a prima facie case in favour of the Assistant Commissioner supported by documentary evidence under the provisions of law has been made out. Since the issues to be examined involve complicated question of fact and the intricacies of inter company dealings belonging to one group, a detailed examination at the stage of disposal of the appeal was considered necessary. It was found that the order of the Assistant Commissioner is not void ab initio. The financial difficulties has also been taken into consideration and it was directed that the petitioner should deposit a sum of Rs. 4,50,00,000/- (Rupees Four Crores Fifty Lakhs only) out of the total demand of Rs. 9,10,98,179/- within 90 days from the date of receipt of the order.
2. Learned Counsel for the petitioner has drawn my attention to the order of the Assistant Commissioner dated 13-11-1998, wherein at para 27 of the order, it was found that these documents are internal documents and not new to them and the same have been considered in the said case as the issue being finalisation of provisional assessment, a show-cause notice was issued to the petitioner along with five documents referred therein. Assessable value was sought to be fixed at the price at which the goods are sold by BPL to their Dealers. Reliance is placed on the judgment given in the case of State of Uttar Pradesh v Mohammad Nooh , wherein, it was observed that, "If an inferior Court or Tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior Court's sense of fair play the superior Court may, quite properly exercise its power to issue the prerogative writ or certiorari to correct the error".
It is stated that the order passed in violation of principles of natural justice is a nullity and can be ignored with impunity. Reliance is placed on the judgment given by Madras High Court in the case of Nuwood Private Limited, Madras v Superintendent of Central Excise. Reliance is placed on the judgment in Aluminium Corporation of India v Union of India and Others, wherein, it was observed that if the reliance is placed on some report, without providing an opportunity to the company to explain or to make its comment, then, it cannot be considered to be a fair hearing. A fair hearing means a hearing which is adequate for the purposes of bringing before the officer who makes the decision all the relevant submissions pertaining to the case. If fresh factual evidence is brought in, and it is likely to influence the decision, a fresh hearing should be given.
3. Much reliance is placed on the judgment given in Sangfroid Remedies Limited v Union of India, wherein, it was observed that, if no notice is served and opportunity is not given by the Assessing Authority, the payment of duty determined cannot be insisted upon. The company was found to be a sick Industry as well. In the case of Sri Krishna v Union of India, it was found that the Tribunal is obliged to adhere the question of undue hardship. If the appellant had prima fade strong case, likely to exonerate him from payment of duty, the Tribunal cannot insist upon the deposit of the amount as it would put to undue hardship.
4. On behalf of the respondent, learned Senior Standing Counsel for the Department drawn ray attention towards the finding given by the adjudicating authority at page 7 of Annexure-D, dated 13-11-1998, wherein, it was mentioned:
"It was pointed out to them that any document relied upon, if it is from their own company need not be shown to them as the same is available with them".
Mutuality of interest was stated not existing in reply thereof.
5. I have considered over the matter.
6. Reliance is also placed on the judgment given in State Bank of Patiala and Others v S.K, Sharma, wherein, affording a reasonable and adequate opportunity to an employee was considered a procedural provision, violation of which, cannot be said to automatically vitiate the enquiry held or order passed. Distinction was drawn between the cases of no opportunity/no hearing and that of the procedural irregularity. It was found that it has to be seen as to whether any prejudice is caused or not.
7. In M/s. Auma (India) Limited v Union of India, it was observed by this Court, a judicial discretion must be exercised to find out whether prima facie case has been made out by the petitioner. Reliance was placed in this case in the judgment given in Union of India v Kamlakshi Finance Corporation. In M/s. Wipro Infotech Limited v CEGAT, it was observed that in the matter of interim order it has to be seen whether the discretion has been exercised judicially or it is palpably erroneous and unjust. In V.I.T. Sea Foods v Collector of Customs, mandate of Article 265 of the Constitution were kept in view and it was observed that existence of prima facie case on merits constitutes an important relevant factor in consideration of question of undue hardship to deposit of an amount directed to be paid by the Appellate Authority and refusal to grant the stay does not amount to whittling down the right to appeal. Dispensation of application to depositing the amount in case of undue hardship is to be exercised on relevant materials, honestly, bona fide and objectively as held in Vijay Prakash D. Mehta and Jawahar D. Mehta v Collector of Customs (Preventive), Bombay .
Order partially dispensing with pre-deposit was held valid in Sunshine India Private Limited v Customs.
The observations of Kerala High Court in the case of M/s. Rubicon v Collector of Central Excise, were admitted to the effect that the words 'undue hardship' are germane in considering the application for stay and not while dealing with the application under Section 35-F.
8. In Appropriate Authority and Another v Smt. Sudha Patil and Another , it was observed by the Apex Court that the finding of the Tribunal can be interfered with, if the High Court comes to the conclusion that in arriving at the conclusion the Tribunal has failed to consider some relevant materials or has considered some extraneous and irrelevant materials or that the finding is based on no evidence or the finding is such that no reasonable man can come to such a conclusion on the basis of which the finding has been arrived at.
At this stage, it is only the disposal of the stay application for waiver of pre-deposit is to be considered. Any observations made therein are only tentative and do not affect the merits of appeal which has to be decided on the basis of the relevant evidence, case law, in regard to documents, arguments which both the parties may raise at that stage.
Even the contention which has been raised is that there was a breach of principles of natural justice, factual aspects are involved in it. This Court has already directed in the order dated 7-12-1998 that the point has to be considered by the Appellate Authority. It is not necessary to examine the arguments regarding breach of principles of natural justice, at this stage, because, considering the same for or against will effect the decision of the Appellate Authority where all questions would be raised.
9. The petitioner was served with a show-cause notice and the proceedings amended therefrom. The liability of duty which has been fixed by the adjudicating authority has to be examined by the Appellate Authority, for the purpose of stay, the order of which has been challenged in this petition. The observations of the Apex Court in the case of Assistant Collector of Central Excise, Chandan Nagar v Dunlop India Limited and Others, are also relevant, wherein, it was observed that, "There are, of course, cases which demand that interim orders should be made in the interests of justice. Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the bounden duty of the Court to intervene and give appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen's faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason that that the parties have come to the Court alleging prejudice, can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. We often wonder why in the case of indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all be given to the manufacturer, dealer and the like".
10. The fact of each individual case has to be examined. No hard and fast rule can be laid down. The contentions raised by the petitioner before the Appellate Authority while arguing the stay application were duly considered and there was no failure of justice. The balance has to be drawn between the assessee and the revenue. Prima facie, balance of convenience, irreparable injury and public interest are the factors which have been held worth consideration. Balance sheet of the company has not been submitted along with the petition nor the Appellate Authority has dealt with this aspect except the aspect of financial stringency raised was considered. The Appellate Authority found that 50% of the payment has to be deposited within 90 days. The order passed in regard to waiver of pre-deposit and stay is no doubt a discretionary order but the discretion has to be taken judicially.
Looking to the facts and circumstances of the case, I direct that the petitioner may deposit 40% of the demand, i.e., Rs. 3,60,00,000/- within the period ordered by the Commissioner of Central Excise and Customs (Appeals).
Writ petition stands disposed of with the above observation.