Customs, Excise and Gold Tribunal - Mumbai
Bombay Dying And Mfg. Co. Ltd. vs Commissioner Of Central Excise on 3 August, 1999
Equivalent citations: 2000(67)ECC479, 2000ECR142(TRI.-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The facts leading to the present applications are as follows:--
2. In three different adjudication orders a total demand of Rs. 68,97,724 as duty was confirmed against the applicants and a total penalty of Rs. 2,10,000 was imposed upon them. The assessees then filed three appeals before the Commissioner of Central Excise (Appeals), Mumbai and also applications for waiver of pre-deposit of the sums and stay of recovery thereof. The Commissioner (Appeals) who heard them on their stay applications made the following order:--
2. I have considered the submission made by the appellant in the request for grant of stay/waiver of pre-deposit and also the findings contained in the Assistant Commissioner's order. Prima facie I find that, the issues involved for consideration are not entirely free from doubt and need to be examined at length on the basis of facts available on record and appellants submissions on facts and law which may be made by the appellants in support of their claim during appeal proceedings. I also find that while the appellants have led some evidences in claim for their plea on financial hardship. These evidences, however, do not add up to support their claim of acute financial hardship and for intervention under Section 35F of the Act by grant of stay against collection of duty. However, this aspect has been given some weightage while determining the quantum of pre-deposit under this section of the Act.
3. I accordingly, direct that, the appellant should deposit an amount equivalent to 50% of the disputed amount as pre-deposit of duties and penalties under requirement of Section 35F of the Act. On making a said deposit within the period of 15 days, the remaining amount of demand and penalty shall stand waived collection till the disposal of the case on merits, failing which the appeal petition shall be dismissed for non-compliance of the requirement of Section 35F of the Act.
3. The assessees did not comply with this order within the time-frame. It appears mat thereafter the Commissioner (Appeals) (a different individual) directed them to appear for personal hearing and heard them. He thereafter passed an order the relevant portion of which reads as follows:--
2. Personal hearing was granted to the appellant which was attended by Shri M.H. Patil, Advocate, Shri P.C. Sharma, Manager and Shri G.A. Shinde, Dy. Manager.
3. Since the appellant has not produced any evidence of proof of payment foi compliance with the direction given in this office stay order dated 11th January 1999, which is a primary requisite under the Law, once an order under Section 35F is issued. As such these appeals cannot be considered on merits. Hence the appeals stand dismissed for non-compliance of this office stay order dated 11th January, 1999.
Against this order the assessees have filed seven appeals and the present seven stay applications. The reason for filing more appeals than the number of contested orders was that the procedural requirements at the material time required one appeal to be filed per show cause notice.
4. In these stay applications the claim has been made that in each case the assessees had strong prima facie case on merits and that the assessees were passing through severe financial crisis due to extremely weak market conditions and other factors. In the main appeals it was claimed that the appeal was heard on merits but was dismissed for non-compliance of the earlier order. It is claimed that the Commissioner (Appeals)'s order on the stay application was a stereotype order. It was mechanically made without taking cognizance of the submissions made before him.
5. Shri M.H. Patil, learned Counsel arguing for the applicants, reiterated the submissions made. He submitted that on receipt of the order dated 11.1.1999 on their stay applications they had filed an application for reconsideration on 20.1.1999 the cognizance of which had been taken by the learned Commissioner. It is his submission that the assessees had very strong case on merits in all the three proceedings and that it was clear from the order itself that the learned Commissioner had passed an unreasoned order. He cited judgments of the Bombay High Court in the case of Ceat Limited v. Union of India and in the case of Velcord Textiles v. UOI and Ors. 1999 (31) RLT 363 vide which the Honble High Court had set aside the orders made by the Commissioner (Appeals) on the stay applications before them. On this ground he requested that the Tribunal give unconditional stay and waiver of the sums and hear the assessees on merits. On the financial hardship aspect he conceded that the financial accounts were not placed on records to support the contention that pre-deposit of the sums would amount to financial hardship.
6. We also heard Shri Deepak Kumar for the Revenue.
7. We have carefully seen the two judgments cited before us. In the Ceat case the government Counsel had himself admitted that the order was an unreasoned order. In the second judgment the Hon'ble Court observed that in the order impugned before them there was no reason given for refusing dispensation of pre-deposit. In the light of the judgments we have examined the order dated 11.1.1999. On perusal of the extract above and the reading of paragraph 2 thereof it would appear that before making this order the Commissioner had gone into issues involved for consideration as also the claim for financial hardship and had thereafter formed a prima facie opinion. To our mind this order cannot be called as an unreasoned order. At the stage of examination of the stay applications, the appellate authority is required to form a prima facie impression. It is not convenient nor necessary to go into the various aspects of the cases and the thought processes of the appellate authority leading to his prima facie conclusion. If that is required to be done then there would be no distinction between an order on the stay application and an order disposing of the appeal. We observe that even before us today no documents have been supplied to support the claim of financial hardship.
8. We have also seen the application dated 28.1.1999 filed by the assessees before the learned Commissioner (Appeals) seeking modification of the earlier order dated 11.1.1999. The assessees in this application have once again reiterated the merits of their case which no doubt were contained in their appeal memorandum and which no doubt were subjected to scrutiny by the learned Commissioner before making the order of which the review was sought. In fact the faint allegation is made in the modification application to the effect that the learned Commissioner had not considered either the facts or the law. The fact that he did not pass any order on this modification application needs deliberations by us.
9. It is claimed that the Commissioner (Appeals)'s act of not inviting them for hearing led them to presume that the modification application had been accepted by the learned Commissioner. In the absence of the letter summoning them for hearing in the appeal preferred before us, we are unable to divine as to the reasons for which the assessees were summoned by the Commissioner (Appeals). When the assessees were aware that in terms of para 3 of the order dated 11.1.1999 extracted above, their petition would be dismissed in the event of non-deposit, in the absence of any modification in writing, they were not entitled to presume that the Commissioner had withdrawn his earlier order.
10. The provisions of Section 35F require that the contested sums be deposited before the appeal is taken up for hearing. The proviso thereof in an exception to be used with caution. The provisions of Section 129 of the Customs Act which are akin to Section 35F of the Central Excise Act, 1944 were examined by the Supreme Court in the case of Navin Chandra Chhotelal v. CBEC . The Supreme Court observed that the appellate authorities were fully competent to reject the application where the provisions of this section were not complied. In another judgment Vijay Prakash D. Mehta and Jawahar D. Mehta v. CC (P) the Supreme Court held that the right to file an appeal was not an absolute right and therefore it could be circumscribed by certain conditions. In this situation where the appellate authority had passed an order after considering the relevant factors refusing to entertain the appeal unless the specified amount was deposited, such order could not be struck down.
11. In our finding above we have held that we did not find merit in the plea of the applicants that the order was an unreasoned one and that it was made without considering the various submissions made by the applicants.
12. In our opinion the assessees were wrong in holding that the orders passed by the appellate authority were bad in law and therefore not to be complied with.
13. We, therefore, are not inclined to accept the prayer for unconditional stay and waiver. Shri M.H. Patil at this stage submits that the applicants be permitted to secure the revenue by way of filing a bank guarantee. We have no objection. We direct the applicants to file a bank guarantee for 50% of the duty confirmed in the proceedings. On such guarantee being filed the pre-condition of deposit of penalty imposed in all the three orders shall be waived and its recovery stayed. The bank guarantee should be filed within one month from the date of receipt of this order.
14. The applicants are free to seek early hearing of the appeal in this situation.