Custom, Excise & Service Tax Tribunal
Shardha Synthetics Pvt Ltd vs Commissioner Of Central Excise on 10 June, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II Appln.No.E/S/1081 & 1082/10 APPEAL No.E/955 & 956/10 (Arising out of Order-in-Appeal No.YDB/121&122/M-II/2010 dated 26/02/2010 passed by Commissioner of Central Excise & Customs (Appeals), Mumbai) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.R. Chandrasekharan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Shardha Synthetics Pvt Ltd., Sushil Kumar Beswala Appellants Vs. Commissioner of Central Excise, Respondent Mumbai Appearance:
Shri.Gajendra Jain, Advocate for appellant Shri.K. Lal, SDR, for respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical) Date of Hearing : 10/06/2011 Date of Decision : 10/06/2011 ORDER NO Per: Ashok Jindal
1. The appellants have filed these appeals against the impugned order wherein the appeals of the appellants were dismissed for non-compliance with the stay order passed by the Commissioner (Appeals).
2. The facts of the case are that the appellants are the manufacturer of excisable goods, i.e., readymade garments. During the course of their manufacturing activity, the appellants purchased yarn, thereafter the yarn is sent for processing into grey fabrics. The grey fabrics were further sent for processing for finished fabrics, thereafter, the appellants used to make readymade garments. In the process of their manufacturing of readymade garments, sometimes the appellants purchases yarn, some cases they purchases grey fabric and sometimes finished fabrics, and thereafter readymade garments were manufactured, which were finally exported. The appellants were also availing Cenvat credit on inputs i.e., yarns/grey fabrics/finished fabrics. The appellants were operating under the provisions of Rule 12B of the Central Excise Rules, 2002, which was omitted by Notification No.11/04-CE (NT) dated 09/07/2004. Therefore, the appellants are neither entitled to take credit on yarn/grey fabrics for utilizing the same towards the clearances of grey finished fabrics or finished fabrics and allowed to pass on such credit in respect of the above inputs received on or after 09/07/2004 or from their customers. Therefore, a show-cause notice was issued for the period 09/07/2004 to 31/03/2006 on 28 March 2008.
3. The said show-cause notice was adjudicated and demands were confirmed for wrong availment of Cenvat credit along with interest. A penalty of equivalent amount was also imposed under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944, on the appellants and a penalty of Rs.10 lakhs was also imposed on Shri Sushil Kumar Beswala, Director of the appellants firm. An amount of Rs.23,84,368/- of the rebate was also confirmed under Section 11A(1) of the Central Excise Act, 1944. The said order was appealed by the appellants before the first appellate authority.
4. The appellants were directed through stay order dated 21/01/2010 by the first appellate authority to make a pre-deposit of 50% of taxes and 50% of penalties, which the appellants failed to comply with, therefore, their appeals were dismissed for non-compliance of the stay order. Aggrieved by the said order, the appellants are before us.
5. The Ld. Counsel for the appellants submitted that the appellant was operating under the provisions of Rule 12B of Central Excise Rules, 2002, which was admittedly omitted by Notification No.11/04-CE (NT) dated 09/07/2004 and the appellants are filing their returns regularly by availing the Cenvat credit and clearing their goods on payment of duty or under bond thereafter they have filed rebate claims, which have been sanctioned by the department. Therefore, the demands by invoking the extended periods are not sustainable. He further submitted that the appellants are having a strong case in their favour on merit also apart from limitation.
6. In view of his submission, he further submitted that as the first appellate authority have not considered their submissions while passing the stay order, the same is not a speaking order. Therefore, the order of pre-deposit could not be complied with . The lower appellate authority have not considered the merits of the case. Hence, after waiving of pre-deposit, the matter be sent back to the Commissioner (Appeals) to pass an order on merits as well as on limitation.
7. On the other hand, Shri K.Lal, SDR appeared on behalf of the Revenue and fairly admitted that the impugned order has not been passed on merits but have been passed only for non-compliance of the stay order directing pre-deposit. He further submitted that the Commissioner (Appeals) has considered all the submissions made by the appellants, thereafter he has asked for to make a pre-deposit of 50% taxes and 50% penalties. Therefore, this Tribunal while considering their stay applications have to consider the norms laid down by the Honble High Court of Andhra Pradesh in the case of CCE, Guntur Vs. Sri Chaitanya Educational Committee, reported in 2011 (22) STR 135 (AP) and the appellants be asked to make a pre-deposit and on such pre-deposit the matter be sent back to the Commissioner (Appeals) for a decision on merits.
8. Heard both sides.
9. On careful consideration of the submissions made by both sides and after going through the decision of the Honble High Court of Andhra Pradesh in the case of Sri Chaitanya Educational Committee (supra), we find that the Honble High Court has laid down the guidelines for dealing the stay application, which are re-produced here as under:-
From the judicial decisions analysed as above, the following principles would emerge which have to be kept in mind while considering the applications for stay or for dispensing with the requirement of pre-deposit under Section 35F of the Central Excise Act, or under Section 129E of the Customs Act, or other similar provisions.
(1) The applications for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand;
(2) Three aspects to be focused while dealing with the applications for dispensing of pre-deposit are : (a) prima facie case, (b) balance of convenience, and (c) irreparable loss;
(3) Interim orders ought not to be granted merely because a prima facie case has been shown;
(4) The balance of convenience must be clearly in favour of making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the interest of public revenue;
(5) While dealing with the applications twin requirements of consideration i.e., consideration of undue hardship, and imposition of conditions to safeguard the interests of revenue have to be kept in view;
(6) When the Tribunal decides to grant full or partial stay, it has to impose such conditions as may be necessary to safeguard the interests of the revenue. This is an imperative requirement; and (7) An appellate Tribunal, being a creature of the statute, cannot ignore the statutory guidance while exercising general powers or expressly conferred incidental powers.
10. The guidelines laid down by the Honble High Court of Aandhra Pradesh are applicable to all the authorities while considering the stay applications. These guidelines are binding of the Commissioner (Appeals), also who failed to follow the same while passing the stay order. Therefore, after going through the said guidelines, we find that the stay order with a direction to the appellants to make a pre-deposit of 50% of taxes and 50% of penalties passed by the first appellate authority is an order in routine manner unmindful of the consequences. We have considered the submissions made by the Ld. Advocate and find that the impugned order is not on merits, the stay application has been dealt with without giving any findings to the submissions made by the appellants in their stay application. Therefore, we find that prima facie, the appellants are having a strong prima facie case on limitation and balance of convenience is also in favour of the appellants. We also feel that if the appellants were directed to make any pre-deposit, then the appellants shall suffer irreparable loss. Therefore, after following the guidelines laid down by the Honble High Court of Andhra Pradesh in the above cited case, we find that the appellants have a strong prima facie case in their favour. Therefore, we grant unconditional waiver of pre-deposit.
11. We have also seen that the Honble Finance Minister in the conference of Chief Commissioners have expressed concern over avoidable litigations with the taxpayers but the impugned order is against the concerns expressed by the Honble Finance Minister.
12. As we consider that the impugned order is not passed on merits, therefore after waiving the pre-deposit, we are of the opinion that the appeals can be disposed at this stage. Therefore, the appeals were taken up for final disposal as agreed by both sides.
13. As discussed above, the impugned order deserves no merits, therefore, we remand back these appeals to the Commissioner (Appeals) to pass a speaking order on merits as well as on limitation after considering all the contentions raised by the appellants in their appeals without insisting any pre-deposit.
14. With these observations, the stay applications as well as the appeals are disposed of by way of remand.
(Pronounced in Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) pj 1 2