Madhya Pradesh High Court
M/S Shree Marwal Sewashram Through ... vs Customs Excise And Service Tax on 22 March, 2018
Author: P.K. Jaiswal
Bench: Virender Singh, P.K. Jaiswal
10 (W.P. No.18996/2017
HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
D. B.: Hon'ble Mr Justice P.K. Jaiswal
Hon'ble Mr Justice Virender Singh
W.P. No.18996/2017
(M/s. Shree Marwal Sewashram.
vs.
Customs, Excise & Service Tax, Appellate Tribunal, New Delhi)
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Shri A.K. Chitale, learned Senior Counsel with Shri
Vijay Tulsiyan, learned counsel for the petitioner.
Shri Amol Shrivastava, learned counsel for the
respondents.
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ORDER
(Passed on this 22nd day of March, 2018) Per P.K. Jaiswal, J.
By this writ petition under Article 226 and 227 of the Constitution of India, the petitioner is praying for quashment of final order dated 2/08/2017(Annexure-P/1), passed by Customs, Excise & Service Tax Appellate Tribunal(in short ... "the CESTAT"), by which the learned Tribunal dismissed the appeal on the ground that pre- deposit is a mandatory condition under Section 35F of the Central Excise Act, 1944 and same cannot be waived.
2. Against the order of dismissal, statutory appeal lie under Section 35(G) (2) of the Central Excise Act, 1944.
3. The facts of the of the case are that a demand of central excise duty of Rs.50,53,29,468/- has been confirmed against the petitioner and equivalent amount of penalty has also been imposed upon the petitioner. He challenged the said 10 (W.P. No.18996/2017 order by filing a statutory appeal without pre-deposit. On 2/08/2017, the learned Tribunal came to the conclusion that pre-deposit is a mandatory condition under Section 35F or the Central Excise Act, 1944.
4. Learned Senior Counsel for the petitioner has drawn our attention to the judgments of the Delhi High Court in the case of Alumayar India Pvt. Ltd. v. Commissioner of Central Excise[(2011) 299 ELT 171 Bom.; Sulzer Friction Systems (I) Ltd. v. The Principal Commissioner of Central Excise & Ors.[2015 (325) ELT 3259(Mad.)] and Associated Switch Gears v. Cegat[(1995) Law Suit 17] and submitted that due to financial hardship, the petitioner is not in the position to deposit the amount, the present writ petition is maintainable and prayed that the impugned order be quashed.
5. Per Contra, learned counsel for the respondents has submitted that all the aforesaid judgments were of prior to 2014. In 2014, Section 35F of Central Excise Act, 1944 was amended and as per the amended provisions, along with the appeal, the petitioner has to submit the receipt regarding deposit of 7.5% of the total amount. Any waiver of pre- deposit would be in contravention to the mandatory provision of Section 35F of the Act. It is further denied that the duty demand would accrue only from 1.03.2013. It is submitted that the present case is not of retrospective application of law as is being projected by the petitioner, 10 (W.P. No.18996/2017 here the dispute is regarding benefit of the Notification no.49/2008. As many as nine opportunities were granted to the petitioner before the learned Appellate Authority to either obtain favourable stay order or to appear in the matter to put up their defence. We cannot convert this writ petition under Article 226 of the Constitution of India into an appellate forum in disregard of the statutory provisions of Section 35F and 35G of the Central Excise Act, 1994 nor we can direct the CESTAT to decide the appeal on merits without insisting on the mandatory per-deposit, in view of the provisions of Section 35F which come into force in 2014. After the amendment the discretion to waive pre-deposit on the ground of financial hardship and other reasons has been completely done away with and a very low fixed percentage of per-deposit which in the petitioner's case is 7.5% has been applied mandatorily in all cases. The decisions cited by the learned Senior Counsel for the petitioner was prior to the amendment of Section 35F of the Central Excise Act, 1994.
6. The petitioner has not challenged the virus of Section 35F of the amended provision of the Act. Even otherwise, the validity of amended provision of Section 35 F have been challenged before number of High Courts and all of whom upheld the same and dismissed the writ petition. One such decision has been given by the Jharkhand High Court in the case of Satya Nand Jha vs. Union of India, 2016 (7) TMI 1307. The aforesaid decision of the Jharkhand High 10 (W.P. No.18996/2017 Court has been upheld by the Apex Court and dismissed the Special Leave Petition bearing Petition (s) for Special Leave to Appeal (C) No(s)31297/2016 dated 7/11/2016.
7. Prior to filing of this writ petition, two writ petitions have been filed by the petitioner. One Writ Petition No.309/2017 dated 23/03/2017 was filed during pendency and proceedings of order in Original No.80/PR.COMMR/CEX/IND/2017 dated 27/02/2017 against the OIO issuing authority i.e. respondent No.2 on the ground that the order was issued ex-parte. The said writ petition was disposed of with a direction that "once the order has been passed in the matter the present petition stands disposed of with liberty to the petitioner to take appropriate steps and to avail the remedy available under the law". Thereafter, on 13/04/2017 he filed W.P. No.2299/2017 dated 13/04/2017 against the show cause notice dated 6/12/2016. The learned writ court declined the petition with a direction that "the question of entertaining the petition does not arise as the liberty has already been granted in the earlier petition" and observed that "the petitioner is free to avail the remedy of filing the appeal. This Court does not find any reason to entertain a second writ petition once an order has already been passed by this Bench in the earlier round of litigation". Order dated 23/03/2017, passed in W.P. No.309/2017 and order dated 13/04/2017, passed in W.P. 10 (W.P. No.18996/2017 No.2299/2017 reads as under :-
WP. No.309-2017 (M/S SHREE MARWAL SEWASHRAM THROUH SANJAY MARWAL Vs CUSTOMS CENTRAL EXCISE AND SERVICE TAX) 23-03-2017 Shri Goruav Chhabra, learned counsel for the petitioner. Learned counsel for the petitioner clearly stated before this Court that during the pendency of the present writ petition the respondent No.1 has passed the final order on 27.02.2017 in the writ petition.
In the considered opinion of this Court that once the final order has been passed in the matter, the present petition stands disposed of with a liberty to the petitioner to take appropriate step and to avail the remedy available under the law.
With the aforesaid, the writ petition stands disposed of.W.P. No.2299/2017
13.04.2017 Shri Piyush Mathur, learned Senior Counsel with Shri Aakash Vijyavirgiya, learned counsel for the petitioner.
The petitioner before this Court has filed the present petition under Article 226 of the Constitution of India against for quashment of show cause notice dated 16.12.2016 passed by the Principal Commissioner, Customs Central Excise and Service Tax, Indore dated 27.02.2017 passed by again the Principal Commissioner.
The petitioner's contention is that the petitioner is a proprietorship firm engaged in a business of manufacturing of Herbal Products and a show cause notice dated 08.02.2016 was issued to the petitioner along with other persons calling upon them to show cause notice as to why excise duty should not be charged as reflected in the show cause notice and show cause notice was issued based upon the statement of Sanjay Marwal and Piyush Patel. Petitioner submitted a letter for cross-examination of Sanjay Marwal and Piyush Patel on 29.11.2016. The prayer was turned down on 06.12.2016. Against the order dated 06.12.2016 W.P. No.309/2017 was filed. The petitioner's contention is that the Principal Commissioner was informed about the pendency of the writ petition the final order has been passed on 27.12.2016.
Learned counsel for the petitioner has placed reliance upon the judgment delivered in the case of Feldohf Auto & Gas Industries Ltd. vs. Union of India and another reported in (1998) 9 SCC 710. His contention is that alternative remedy of appeal is no bar in the matter of filing a writ petition. Reliance has been placed upon another judgment in the case of Union of India vs. Hindalco Industries reported in (2003) 5 SCC 194. It has been stated that the writ petition certainly is 10 (W.P. No.18996/2017 maintainable even at the stage of show cause notice or at the stage of assessment.
Lastly, reliance has been placed upon the judgment delivered in the case of Lakshman Exports Ltd. Vs.Collector of Central Excise (2005) 10 SCC 634. His contention is that in the light of aforesaid it is obligatory on the part of assessing authority to grant permission to cross-examine the witnesses. He has also placed reliance upon Master Circular issued by the department which is enclosed as Annexure P/4. His contention is that denial of cross-examination of witness vitiates the entire proceedings.
We have patiently heard learned counsel for the petitioner. However, the fact remains that earlier also writ petition was filed challenging the show cause notice dated 06.12.2016. During pendency of the aforesaid writ petition the order dated 27.12.2017 was passed by the Principal Commissioner/respondent No.1. The Division Bench of this Court by order dated 23.03.2017 passed in Writ Petition No.309/2017 has passed the following order:
"Learned counsel for the petitioner clearly stated before this Court that during the pendency of the present writ petition the respondent No.1 has passed the final order on 27.02.2017 in the writ petition.
In the considered opinion of this Court that once the final order has been passed in the matter, the present petition stands disposed of with a liberty to the petitioner to take appropriate step and to avail the remedy available under the law."
The Division Bench of this Court has disposed of the earlier petition wherein the point of cross-examination of a witness was also under consideration, the writ petition was disposed of with a liberty to challenge to avail the remedy provided under the law, meaning thereby, to file an appeal. In the considered opinion of this Court, we cannot sit in the appeal over dated 23.03.2017. Once there is alternative remedy available under the law i.e. the remedy of appeal and Secondly, the petitioner has challenged the same show cause notice dated 06.12.2016, the question of entertaining the petition does not arise as the liberty has already been granted in the earlier petition. The petitioner is free to avail the remedy of filing the appeal. This Court does not find any reason to entertain a second writ petition, once an order has already been passed by this Bench in the earlier round of litigation.
Resultantly, no case for interference is made out in the matter.
The admission is declined.
8. In the matter of Suvidha Signs Studios Pvt. Ltd. v.
10 (W.P. No.18996/2017Union of India[2016 (336) E.L.T. 274(Del.)] the petitioner therein failed to comply with the statutory mandatory requirement of depositing the 7.5% of the demand of duty and penalty and therefore, the appeal of the petitioner therein was dismissed. The Delhi High Court after appreciating the fact that petitioner is in great financial difficulty and needs some more time to pay the pre-deposit amount has held that the Court is unable to accede the request and therefore considering the question of financial difficulty dismissed the writ petition.
9. Similar is the view taken in the matter of Pioneer Corporation v. Union of India[2016 (340) E.L.T. 63(Del.)]. Para 10 and 11 of the judgment are relevant which reads as under :-
10. Under section 35F of the CE Act as it stood prior to 6th August, 2014, a discretion was available to the CESTAT to consider the financial hardship and accordingly determine the per-deposit amount. That discretion has been consciously sought to be curtailed and thus an amendment was made to Section 35F of CE Act requiring making of a per- deposit of 7.5% in all cases subject to an upper cap of Rs.10 crores. A direction, therefore, to the CESTAT that it should waive the per-deposit would be contrary to the express legislative intent expressed in the amended Section 35F with effect from 6th August, 2014.
11. While, the jurisdiction of the High Court under Article 226 of the Constitution to grant relief notwithstanding the amended Section 35F cannot possibly be taken away, the Court is of the view that the said power should be used in rare and deserving cases where a clear justification is made out for such interference. Having heard the submissions of Mr. Datta and having perused the adjudication order, the Court is not persuaded to exercise its 10 (W.P. No.18996/2017 powers under Article 226 to direct that there should be a complete waiver of the per-deposit as far as the petitioner's appeal before the CESTAT is concerned.
10. On due consideration of the aforesaid, the writ petition filed by the present petitioner challenging the order of dismissal of the appeal by the Customs, Excise & Service Tax Appellate Tribunal has no merit and is, accordingly, dismissed. No costs.
(P.K. Jaiswal) (Virender Singh)
Judge Judge
pn/
Preetha Nair
2018.03.27 10:50:35
+05'30'