Punjab-Haryana High Court
Adinath Dyeing And Finishing Mills vs Commr. Of C. Ex. on 5 July, 2005
Equivalent citations: 2006(203)ELT216(P&H), 2008[10]S.T.R.97
Author: D.K. Jain
Bench: D.K. Jain, Hemant Gupta
ORDER D.K. Jain, C.J.
1. Since a similar issue is involved in this bunch of 45 petitions, all the petitions are being disposed of by this common order.
2. A short question for consideration in these cases is about the validity of a common order dated 21-1-2002 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short the Tribunal), directing all the applicants before it to deposit 25 per cent of the amount of service duty confirmed against them by the Commissioner (Appeals), Central Excise, Ludhiana, Commissionerate, Ludhiana, within 8 weeks of the date of the said order, as a condition precedent for stay of the recovery of the balance demand and for entertainment of their appeals for consideration on merits.
3. The Assistant Commissioner of Central Excise, Ludhiana, by the order of adjudication had come to the conclusion that the petitioners, manufacturers of "Man-made processed knitted fabrics", had contravened the provisions of Rules 4, 5, 6 and 8 of the Central Excise Rules, 2002, in as much as they had wrongly availed nil rate of duty on the clearance of goods under a particular notification. He did not accept the plea of the petitioners that a survey had been floated by the Central Board of Excise and Customs for the purpose of issue of notification under Section 11C of the Central Excise Act, 1944 (for short the Act). Consequently, he confirmed additional demands against the petitioners under Section 11A of the Act and also levied penalties under Section 25 read with Section 11AC as also interests under Section 11AB of the Act.
4. Aggrieved, the petitioners preferred appeals to the Commissioner (Appeals) but without any success. The matters were carried in further appeals to the Tribunal along with applications seeking waiver of pre-deposit pending decision on appeals. On these applications, the impugned orders have been passed.
5. Assailing the said orders, Mr Bansal, learned Counsel appearing for the petitioners, has vehemently submitted that the impugned orders suffer from the vice of non-application of mind on the part of the Tribunal inasmuch as the Tribunal has failed to apply its mind to the facts of each case in order to determine as to whether a direction to pay a particular amount would cause undue hardship to the applicants in terms of proviso to Section 35F of the Act. Learned Counsel has also urged that the Tribunal has erred in not taking into consideration a Circular No. 684-75-2002, dated 26-12-2002, issued by the Board, wherein it has been directed that whenever a survey is floated for issue of a notification under Section 11C of the Act, coercive action should not be taken for recovery of arrears/duties. Learned Counsel has also pointed out that the Jalandhar Commissionerate of Central Excise has already dropped the proceedings for recovery against the assessees against whom similar action had been initiated under similar circumstances. It is, thus, urged that the impugned orders deserve to be quashed.
6. In the short reply filed on behalf of respondents Nos. 1 and 3 supporting the impugned order passed by the Tribunal, the respondents have themselves referred to the afore-mentioned circular issued by the Board. In fact, it has been reiterated that in the light of the circular, no coercive steps for enforcement of duty are being taken.
7. Having heard learned Counsel for the parties, we are of the view that the impugned orders cannot be sustained.
8. In these petitions we are not concerned with the merits of the controversy raised in the appeals. The short question is whether the Tribunal has exercised the discretion vested in it under the afore-mentioned proviso on sound legal principles considering all the relevant facts. True that at the time of consideration of application seeking waiving/stay, it is not desirable for the Tribunal to embark upon a detailed inquiry to find out whether the stand of the applicants is on terra firma yet it is imperative that before making any direction with regard to the pre-deposit, the Tribunal must take into consideration the relevant factors, namely, whether there is a prima facie case in favour of the assessees; the balance of convenience qua depositor or otherwise; irreparable loss, if any, likely to be caused in case the stay is not grafted and safeguarding the public interest. The order of the Tribunal must reflect its application of mind on these factors. We feel that in the present cases, there has been non-application of mind in respect of each of the cases individually, thus, vitiating the pre-deposit orders.
9. We say no more at this stage as we find that the Tribunal, in similar cases, while relying upon the afore-mentioned circular issued by the Board on 26-12-2002 has taken a view that in the light of the said circular there is no need to issue any order on stay application, as coercive action has already been stayed by the Board. The Tribunal has dispensed with the condition of pre-deposit with liberty to the Department to move rectification if information regarding floating of survey is incorrect.
10. For all these reasons and particulary in view of order of the Tribunal dated 6-2-2005 in stay application No. 931 of 2005 in Appeal No. E/1288/2005, passed in an identical situation, the impugned orders are set aside. The Tribunal is directed to take up the appeals for consideration on merits without insisting upon any pre-deposit being made in terms of the impugned orders.
11. All the petitions are allowed in the above terms.
12. Parties/their representatives shall appear before the Tribunal on 1-8-2005 for further proceedings.