Calcutta High Court
J.N. Chemical (Pvt.) Ltd. vs Cegat on 18 May, 1989
Equivalent citations: 1994(46)ECC106, 1991(53)ELT543(CAL)
JUDGMENT P.D. Desai, C.J.
1. The appeal is taken up for hearing by treating it as included in the day's cause list. Filing of the paper book is dispensed with and the undertaking given in that behalf is discharged.
2. The appeal arises out of a Writ Petition which was directed against an order dated March 16, 1988 passed by the Calcutta Bench of the Central Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as "the Tribunal") on an application for dispensing with the statutory requirement of pre-deposit of the amount of duty and penalty in dispute in appeal. The present appeal has been brought in view of the summary dismissal of the Writ Petition by the Trial Court.
3. The following facts are not in dispute :
(1) The original demand for excise duty was raised in respect of precipitated chalk manufactured by the appellant.
(2) The case of the appellant before the competent authority was that precipitated chalk was eligible for exemption under Notification No. 23/55 dated April 29,1955.
(3) The competent authority rejected the claim for exemption substantially on the ground that unless the product in question was shown to have been finally used in the manufacture of commodities mentioned in the said notification, the condition for exemption could not be regarded as having been duly satisfied and that the appellant had failed to establish the end use of the product and, as such the benefit of exemption could not be claimed and allowed.
(4) Consequent upon the rejection of the claim for exemption a demand in the sum of Rs. 1,54,734.30P was raised and penalty in the sum of Rs. 30,000/- was also levied.
(5) The appellant preferred an appeal before the Tribunal and made an application for dispensing with the statutory requirement of pre-deposit of the amount of duty and penalty.
(6) The Tribunal dispensed with the requirement of pre-deposit of the amount of penalty but rejected the prayer with regard to the requirement of dispensing with the pre-deposit of the amount of duty.
4. The grounds which weighed with the Tribunal in rejecting the application made by the appellant arc contained in the following passage extracted from its impugned decision:
"...We find that the contention raised by the learned Counsel for the applicants that they were entitled to the benefit of the said Notification; that the demand was time-barred and that the penalty was illegal relates to the mertis of the case and will be gone into at the time of hearing of the appeal on merits. At this stage, in the light of the reasoning recorded by the Collector in the impugned order, it cannot be said that the applicants have good prima facie case as to warrant the dispensation of the pre-deposit of the amount of duty and penalty in question. However, looking to the financial position of the applicants' company as would be evident from the documents filed by them, we feel that asking the applicants to deposit the full amount of duty and penalty may cause undue hardship to them. Consequently we direct the applicants to deposit the amount of duty demanded for Rs. 1,54,734.30 and dispense with the requirement of the penalty amount for Rs. 30,000/-."
5. The learned Counsel for the appellant drew our attention to the decision of the Special Bench (C) of the Tribuanl at New Delhi in Collector of Central Excise, Chandigarh v. Thirani Chemicals Ltd. (Tribunal) and urged that the Tribunal has already taken the view that the benefit of exemption under the Notification in question is available with respect to precipitated chalk irrespective of the end use and that, therefore, the requirement of pre-deposit ought to have been relaxed in toto in the present case.
6. The learned Counsel for the Revenue stated that the Department has accepted decision aforesaid of the Tribunal since, according to his instructions, no reference or appeal has been preferred.
7. Against the aforesaid background, in our opinion it was impossible for the Tribunal to arrive at the conclusion that it could not be said that the appellant had a good prima facie case so as to justify the dispensation of the requirement of pre-deposit of the disputed amount of duty and penalty in question. On the facts and in the circumstances of the case, there was full justification for the exercise of the power vested in the Tribunal to dispense with the requirement of pre-deposit inasmuch as the case of the appellant was fully covered by the decision of a Special Bench of the Tribunal and still to insist upon the deposit of duty demanded and penalty levied would indubitably cause undue hardship to the appellant. The power to dispense with such requirement is conferred on the Tribunal to be exercised precisely in cases like these and, if it is not exercised under such circumstances, this Court will require it to be so exercised.
8. The decision of the House of Lords in Julius v. Lord Bishop of Oxford, (1880) 5 Appeal Cases 214, which has received approval at the hands of the Supreme Court in L Hirday Narain v. Income Tax Officer, Bareilly, , has great relevance in this connection. It was there observed as follows:
"But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person on whom the power is reposed to exercise that power when called upon to do so....
...where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is suplied by the legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the court will require it to be exercised."
In Hirday Narains's case (supra), the Supreme Court observed as follows :
"...If a statute invests a public officer with aurhority to do an act in a specified set of circumstances, it is impreative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moved in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling, the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right - public or private - of a citizen."
9. These judicial pronouncements of high authority show that even where enabling or discretionary power is conferred on a public authority, the words which are permissive in character may be construed as involving a duty to exercise the power, if some legal right or entitlement is conferred or enjoyed and, for the purpose of effectuating such right or entitlement, the exercise of such power is essential. If there is failure on the part of the donee to exercise such power accordingly, the court will require it to be exercised.
10. For the foregoing reasons the appeal succeeds and it is allowed. The decision under appeal of the Trial Court is quashed and set aside. The Writ Petition succeeds and the decision of the Tribunal impugned in the Writ Petition is quashed and set aside. The Tribunal is directed to entertain and decide the appeal in accordance with law by dispensing with the requirement of pre-deposit of the amount of excise duty and penalty in dispute.
11. All parties and the Tribunal to act on a signed copy of the operative part of the Judgment on the usual undertaking.