Allahabad High Court
Commissioner Of Central Excise Meerut & ... vs M/S Moon Beverages Ltd. & Another on 25 October, 2013
Bench: Sunil Ambwani, Surya Prakash Kesarwani
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No.32 Judgment reserved on 05.09.2013 Judgment delivered on 25.10.2013 Central Excise Reference application No.(1) of 2011 Commissioner of Central Excise Meerut & Anr. v. M/s Moon Beverages Ltd. & Anr. Hon. Sunil Ambwani, J.
Hon. Surya Prakash Kesarwani, J.
1. We have heard Shri Ramesh Chandra Shukla, leaqrned counsel for the Commissioner of Central Excise, Meerut-the appellant. Shri H.M.B. Sinha appears for the respondents.
2. The Central Excise Reference application under Section 35H of the Central Excise Act, 1944 was filed on 11.5.2011. The office could not give the report on limitation as the affidavit of service did not bear any date of service of the order. An affidavit of service was filed subsequently giving the date of acceptance as 18.12.1999, on which office has reported reference to be beyond time by 11 years and 227 days.
3. The application for condonation of delay was found to be deficient in giving the grounds for explaining the long delay on which the counsel appearing for the applicant was allowed time on 2.4.2012 to file supplementary affidavit. A supplementary affidavit with the grounds on the condonation of delay was filed, to which counter affidavit has been filed by the respondents.
4. A fresh application for condonation of delay along with affidavit of Farah I Gupta, Deputy Commissioner, Central Excise, Division-III, Ghaziabad was filed on 10th July, 2012, explaining the delay from the date of the order by which the Writ Tax No.1339 of 2001 filed by the Commissioner of Central Excise, Meerut was dismissed by the Division Bench of this Court on 3.5.2010 on the ground that against the order of the Tribunal a reference lies under Section 35G of the Central Excise Act.
5. Brief facts giving rise to this reference, for consideration of the application for condonation of delay are that a show cause notice was issued to M/s Moon Beverages Ltd.-the respondent on 22.3.1994 on the basis of intelligence gathered that M/s Moon Beverages Ltd. (M/s MBL) is engaged in the manufacture of aerated water falling under heading 22.01 and 22.02 of the schedule to the Central Excise Tariff Act, 1985. M/s MBL was found evading central excise duty by resorting to suppression of production and clandestine removals. On a search of the factory premise by the officers of the Directorate General of Anti Evasion (C.Ex.) Delhi, the sales depot/ godown situated at Nirankari Colony, Delhi and the registered office of M/s MBL on 28.9.1993 records were seized and panchnamas were drawn. On physical verification certain shortages/ excesses of the finished excisable goods were found as against recorded balance as per the RG-1 registers. The shortage/ excess could not be explained by Shri Raj Mohan and the records such as Gate Pass could not be produced. A notice was given with details of the inspections and observations made by the intelligence running into 43 pages proposing confiscation of crates and bottles of aerated water of different brands and the sale proceeds seized on 28.9.1993, and imposition of Central Excise Duty amounting to Rs.7,33,36,132/- and penalty, requiring the respondents to show cause to such seizure, imposition of excise duty and penalties.
6. M/s MBL filed a reply on 7.11.1994. After considering the reply and the evidences the Commissioner of Central Excise, Meerut passed an order imposing Central Excise Duty of Rs.2,60,85,083/- under Rule 9 (2) of the Central Excise Rules, 1944 read with proviso to Section 11-A (1) of the Central Excise and Salt Act, 1944, and penalty of Rs.65,000/- on M/s MBL under rule 9 (2), 52A, 226 and 173-Q (1) of the Central Excise Rules, 1944. He also directed confiscation of the 385 crates (9240 bottles) of aerated water on 28.9.1993 from the factory premise; 2750 crates and 57 bottles (52617 bottles) of aerated water of different brands, provisionally on the giving bond furnishing cash security of Rs.50,000/- only and appropriation of Rs.50,000/- by encashment of the FDRs. The Commissioner vacated seizure of an amount of Rs.3,46,493/-, 1400 crates (82840 bottles) of aerated water of different brands and another quantity of 3387 crates (81120 bottles of aerated water of different brands). He did not confiscate land, building, plant and machinery and vehicles and released them provisionally.
7. The Commissioner of Central Excise, Meerut as well as Moon Beverages Ltd. filed appeals arising out of order 43/Commr./95 dated 12.7.1995. By a judgment dated 28.5.1999 the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi allowed the appeal filed by the assessee setting aside duty demanded and penalty and rejected the appeal of the revenue on the ground that for the year 1989-90, 1991-92 the appellants were not enjoying benefit of MODVAT on aerated water. They were not keeping the account in statutory form for quantities of concentrates. The quantities were, however, reflected in their records maintained for the sales department as well as the balance sheet prepared for the financial year. The quantity of concentrates destroyed due to drainage or use in excess due to saline nature of water was not included in the records. The refrigeration / cooling system in the factory was not operational at times resulting into the water becoming saline and thus more concentrates were required to be used for quality and flavour. During these years the difference between figures of NABB supplied by PEL and figures in records of the assessee was only the quantity of concentrates either drained out or used in excess. For the subsequent years namely 1992-93 and 1993-94 the records and the Form IV Register and RG-23A were duly authenticated and periodically scrutinized by the Central Excise Officer. Almost all the inputs were covered under MODVAT Scheme and the quantities reflected in RG-23A Register, which was authenticated by the department. The Tribunal further found that clandestine manufacture and removal could not be alleged solely depending upon use of one particular material. The other raw materials namely crown crocks, sugar and carbon dioxide was not used, found or seized in manufacture. Further the difference in water concentrates was explained and thus the duty demand on account of suppression of production was not sustainable.
8. The Commissioner of Central Excise, Meerut filed Special Leave to Appeal (Civil) ...... of 1999 (CC7045-7046 of 1999) against the judgment. Hon'ble the Supreme Court dismissed the special leave petition on 4.2.2000 as withdrawn so that the petitioner may approach the High Court under Art.226 of the Constitution of India.
9. The Commissioner of Central Excise, Meerut filed Writ Petition No.1339 of 2001 on 18.12.2001 i.e. after 10 months and 14 days from the order of CEGAT. The writ petition was admitted on 2.1.2002. Later it was dismissed for want of prosecution on 11.10.2006 and was thereafter restored in July, 2009 after 3 ½ years.
10. The writ petition was dismissed on 3.5.2010 with following order:-
"List revised.
No one appears on behalf of the petitioner.
By means of the present petition the petitioner has challenged the order of the Tribunal dated 28th of May,1999. The writ petition was filed on 18.12.2001.
Learned Counsel for the respondent submitted that against the order of the Tribunal reference lies under Section 35G of the Central Excise Act and, therefore, the writ petition is liable to be dismissed on the ground of alternative remedy. He further submitted that the appeal is barred by laches as it had been filed after one year.
In view of the aforesaid facts and circumstances, the writ petition is dismissed."
11. On 11.5.2011 this reference application was filed and was reported to be delayed by 11 years and 227 days from the order of the CEGAT.
12. Shri Ramesh Chandra Shukla has explained the delay with the help of supplementary affidavit and in which it is stated that a copy of the order dated 3.5.2010 dismissing the writ petition was received by Shri Ajay Singh, Advocate from the registry of the Court on 10.12.2010. It was sent by Shri Ajay Singh, Advocate to the department by letter dated 14.12.2010, which was received on 22.12.2010. The Asstt. Commissioner, Central Excise, Division-III, Ghaziabad after a period of about 2 ½ months sent a letter to Shri Ajay Singh and Shri Zafar Moonis to provide all relevant records of the case to file appeal in the High Court. The Chief Commissioner, Central Excise wrote a letter to the Commissioner, Customs and Central Excise, Ghaziabad to seek legal opinion to decide the course of action vide his letter dated 4.2.2011. The legal opinion was sent by Shri Zafar Moonis and Shri Ajay Singh, Advocate on 7.2.2011 to Asstt. Commissioner, Central Excise, Division-III, Ghaziabad to file appeal under Section 35G of the Act. A clarification was sought by the Superintendent, Central Excise, Division-III, Ghaziabad from Shri Zafar Moonis about the dates of filing of the writ petition as there were different dates available in the records intimated by Shri S.N. Srivastava, Advocate-Sr. Standng Counsel and Shri Bhupendra Nath Singh, Sr. Standing Counsel. Information was also sought about the date of admission of the writ petition and whether the notices were sent to the respondents. Another letter was sent on 9.3.2011 to Shri Zafar Moonis, Sr. Standing Counsel to approve the grounds of appeal and questions of law. The reminder was sent on 28.3.2011 to the same request to Shri Zafar Moonis to file appeal on priority for which document will be delivered to him personally. Once again he was reminded on 7.4.2011 for filing the appeal. The department, thereafter, realised that since the writ petition was dismissed on 3.5.2010, the remedy is to file the reference under Section 35H of the Central Excise Act and consequently the reference was filed on 11.5.2011 in defect for which the affidavit for calculating the delay was filed and the appeal was presented before the Joint Registrar on 3.8.2011.
13. In the counter affidavit of Shri Shachindra Kumar Goyal, General Manager (Finance & Accounts) of M/s Moon Beverage Ltd., it is stated that the application is hopelessly barred by time and is not maintainable on which the Supreme Court of India was pleased to dismiss the special leave petition on 4.2.2000 as withdrawn. Instead of filing the statutory application under Section 35G of the Central Excise Act, a Writ Petition (Civil) No.1339 of 2001 was filed after 2 years and 7 months of the order of CEGAT, which was filed just to cover the lapse of delay. A counter affidavit was filed by the respondents, taking the plea that the writ petition is not maintainable. The counter affidavit was served on counsel appearing for the Central Excise Department on 23.9.2005. The writ petition was dismissed for want of prosecution on 11.10.2006 and on which affidavit attested/ sworn on 4.6.2009 was filed. On 3.5.2010, when the matter was taken up, no one appeared on behalf of the petitioner. The Court found that the petitioner has challenged the order of the Tribunal dated 28th May, 1999 by filing writ petition on 18.12.2001. A reference lies against the order and thus the writ petition was dismissed on the ground of alternative remedy. The Commissioner, Central Excise thereafter filed present application under Section 35G with application for condonation of delay. The application was filed almost 10 months after the dismissal of the writ petition with no appropriate application and for which supplementary affidavit was required.
14. It is submitted by learned counsel appearing for the party that reference application can be filed against the order of the Tribunal within 60 days from the date of receipt of the notice of Tribunal, which in case it is satisfied shall draw statement of case and referred it to the High Court within 125 days. No such application was filed before the Tribunal and hence the present petition is not maintainable. Shri Sinha further submits that without exhausting the remedies under the provisions of Section 35 (G) (1) and (2), a party or the department not eligible to file a petition directly before the High Court as contained under Clause 3 of Section 35G. It is only on refusal of the Tribunal of the application under Section 35G on the ground that no question of law arise, the Commissioner of Central Excise or other party can file reference within six months from the date of such refusal.
15. We have examined the records and find that the Central Excise Department has been grossly negligent in pursuing the matter. The order of CEGAT allowing the appeal of the assessee and dismissing the appeal of the department was passed on 28.5.1999, against which a Special Leave to Appeal was filed before the Supreme Court, which was dismissed as withdrawn to file writ petition in the High Court. The department was well aware that the writ petition was not maintainable against the order and that a reference could be made for which an application had to be filed before the Tribunal. Instead of filing an application for reference, the department filed a writ petition in the High Court, which was admitted on 2.1.2002. The writ petition was dismissed for want of prosecution on 11.10.2006. A restoration application was filed with delay of 3 ½ years in July, 2009. When the matter came up for hearing, the Court found that the writ petition of the Central Excise Department against the order of the CEGAT was not maintainable. The Court dismissed the writ petition on 3.5.2010 on the ground of alternative remedy to file reference under the Central Excise Act. The Court, however, did not make any comment nor expressed any opinion on the latches. The department instead of approaching the Tribunal for making reference under Section 35 G (1) filed a reference directly in the High Court with delay. In the process more than 11 years time was consumed in challenging the order of CEGAT.
16. We do not find that the long delay of 11 years and 227 days has been sufficiently explained by the Central Excise Department to entertain Central Excise Reference, which in any case has been filed without following procedure prescribed under Section 35G (1) and (2) of the Act. The Central Excise Department has been negligent for more than one reason. Firstly it filed Special Leave Petition against the order in the Supreme Court, which was withdrawn by the counsel appearing for the Central Excise Department. The department thereafter filed a misconceived writ petition, which was dismissed for want of prosecution in the year 2006. It took three years for the department to file restoration application, after which the writ petition was dismissed on the ground of alternative remedy of filing reference. The department again neglected in failing to comply with the procedure for filing reference, and again caused delay from 3.5.2010 to 3.8.2011 in filing the present reference.
17. The writ petition was dismissed for want of prosecution on 11.10.2006. The recall application was filed on 21.8.2009. The recall application was not allowed, when it came up for hearing on 3.5.2010. The Court found that the department had an alternative remedy. The delay in filing reference from 11.10.2006, when the writ petition was dismissed and was never restored has also not been explained sufficiently.
18. For the aforesaid reasons, we find that the Central Excise Department has been grossly negligent in pursuing the matter. It filed appeal in the Supreme Court, which was not maintainable and thereafter a misconceived writ petition, which was dismissed on the ground of alternative remedy. In the process the department has consumed 11 years and 227 days within which the assessee must have arranged his financial affairs, which need not be disturbed at such distance of time.
19. The delay condonation application is rejected. Consequently, the Central Excise Reference application is dismissed.
Dt.25.10.2013 SP/