.^•^-:'-^.^^....!^.;^^^:,, S^^- w^s^ff;^'^^ v^ HiGH COURT OF JUDiCATURE CHHATTiSGARH : BiLASPUR (DJViSION BENCH') CORAnn: HON'BLE SHRi ViJAY KUwiAR SHRiVASTAVA & HON'BLE SHRi DHiRENDRA MiSHRA, Jj TAXCASENO. 41 OF 200S Appeliants : 1. M/s. R.K. Polytubes, 26, industriai Qro\A/th Csntrs. SQrsi, Distt. Dun (C.G.), (Through its Partner Shri Ravi Gupta, S/o Late Shri Bhola Prasad Gupta, Aged about 40 years) 2. M/s. Fairdeai Agencies, Kalpana j-iouse Station Road, Durg (C.G.) (inrougn its ranneriinn t-raKasn Guota. S/o Late Shri Bhola Prasad Gupta; Aged about41 years) VERSUS Respondents : 1. Union of india-Through the Secretary Ministry of Finance, Departr"e"t of Revenue, North Block, New Deihi - 110 001. 2. Customs, Excise and Service Tax, Ant')9l!s[t©Trlbuns. ThrQUCih Assistant Registrar, West Biock No.2 R.K. Puram. New Delhi -110 066. .s. uommissioner OT uentral txcise, Nsw Csntrs! Exciss Suilding, Dhamtari Road, Tikrapara, Raipur (Chhattjsaarh'i Present:- Shri P. Diwakar, iearned Sr. Advocate wth Shri P.K. Bhaduri, learnea counsei Tor me petitloners. Shri Bhishma Kinger, iearned Standing Counsel for Union of inaia/responaents. (ORAL ORDER) (Passsd on 08 January 2007) Tne following orai order oftne Court was passea byj/ilauKumar Shriwactawa .1 'l 1 ^^^^^^^^^^S^^^K This appeai under Section 35-G of the Centrai Excise Act, 1944 (henceforth 'the Act;) has been preferred against the orders passed by Custom, Excise and Sen/ice Tax Appeliate Tribunai, New Deihi (henceforth referredto as Tribunai") dated 25.4.2006 and 7.8.2006 whereby the Tribunai vide order dated 25.4.^:006 grantea conditional stay ana vide later oraer aismissea Dom me appeals on non-compiiance ofthe condition to make pre-deposit ofRs. 40 lakhs and Rs. 10 lakhs respectively, preferred bythe appeliants. Commissioner, Custom and Centrai Excise, passed an elaborate order dated 30.11.2005 whereby imposed central excise duty of Rs. 69,74,004/- and a penaity ofthe same amount on appeliant No. 1 and a penaity of Rs. 22,00,000/- on appeiiant No. 2. Feeling aggrieved, both the appellants preferred excise appeais before the Tribunai bearing Excise Appeai Nos. 411/2006 and 412/2006. Both the appeiiants filed an appiicatlon for staying the order of the uommissioner. The appeiiants' contention before the Tribunal was that ihe demand has been based on eiectricity consumption. On the other hand, the department opposed the same and contended that fixation of duiy and penaity is not based on account of eiectricity consumption but based on various documents estabiishing production and sale. They exhibited before the Tribunal how without payment of duty, manufactured materiais were soid to customers. M/s R.K. i^oiytuDes receivea raw matenais Trom M/S Alpna urganics and yigma unemicais but not accounted for. On the basis of production that was worked out, duty has Deen calculated. 'he Tribunal very meticuiousiy considered contentions raised by both the parties and on perusal of materiai fited before it, came to know that there is sufncient evidence in the form of document for illicit clearance of goods without ciearance of duty by M/s R.K. Polytubes. it was found that for the year 1997-98 the production has been worked out on the basis of electricity consumption, which is taken on the basis ofactuai production for a certain period and then on the basis of totai consumption of eiectricity, th,e production was worked out. It was aiso found that iess production than actuai is shown in R.G.-I register and the baiance quantity has been cieared without ^ccoyntingJ'pt^and without payment OT duty. ^\ Having considered ail the materiai the Tribunai vide impugned order dated 25.4.2006 directed appeilant No. 1 M/S. R.K. Poiytubes to pre-deposit an amount of Rs. 40,00,000/- within a period of tweive weeks and report compiiance on 7.8.2006 and on such deposit, the recovery of the balance amount of duty and penalty from M/s R.K. Poiytubes is waived forthe purpose ofhearing the appeal and if the said amount is not deposited within the stipuiated period, then the appeal shaii stand dismissed. Learned Tribunai further directed appeilant No. 2 M/s Fair Deai Agencies, to pre-deposit a sum of Rs. 10,00,OOO/- within a period of 12 weeks with a further direction that if they fail to pre-deposit this amount within the stipuiated period, then appeai shail stand dismissed and if the said amount is deposiied, recovery of baiance amotint is waived for the purpose of neanng ine appeai. >oth the appellants did not adhere to the interim order passed by the appeliate Tribunal as a resuit ofthat when the appeals came up. for hearing on 7.8.2006, the iearned Tribunai dismissed both the appeals for non-compiiance of its order dated 25.4.2006 which wss a conditionai order. Orders passed by the Tribunai have been made appeiiabie in accordance with Section 35-G of ihe Act. The period prescribed for appeal is 180 days and the appeai can oniy be admitted if the Court is satisfied that a substantiai question of law is invoived in the case. Here in the instant appeai, first order has been passed on 25.4.2006 and when this appeai has been fiied, the period of 180 days from 25.4.2006 nas elapsed a long Dack. No application ror condonation of deiay has been fiied, therefore, the order dated 25.4.2006 attained iis finaiity. Subsequent order dated 7.8.2006 has been passed as a re.suit of non-compliance ofthe eariier order dated 25.4.2006. ine appeltants nave Tormulated toilowing suostantiai questions OT law in tneir memo oT appeai: • Vvhether the act on the part ofthe respondent No. 3 of not adducing any evidence with respect to the fact that the appeilant has received excess raw-material is acceptable Tor imposing so neavy a penaity wnicn nas resultea into a serious financiai nardship to me appeiiants. • Whether a firm which is not financiaiiy robust and strong can be compeiied to comply wth so heavy 3_fifiBarty. jt is h Deiow: suDmittea tnat me appeltants nave accumuiatea a loss or Rs. 5,68,866.92 and the iotal fixed assets amounts to Rs. 18.11 iaksh oniy. in such a situation, it is submitted that vrfiether the Appeilate Tribunai's stand of ignoring the financiai condition notwithstanding the fact that it vras submitted before them would render the order passed by the CESTAT perverse, erroneous and incorrect. * Whether a penalty under Excise Act, 1944 can be imposed by placing reiiance oniy on rough exercise book maintained by the appeiiants in which recorded entries were onlyforthe period of 1.1.19a9 to 16.2.1a9a, wiereas, the payment has been sought for the entire period of 1997- 1998 and 1998-1999. • wnetner on tne oasis OT consumption OT eiectncity, a penalty can be imposed under the Excise Act, 1944. it is submitted that the process of taking into account the consumption OT eiectricity is Dasea on me assumea production and it 'nas been considered that the payment has been made on the basis of such assumed/presumed production. • VVhether such flimsy and rickety criterion i.e. entry made in rough exercise book and consumption of electricity can be used as sufficient and just and yardstick for fastening !iaDi!iiy on tne appeiiants wnicn is so neavy. • V'Vhether the respondents have not adhered to the fundamentai ruie of "Duty to act judiciaily" when they were proceeding to fasten so heavy a penaity on the appeliants. • VVhether non-avaiiabiiity of sunicient incriminating evidence vitiates the entire proceedings. Section 35-F of the Act is relevant for consideration which is reproduced S. 35F. Deposit, pending appeai, of duty demanded or penalty ievied.- VVhere in any appeal under this Chapier, the decision or order appealed against relates to any duty demanded in respect of joods which are not under ihe controi-eT~eenu^i Excise authorities or any penalty ievied under this Act, the person desirous of appeallng against such decision or order shaii, pending the appeai, deposit with the adjudicating authority the duty demanded or the penalty ievied: Provitted that wiere in any particular case, ihe [Commissioner (Appeaisj] or tne Appellate Tribunal is OT opinion tnat tne aeposit of auty demandea or penaity levied would cause undue hardsnip to such person, the [Commissioner (Appeais)j or, as the case may be, the Appellate Tribunai, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as (o safeguard the interest of revenue. [Proviaed further that where an appiication is fiied before the Commissioner (Appeals) for dispensini viflth the deposit of duty demanded or penaity levied under the first proviso, the Commissioner (Appeals) shail, wiere it is possibie io do so, decide such appiication wiihin thirty days from the date ofitsfiting. hrom a Dare reaaing oTtne aDove provision, it is ciear tnat the appeliate Tribunai has jurisdiction and power to pass interim orders viiho having considered the hardship ofthe appetiants passed the order on 25.4.2006. During course of the argument iearned counsel for the appeliants couid not demonstrate howthe praer passea Dy tne i nbunai on '^SA.'ZUW is iiiegai or incorrect wnich requires to be correcied by the High Court, even faiied to demonstrate as to how the finai order passed by the Tribunai due io non-compiiance of its directions by dismissing the appeals invoive any substantlal question of iaw. Vv'e are of the considered opinion that the appeai does not invoive even any question of law, what to say of subsiantiai question of iaw. In the resuit, the apn6aUsJabieJo_be disngjssed in timine and is accordingly dismissed. SdA 'i SdA VK.Simvastava ; Dhirendra Mishra Judge ' Jud8e I ^