CEAC No.10 of 2009 Page 1 of 9 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CEAC Nos.10, 11, 12, 13, 14 & 15 of 2009 % Decision Delivered On: 17th September, 2010. 1) CEAC No.10/2009 & CM No.18884/2009 NATRAJ PLAST INDUSTRIES LTD. . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS COMMISSIONER OF CENTRAL EXCISE . . .Respondent through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. 2) CEAC No.11/2009 & CM No.18896/2009 DINESH KUMAR GUPTA . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS COMMISSIONER OF CENTRAL EXCISE . . .Respondent through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. 3) CEAC No.12/2009 & CM No.18906/2009 SUNIL MITTAL . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS CEAC No.10 of 2009 Page 2 of 9 COMMISSIONER OF CENTRAL EXCISE . . .Respondent through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. 4) CEAC No.13/2009 & CM No.18908/2009 GAURAV GUPTA . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS COMMISSIONER OF CENTRAL EXCISE . . .Respondent through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. 5) CEAC No.14/2009 & CM No.18910/2009 ADITYA PLASTIC . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS COMMISSIONER OF CENTRAL EXCISE . . .Respondent through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. 6) CEAC No.15/2009 & CM No.18912/2009 ADITYA PLASTIC . . . Appellant through : Ms. Seema Jain with Ms. Manpreet Sethi and Ms. Savita Singh, Advocates VERSUS COMMISSIONER OF CENTRAL EXCISE . . .Respondent CEAC No.10 of 2009 Page 3 of 9 through: Mr. Mukesh Anand with Mr. R.C.S. Bhadoria and Mr. Sailesh Tiwari, Advocates. CORAM :- HON’BLE MR. JUSTICE A.K. SIKRI HON’BLE MR. JUSTICE MANMOHAN SINGH 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the Judgment should be reported in the Digest? A.K. SIKRI, J. (ORAL) 1. All these appeals arise out of common proceedings, which was triggered on the issuance of show cause notice dated 02nd January, 2007 alleging that M/s. Natraj Plast Industries Ltd. had availed the CENVAT Credit wrongly and illegally. It is not necessary to go into the details thereof. Keeping in mind the controversy involved in these appeal, suffice is to state that after eliciting reply to these appellants who were served with show cause notice and giving them hearing, the Commissioner, Central Excise, Delhi passed the Order-in-Original dated 31.03.2008 for recovery of wrongly availed CENVAT Credit as well as penalties on all these appellants. In addition, recovery of interest in respect of alleged illegally availed CENVAT Credit by M/s. Natraj Plast Industries was ordered. All these appellants preferred appeals before the Customs Excise & Service Tax Appellate Tribunal (hereinafter referred to as „the Tribunal‟) under Section 35B of the Central Excise Act, 1944 (in short „the Act‟). Along with the appeals, the appellants preferred applications for stay as well against the Order-in-Original passed by the Commissioner of CEAC No.10 of 2009 Page 4 of 9 Central Excise with request that the condition of pre-deposit of duty and penalty under Section 35F of the Act be dispensed with and appeal be heard without any such pre-deposit. It was also stated by M/s. Natraj Plast Industries in its appeal that a sum of `20 lakhs have already been deposited before the issuance of show cause notice. These applications were taken up together and orders were passed on 19.05.2008. As per these orders, the appellants were directed to make a further deposit of `40 lakhs in addition to the amount already deposited, within a period of eight weeks. The last paragraph of that order containing direction, reads as under: “6. It is also submitted by applicant that `20 lakhs has already been deposited by the applicant. In view of the fact the inputs, on which credit is availed, are cleared without payment of duty, we find it is not a fit case for waiver of duty. After taking into consideration the facts and circumstances and financial hardship into the account, applicants are directed to make a deposit an amount of ` forty lakhs in addition to the amount had already been deposited, within a period of eight weeks. On deposit of above-mentioned amount, the pre-deposit of remaining amount of duty and penalty are waived. Compliance reported on 17th November 2008.” 2. The appellants challenged this order of pre-deposit by filing Writ Petitions in this Court. These writ petitions were dismissed vide orders dated 14.11.2008. However, at the same time, for making payment of `40 lakhs, further period of three months was granted to the appellant. The appellants deposited the said amount with the respondent within the period granted by this Court. There was a delay of three days in depositing a sum of `3 lakhs out of the aforesaid amount, which was condoned by the Tribunal itself. CEAC No.10 of 2009 Page 5 of 9 3. The narration of the aforesaid facts would disclose that the orders dated 15.09.2008 passed by the Tribunal on pre-deposit have been complied with. 4. When the matters came up for hearing before the Tribunal on 08.07.2009, the appellants were confronted by the Tribunal with altogether different circumstance. It was pointed out by the Tribunal that in its orders dated 15.09.2008, no directions regarding waiver of interest amount were given and, therefore, the appellants were required to deposit the entire interest as per the directions of the Commissioner in the impugned Order-in- Original. The counsel for the appellant took adjournment on that date stating that he had no instruction in the matter. Case was adjourned to 22.7.2009 on which position remained the same. The matter was again adjourned to 21.08.2009. As on that date nobody appeared on behalf of the appellants, the Tribunal dismissed all the appeals on the ground that there was no compliance of Section 35F of the Act, insofar as orders regarding pre-deposit of interest are concerned. These orders are challenged by means of the instant appeals and following two questions of law are raised for determination: (a) Whether the Tribunal Committed an error in dismissing the appeal of the appellant, in spite of the appellant having complied with the stay order of the Tribunal? CEAC No.10 of 2009 Page 6 of 9 (b) Whether the Tribunal was right in dismissing the appeal of the appellant for failure to deposit interest, when there was no direction to deposit interest in Stay Order? 5. We admit these appeals on the aforesaid two questions. We have also heard the matter finally with the consent of the counsel for the parties. 6. Relevant portion of the order of the Tribunal on the stay application/waiver of pre-deposit has already been extracted above. It is clear from the reading of the order that the Tribunal had directed the appellants to make a deposit of further sum of `40 lakhs (in addition to the amount of `20 lakhs, which had already been deposited). It was clearly stipulated in the order that “on deposit of above-mentioned amount, the pre-deposit of remaining amount of duty and penalty are waived”. No doubt in that order, remaining amount of duty and penalty is waived and order does not expressly states anything about the interests. However, at the same time, it is also to be noticed that no specific direction is given in the said order in respect of directing the appellants to deposit the interest. Therefore, any reasonable person reading the aforesaid order can have legitimate expectation that on depositing of `40 lakhs, no further amount is directed to be deposited vide impugned Order-in-Original. We may emphasize that this was an order on an application for waiver CEAC No.10 of 2009 Page 7 of 9 of pre-deposit inasmuch as, as per the provisions of the Act, unless the amount is deposited, the appeals preferred by the appellants could not be heard. It is because of this reason, stay of the impugned Order-in-Original passed by the Commissioner was sought and the appellants wanted complete waiver of pre-deposit. In that backdrop, when the aforesaid order is read whereby the appellants were directed to deposit `40 lakhs, the intention becomes clear, viz., the appeals of the appellants would be heard on merits on deposit of `40 lakhs. 7. Be as it may, it is not even necessary to venture into the implications of the aforesaid orders. It is because of the reason that provisions under Section 35F of the Act are clear and explicit in this behalf. Section 35F reads as under: “35F. DEPOSIT, PENDING APPEAL, OF DUTY DEMANDED OR PENALTY LEVIED. Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case the [ Commissioner (Appeals) ] or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the [ Commissioner (Appeals) ] or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of revenue : [Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the CEAC No.10 of 2009 Page 8 of 9 first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.] [Explanation.--For the purposes of this section "duty demanded" shall include,-- (i) amount determined under section 11D; (ii) amount of erroneous CENVAT credit taken; (iii) amount payable under rule 57CC of Central Excise Rules, 1944; (iv) amount payable under rule 6 of CENVAT Credit Rules, 2001 or CENVAT Credit Rules, 2002 or CENVAT Credit Rules, 2004; (v) interest payable under the provisions of this Act or the rules made thereunder.]” 8. Explanation inserted in this Section clearly states that for the purpose of this Section “duty demanded would also include amount payable under the provisions of the Act or the Rules made thereunder”. It is for this reason that the provisions provide is for waiver of duty demanded or penalty levied. It does not mention about the “interest” at all insofar as stay of interest component is concerned, that is taken care of in the explanation. Once there is a stay of “duty demanded”, the interest payable under the provision of the Act for the Rules would also be stayed. 9. There is yet another aspect, which has lost sight of by the Tribunal while passing the impugned Order-in-Original dated 21.08.2009 dismissing the appeal. As per the Order-in-Original, interest is demanded only from M/s. Natraj Plast Industries Ltd. on the purported wrong availment of CENVAT/MODVAT Credit. There was no interest payable by other appellants. Therefore for alleged CEAC No.10 of 2009 Page 9 of 9 non-payment of interest, appeals of other appellants in any case could not have been dismissed. 10. We, thus, answer both the questions in the affirmative holding that the Tribunal erred in dismissing the appeals of the appellants. Consequently, the impugned Order-in-Original dated 21.08.2009 passed in case of all these appellants is set aside. The appeals are restored to their original numbers. The Tribunal shall hear these appeals and decide the same on merits. 11. Learned counsel for the respondent, at this stage, requests that direction should be given to the Tribunal to decide the appeals in a time bound period. It is not necessary to give any such direction. However, we hope and expect that the appeals shall be decided as expeditiously as possible. 12. Party shall appear before the Tribunal on 18th October, 2010. (A.K. SIKRI) JUDGE (MANMOHAN SINGH) JUDGE SEPTEMBER 17, 2010 pmc