AJN 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7992 OF 2008 Sarla Performance Fibres Limited .... Petitioners Vs. The Union of India & Ors. .... Respondents Mr. P.S. Shah i/b PDS Legal for the petitioners. Mr. P.S. Jetly for the respondents. CORAM : SMT. RANJANA DESAI & J.P. DEVADHAR, JJ. DATED : 13TH FEBRUARY, 2009. P.C. :- 1. This petition is filed basically to challenge pre-deposit order dated 16/7/2007 as well as order dated 27/10/2008 passed by the respondent 2, rejecting the modification application filed by the petitioners. 2. The petitioners are a 100% Expert Oriented Unit (for short, EOU). They are engaged in manufacturing of Synthetic Yarn. It is the case of the petitioners that pursuant to the orders placed by AJN 2 Ashnoor Textiles Mills Limited, formerly known as Gupta Carpet Udyog Limited (for short, “GCUL”), a 100% EOU, the petitioners supplied Polyester Filament Yarn (PTY/PFY) from time to time to GCUL. Pursuant to the intelligence received, the Central Excise conducted searches at the premises of certain 100% EOU. Show cause notice was issued to the petitioners' Silvassa Unit and GCUL, Gurgaon. It was, inter alia, alleged in the said show cause notice dated 13/6/2000 that the petitioners as consignors removed PTY/PFY to the GCUL against CT-3 certificate obtained by them. But, the same did not reach the premises of the consignee and were sold in local market by the consignee with the assistance of the petitioners. It was further stated in the show cause notice that the consignee is liable to pay duty on the yarn cleared by the petitioners on the strength of the CT-3 certificates obtained by them from the Excise Department after complying with Chapter X procedure including execution of bonds indemnifying Excise Department for payment of duty demanded. Another show cause notice bearing F. No.DGAE/DZU/40/98/2021 dated 13/8/2001 was issued to the petitioners' Vapi unit and the GCUL, Gurgaon. The AJN 3 petitioners filed their replies. 3. On 18/12/2006, the Commissioner (Adjudication) Central Excise confirmed the duty demanded and penalties imposed. Being aggrieved by the said Order-in-Original dated 18/12/2006 to the extent it confirmed the duty demanded from the petitioners in respect of the said two units at Silvasa and Vapi, the petitioners filed their separate appeals before respondent 2 under section 35B of the Central Excise Act, 1944. The petitioners also filed applications for waiver of pre-deposit of duty demanded and penalties imposed and stay of recovery thereof, pending the hearing and final disposal of the said appeals. 4. On 16/7/2007, respondent 2 heard the stay applications and directed the petitioners to deposit Rs.1,20,00.000/- within eight weeks from the date of receipt of the order, upon which respondent 2 waived the pre-deposit of the remaining duty amount and the penalties under Rule 209 of the Central Excise Rules, 1944 and stayed the recovery thereof. AJN 4 5. The petitioners filed a modification application before respondent 2 stating that respondent 1 had in an identical matter granted unconditional stay to the assessee. On 13/12/2007, respondent 2 rejected the modification application of the petitioners. Being aggrieved by the said order, the petitioners filed Writ Petition No.1056 of 2008 in this court. On 15/2/2008, this court set aside the order dated 13/12/2007 and directed respondent 2 to rehear the modification application filed by the petitioners. 6. On 27/10/2008, respondent 2 rejected the modification application filed by the petitioners on the ground that no case was made out by the petitioners to modify the earlier order. However, respondent 2 extended the time for pre-deposit of amount of Rs.1,20,00,000/- by a further period of eight weeks. The petitioners are aggrieved by the aforesaid orders dated 18/12/2008 passed by the Commissioner of Central Excise, orders dated 16/7/2007 and 27/10/2008 passed by the Customs, Excise & AJN 5 Service Tax Appellate Tribunal i.e. respondent 2 herein. 7. We have heard Mr. Shah, learned counsel appearing for the petitioners at some length. He, inter alia, submitted that respondent 2 erred in rejecting the application for modification filed by the petitioners. Learned counsel submitted that in two cases of similar nature, the respondents demanded duty from the consignees. Demand was confirmed in the hands of consignees. Revenue accepted this order. No appeal was preferred. It is contended by learned counsel for the petitioners that it is not permissible in law to pass inconsistent assessment orders and, hence, respondent 2 should have passed an order granting unconditional waiver. It is pointed out that in the appeal filed by the consignee - M/s. S.R. Industries, the Tribunal has granted full waiver and in the appeal preferred by the consignee – M/s. Riba Textiles Limited, the Tribunal has directed pre-deposit of an amount of Rs.50 lakhs. 8. We have perused the affidavit in reply filed by Mr. V.V. Chandran, Assistant Director, DGCI, Zonal Unit, Bombay. The AJN 6 case of the revenue is that the petitioners removed the goods against CT-3 certificate obtained by them. The goods were removed without payment of duty but the goods did not reach the consignees. They were sold in open market. Admittedly, in the case of consignee - M/s. S.R. Industries, who had obtained goods under CT-3 certificate from the petitioners and others and, in the case of M/s. Riba Textiles Limited where goods were supplied by the petitioners, duty was demanded from the consignees. Demand was confirmed in the hands of the consignees. No appeal was preferred by the revenue. In spite of this, in this case, duty is claimed from the petitioners, who are consignors. In the circumstances, we are of the prima facie opinion that the petitioners are entitled to unconditional waiver especially when the Tribunal has granted unconditional waiver in the case of M/s. S.R. Industries. 9. In the circumstances, pre-deposit order dated 16/7/2007 and order dated 27/10/2008 rejecting modification application of the petitioners must be set aside and the matter must be remanded to AJN 7 respondent 2 for de novo consideration on merits. We, therefore, set aside the impugned orders dated 16/7/2007 and 27/10/2008 and direct respondent 2 to consider the case on merits without any pre-deposit. We, however, make it clear that we have not expressed any final opinion on the merits of the petitioners' submissions. The Tribunal shall deal with the matter independently and in accordance with law. The Tribunal shall dispose of the matter within a period of three weeks from the date of receipt of this order by it. The petition is disposed of. [SMT. RANJANA DESAI, J.] [J.P. DEVADHAR, J.]