TAXAP/311/2008 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 311 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE M.S.SHAH AND HONOURABLE MR.JUSTICE RAVI R.TRIPATHI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= REGENT OVERSEAS PRIVATE LIMITED AND ANOTHER Versus THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, SURAT - I ========================================= Appearance : MR MIHIR JOSHI, SENIOR ADVOCATE with MOHMEDSAIF HAKIM for the Appellants MR HARIN P RAVAL for the Respondent ========================================= CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE RAVI R.TRIPATHI Date : 12/03/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE M.S.SHAH) Leave to convert this appeal into a Special Civil Application under Articles 226 and 227 of the Constitution. RULE. Mr.Harin Raval waives service of Rule for the respondent. In the facts and circumstances of the case, the petition TAXAP/311/2008 2/5 JUDGMENT is taken up for final disposal today. 2. Since the dispute in this petition merely relates to the orders passed by the Customs, Excise and Service Tax Appellate Tribunal at Ahmedabad on stay application under Section 35-F of the Central Excise Act, 1944 and the consequential order of dismissal of the appeals on the ground of non-compliance with the condition stipulated in the stay order, it is not necessary to set out all the facts in detail. 3. When the petitioners' stay application was heard on 25.04.2007, the petitioner offered to deposit an amount of Rs.10 lacs as a condition of pre-deposit. The Tribunal accordingly passed order dated 26.04.2007 directing the petitioners to deposit an amount of Rs.10 lacs towards duty within a period of 12 weeks and report compliance on 26.07.2007. Subject to deposit of the above amount, pre-deposit of the balance amount of duty and entire penalty imposed upon the petitioners were to stand waived during pendency of the appeals. 4. The petitioner thereafter filed application dated 16.07.2007 stating that the petitioners received the Bank Guarantee for a sum of Rs.2.25 lacs and that the petitioners were making efforts for collecting further funds. The petitioners also prayed for permission to submit Bank Guarantee of Rs.10 lacs instead of cash deposit of Rs.10 lacs towards compliance of the stay order passed by the Tribunal. By order dated 26.07.2007, the Tribunal permitted the TAXAP/311/2008 3/5 JUDGMENT petitioners to furnish Bank Guarantee for a sum of Rs.2.25 lacs and to deposit the balance amount of Rs.7.75 lacs in cash and to report compliance on 18.10.2007. It appears that the petitioners thereafter made application dated 17.10.2007 stating that the petitioners had obtained Bank Guarantee for the amounts of Rs.2.25 lacs and Rs.2.75 lacs and that for furnishing bank Guarantee for the balance amount of Rs.5 lacs, further period of one month may be granted. Before this application was heard, the petitioners made further application dated 19.11.2007 stating that the petitioners had already submitted Bank Guarantees of Rs.2.25 lacs and Rs.2.75 lacs and that the petitioners had managed to get further Bank Guarantee for Rs.5 lacs, hence the same may be accepted. That the petitioners had managed to get Bank Guarantees for the entire amount of Rs.10 lacs, including Bank Guarantee of Rs.2.25 lacs which was earlier accepted on 26.07.2007 and also including the Bank Guarantee of Rs.2.75 lacs which was tendered along with application dated 17.10.2007. When both the applications dated 17.10.2007 and 19.11.2007 came up for hearing before the Tribunal, by order dated 05.12.2007, the Tribunal rejected the applications for modification on the ground that the petitioners had failed to deposit the balance amount of Rs.7.75 lacs in cash. The Tribunal also dismissed the appeals on the ground of non-compliance of the stay order within stipulated period. The petitioners have therefore approached this Court for challenging the aforesaid order dated 05.12.2007. TAXAP/311/2008 4/5 JUDGMENT 5. Mr.Mihir Joshi with Mr.Hakim for the petitioners has submitted that the petitioner Unit is closed since 2001 and in view of the financial hardships pointed out by the petitioner, the Tribunal ought to have accepted the petitioners' request and should have accepted the Bank Guarantees for Rs.10 lacs. It is alternatively submitted that in any view of the matter, the Tribunal erred in not granting the petitioner some more time to deposit 50% in cash over and above accepting Bank Guarantees for Rs.5 lacs. 6. Mr.Harin Raval, learned Assistant Solicitor General of India, for the respondent has supported the order of the Tribunal. 7. Having heard the learned counsel for the parties, we are of the view that since the Tribunal had itself permitted the petitioner by order dated 26.07.2007 to furnish Bank Guarantee for a sum of Rs.2.25 lacs and deposit the balance amount in cash and the petitioner had already submitted Bank Guarantee of Rs.2.25 lacs by 26.07.2007 and furnished further Bank Guarantee of Rs.2.75 lacs by 17.10.2007, the Tribunal could as well have accepted Bank Guarantee for a total amount of Rs.5 lacs and grant the petitioner further time to deposit the balance amount of Rs.5 lacs in cash. 8. It is made clear that furnishing Bank Guarantee towards payment of amount under the order of pre-deposit is not to be treated as a rule. In fact, the pre-deposit should generally be made in cash (AIR 1985 SC 330), but since the Tribunal itself had granted an indulgence to the petitioners of furnishing Bank Guarantee of TAXAP/311/2008 5/5 JUDGMENT Rs.2.25 lacs on 26.07.2007 and since the petitioner had already furnished a Bank Guarantee for further amount of Rs.2.75 lacs on 17.10.2007, we have permitted the petitioners to make deposit towards duty demanded by Order in Original to the extent of Rs.5 lacs including the Bank Guarantee of Rs.2.75 lacs which shall be submitted before the Tribunal by 19.03.2008. The remaining amount of Rs.5 lacs towards the duty shall be paid in cash within a period of one month from today. 9. In view of above discussion, the impugned order dated 05.12.2007 of the Tribunal is set aside and the Bank Guarantee for total amount of Rs.5 lacs plus deposit of Rs.5 lacs in cash in the aggregate Rs.10 lacs in all shall be treated as the pre-deposit under Section 35-F of the Act. Subject to payment of the aforesaid amounts, the balance amount of duty and penalty shall stand waived during pendency of Appeals Nos.115 and 116 of 2007 pending before the Appellate Tribunal at Ahmedabad. 10. Rule is accordingly made absolute in the above terms and the petition is accordingly disposed of. (M.S.SHAH, J.) (RAVI R.TRIPATHI, J.) *Shitole