C.E.A. No. 105 of 2011 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.E.A. No. 105 of 2011 (O&M) Date of Decision: 17.11.2011 M/s. Samrat Plywood Ltd. ........Appellant Versus Commissioner of Central Excise, Chandigarh .......Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE G. S. SANDHAWALIA Present: S/Shri Santhanam, Ajay Jain and Rohit Sud, Advocates, for the appellant. HEMANT GUPTA, J. The present appeal under Section 35G of the Central Excise Act, 1944 (for short “the Act”), is directed against the order dated 22.9.2011 passed by Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short 'the Tribunal'), whereby while setting aside the order passed by Adjudicating Authority, the appellant was directed to deposit Rs. 80 lacs so as to secure the interest of revenue and that delaying tactics are not adopted by the appellant. ( 1) C.E.A. No. 105 of 2011 (O&M) The Adjudicating Authority vide order dated 12.2.2009 (Annexure A9.) raised a demand of duty of Rs.3,65,16,786/- from the Appellant under Section 11A of the Act out of which Rs. 20 lacs, already stands deposited by the appellant. There was also order to pay interest on delayed payment under Section 11AB of the Act and separate penalties on the two Directors and one Accountant of the Company. The learned Tribunal while considering the application for waiver of the pre-deposit under Section 35F of the Act and the appeal on merits, set aside the order passed by the Adjudicating Authority but directed the appellant to make deposit of Rs. 80 lacs within 8 weeks in view of judgment passed by this Court in Shiv Sewa Sadan v. CESTAT, New Delhi, 2010(254) E.L.T. 249 (P&H). Learned counsel for the appellant has argued that:- (i) The learned Tribunal has recorded adverse comments against the appellant which are required to be expunged being unwarranted and untenable. (ii) In exercise of jurisdiction under Section 35C of the Act, the Tribunal could not order to deposit Rs. 80 lacs when the order of Adjudicating Authority is being set aside. (iii) That the amount of Rs. 80 lacs is highly excessive and disproportionate to the extent of liability which may arise against the appellant, when the substantial demand of Rs. 1,03,21,692/- was prima facie unacceptable to the Tribunal though levy of such duty has also been remanded back to the Adjudicating Authority for verification. iv) That the Tribunal has not ordered the adjustment of Rs.20 lacs already deposited by the appellant and that ( 2) C.E.A. No. 105 of 2011 (O&M) instead of cash deposit of the amount as directed by the Tribunal, the appellant may be permitted to deposit the amount through a Bank Guarantee. A perusal of the order passed by Adjudicating Authority shows that there was clandestine removal of goods giving rise to demand of duty of Rs. 2,61,95,174/- and undervaluation of goods giving rise to duty demand of Rs. 1,03,21,612/-. Learned Tribunal has given detailed reasons while setting aside the order passed by Adjudicating Authority to seek fresh determination. The said order was dictated and pronounced by the Tribunal in Court and in the presence of learned counsel for the appellant. Any reservation, in respect of the remarks should have been raised before the Tribunal, at that stage. This Court is not a proper Forum to consider the expunction of remarks in these circumstances in appeal. A Division Bench of this Court in Shiv Sewa Sadan’s case (supra), has held that under Section 35C of the Act, the Tribunal can issue such directions or impose such conditions as it considers appropriate, while deciding the appeal. Learned counsel for the appellant has relied upon two judgments of the Delhi High Court reported as Voltas Limited v. Union of India, 1999(112) E.L.T. 34 (Del.) and Satvik Industries v. Commissioner of Central Excise, Delhi- II, 2010(252) E.L.T. 182 (Del.), taking a contrary view that the Tribunal cannot order the deposit of the amount while remanding the matter to the Adjudicating Authority. Section 35C of the Act, confers jurisdiction on the Appellate Tribunal to pass such orders as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the Authority, which passed such decision or order “with such directions” as the Appellate Tribunal may think fit. Therefore, ( 3) C.E.A. No. 105 of 2011 (O&M) the jurisdiction of the Appellate Tribunal to issue directions, while remanding the matter to the Adjudicating Authority, cannot be said to be without jurisdiction. The argument of the learned counsel for the appellant that this Court has not considered Section 35C of the Act in Shiv Sewa Sadan’s case (supra), is not tenable. In the present case, the Tribunal has decided the appeal as well as the application for pre- deposit vide a common order. The order of direction to deposit Rs.80 lacs, is a direction in exercise of the powers conferred on the Tribunal under Section 35C of the Act, and not a condition to entertain the appeal under Section 35F of the Act. In Satvik Industries’ case, the Delhi High Court set aside the condition imposed by the Tribunal on the ground of denial of principle of natural justice. It was in these circumstances the Court held that since the appellant is seeking an opportunity of hearing, the condition of deposit is untenable. It is not a case, where the jurisdiction of the Tribunal in issuing such direction was commented upon. In Voltas Ltd’s case (supra), the assessee has produced voluminous technical literature in appeal. The Tribunal formed an opinion that such technical literature was required to be taken into consideration by the Adjudicating Authority. In the aforesaid case, the assessee has deposited Rs.50 lacs in terms of an order passed under Section 35F of the Act. The said amount was ordered to be retained pending adjudication on remand by the Adjudicating Authority. Again it is not a case where the jurisdiction of the Tribunal in issuing directions under Section 35C was commented upon. In our view, the Tribunal has the jurisdiction to issue directions under Section 35C of the Act as it considers appropriate in its judicial discretion. It is needless to say that such direction cannot be arbitrary manner and without justification. Such directions have to meet the test of reasonableness. In view of the said fact, we do not find any ( 4) C.E.A. No. 105 of 2011 (O&M) merit in the second argument raised by the learned counsel for the appellant as well. The third argument that direction to deposit the amount of Rs.80 lacs is disproportionate to the contingent liability, is again not tenable. The liability on account of duty found at one stage is Rs.3,65,16,786/- apart from equivalent amount of penalty and the amount of penalty imposed upon the Director and the Officers of the Company. The appellant was also made liable to pay interest. Keeping in view the extent of liability which may arise against the appellant and the fact that the allegations against the appellant are that of clandestine removal and undervaluation of goods, we do not find that direction to deposit Rs.80 lacs is arbitrary and has no reasonable nexus with the amount of duty imposable. The Tribunal has mentioned that such amount has been directed to be deposited in order to secure the interest of Revenue and also for the reason that the assessee may not appear and adopt delay tactics. It may be noticed that the transactions in question pertain to the year 2005. Till now, sufficient time has already been passed but the proceedings have not been concluded. Therefore, it is in the interest of all concerned that the proceedings are concluded at an early date. In respect of the last and fourth argument, learned counsel for the appellant is justified in pointing out that Rs.20 lacs deposited by the appellant earlier, should have been accounted for, while directing the appellant to deposit Rs.80 lacs. A perusal of the order passed by the Tribunal, does not show that the said amount was taken into consideration while directing the appellant to deposit Rs.80 lacs. The argument that the appellant should be directed to furnish a Bank Guarantee, is again not tenable. The Hon’ble Supreme Court in CCE v. Dunlop India Ltd. AIR 1985 SC 330, has held that the State is not run on the Bank Guarantees. Therefore, we do not find any ( 5) C.E.A. No. 105 of 2011 (O&M) merit in the argument raised by the learned counsel for the appellant to permit the appellant to furnish Bank Guarantee to the extent of Rs.60 lacs. In view of the above, the present appeal is disposed of with the direction the amount of Rs.20 lacs shall be taken into consideration for considering the total deposit of Rs.80 lacs i.e. the appellant is required to deposit an additional sum of Rs.60 lacs. Such direction will meet the interest of the assessee and also the order passed by the Tribunal. Learned counsel for the appellant has lastly submitted that the time for deposit be extended. Since the appellant has been directed to appear before the Adjudicating Authority on 20.12.2011, therefore, we are opinion that the Adjudicating Authority, may take up the proceedings, if the appellant deposits a sum of Rs.60 lacs on or before the date fixed i.e. 20.12.2011. With the said directions and observations, the present appeal stands disposed of. (HEMANT GUPTA) JUDGE (G.S. SANDHAWALIA) JUDGE 17.11.2011 reema/ds ( 6)