IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 6490 of 2012 For Approval and Signature:
HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 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 ?
Whether this case involves a substantial question 4 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 ?
========================================================= RAJKAMAL PRINTERY & 1 - Petitioner(s) Versus UNION OF INDIA & 3 - Respondent(s) ========================================================= Appearance :
MR HARDIK P MODH for Petitioner(s) : 1 - 2. RULE NOT RECD BACK for Respondent(s) : 1 - 2. RULE SERVED for Respondent(s) : 3 - 4.
MR KALPESH N SHASTRI for Respondent(s) : 3 - 4.
========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date :23/08/2012 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) In the present petition under Article 226 of the Constitution, the petitioners have prayed for a writ to set aside the three orders of the Custom, Excise and Service Tax Appellate Tribunal. First is the order dated 12.03.2007 passed in stay applications filed in the Tax Appeals requiring the petitioners to deposit Rs.50 lakhs each within eight weeks by way of pre- deposit as condition of stay. As no pre-deposit was made, order dated 06.06.2007 was passed dismissing the main appeals. The second challenge is against that order. The third order sought to be set aside is the order dated 18.01.2012, whereby the Tribunal has dismissed petitioners' application for restoration of the main appeals.
2. The facts of the case run thus. The first petitioner is a partnership firm engaged in the business of processing of textile fabrics. The second petitioner is a proprietory firm doing the same business. The preventive officers of the Central Excise Commissionerate visited the premises of the petitioners on 30.01.2003. During the course of investigation, they found that the petitioners-assessees had wrongly claimed the exemption of duty under two notifications dated 28.02.1999 and 01.03.2000 issued by the Central Government providing for exemption to textile fabrics, if they were processed without the aid of power or the steam. It was noticed that the processes of stirring of dyes, colour, dyeing of fabrics, water treatment plant and other connected processes carried out by the petitioner with aid of the power.
2.1 On that basis, a common show cause notice dated 20.05.2003 was issued raising a demand of Rs.2,54,02,402/- in respect of the fabrics processed during April 1998 to January 2003 against the first petitioner. Against the second petitioner, similarly, a demand of Rs.2,65,20,218/- was raised. Imposition of penalty was also proposed in the show cause notice.
Respondent No.3 by Order-In-Original (OIO) dated 20.01.2005 confirmed the duty amount of Rs.2,54,02,402/- and Rs.2,65,20,218/- respectively against the two petitioners with equal amount of penalty imposed under section 11AC of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’ for sake of brevity). It was ordered to confiscate the seized goods namely the Sarees with an option to pay redemption fine of Rs.2 lacs by each of the petitioners in lieu of the confiscation.
2.2 Against the aforesaid order of the respondent No.3 Commissioner, Central Excise, the petitioners preferred Excise Appeals No.1161 of 2005 and 1162 of 2005 together with Stay Applications No.973 of 2005 and 974 of 2005. The Tribunal granted interim stay on 12.03.2007 on condition of each of the appellants depositing a sum of Rs.50 lacs within 8 weeks and on making of such deposit, the remaining amount of duty and penalty would stand waived. Thereafter, the appeals were posted before the Tribunal on 06.06.2007 for reporting the compliance. As the appellants had not deposited the amount, the appeals were dismissed on 06.06.2007. Thereafter, a Tax Appeal No.ST/2343/2007 under section 35G of the Act was preferred by the petitioners before this High Court challenging the abovementioned orders dated 12.03.2007 and 06.06.2007. However, as the office objections were not removed, the appeal came to be dismissed by order dated 04.07.2008 for non-removal of office objections.
2.3 On 23.08.2011, the Assistant Commissioner, Central Excise, Division- II, Rajkot passed order attaching the property being Plot No.1, 2, 3, Survey No.822 at Jetpur together with the factory building standing thereon, in exercise of powers under section 11 of the Central Excise Act, 1944, section 142(1)(c)(ii) of the Customs Act, 1962 read with the Customs (Attachment of Property of Defaulters for Recovery of Govt. Dues) Rules, 1995. The valuation report indicated that the market value of the property was Rs.65,29,000/-.
2.4 On 01.11.2011, petitioners filed Misc. Applications in their original Appeals No.E/1161/2005 and E/1162/2005. In the restoration application, it was pleaded that earlier a Tax Appeal was filed before the High Court which was dismissed as the office objections were not removed. It was averred further that there was a change of circumstances thereafter because the Excise authorities had attached the property. It was the further case that the applicant was earning only salary income and had no financial means to make the deposit. On these pleas, it was prayed to restore the main appeals on its original number. Secondly, it was prayed that the stay order dated 12.03.2007 be recalled and be amended by dispensing with the deposit requirement.
2.5 The Tribunal dismissed the said applications on 18.01.2012 by the impugned order. The relevant part of the order of the Tribunal reads as under.
“2. Learned counsel arguing on behalf of the assessee applicants submits that the applicants had no means to deposit the amount of pre- deposit ordered by the Bench. It is also his submission that subsequent development taken place wherein the Revenue officers have attached the property of the appellants, which is valued approximately at Rs.60 Lakhs as approved by the approved valuer and that should be considered as enough deposit to cover the pre-deposit ordered by the Bench in the stay order. It is his submission that applications are allowed and appeals restored and heard on merits and disposed of.”
3. Learned SDR, on the other hand would submit that the applications for restoration have been filed belatedly. It is his submission that the applications for restoration are filed almost after four years after the appeals were dismissed by the Bench. It is his submission that against such dismissal order, the appellants/ applicants moved to Hon'ble High Court of Gujarat in Tax Appeal and it was also dismissed for technical reasons like non-removal of defects. It is his submission that there are series of decisions that indicate that restoration application should have been filed within three months from the date of dismissal of the appeal. In this case, it is not so.”
“4. We have considered the submissions made by both the sides at length and perused the records. Due to loss of considerable time in moving application for restoration of appeals, we find that even if the Revenue authorities have attached the property that would not satisfy the condition of stay order passed by this Bench. Accordingly, the both the applications are dismissed as devoid of merits.”
3. Affidavit-in-reply dated 12.06.2012 was filed on behalf of the respondents through the Assistant Commissioner of Central Excise, Rajkot, raising various contentions. The petitioners filed affidavit-in-rejoinder on 21.07.2012.
4. We heard learned advocate Mr. Vikram Nankani appearing with learned advocate Mr. Hardik P. Modh for the petitioners, and learned advocate Mr. Kalpesh N. Shastri appearing for the respondents. We considered the facts on record and the pleadings of the parties.
4.1 It was submitted by learned advocate for the petitioners that they had deposited Rs.16,78,400/- and further that now the property of the value of Rs.65 lacs is also in the custody of the department. He submitted that the Tribunal ought to have allowed the restoration application and heard the appeal on merits by dispensing with the pre-deposit. It was next submitted that the company had stopped manufacturing activity since long and the property was rented to M/s Jai Khodiyar Process and that the petitioners were doing job work and earning job charges every year. It was submitted that the partners/petitioners are not in position to deposit the amount and that the bread and butter was taken away by the department. He raised a contention that the circumstances had changed.
4.2 Learned advocate for the petitioners relied on decision in Venus Electronics and Control Pvt. Ltd. Vs. Commissioner of Customs, Kandla [2006 (198) ELT 547 (Tri. Mumbai)] for the proposition that requirement of pre-deposit was only procedural and it could not extinguish statutory right to appeal. On the basis of decision in Sun Polytron Inds. Ltd. Vs. Commissioner of Central Excise, Vapi [2009 (236) ELT 243 (Tri. Ahmedabad)], it was submitted that in that case, as also in the present case, sufficient security in shape of factory was already with the Revenue and, therefore, pre-deposit of duty and penalty was required to be waived. It was submitted that liability of the company was limited to assets available. Decision in Jai Goga Enterprises Vs. CCE [2008 (232) ELT 572 (Tri.)] was relied on. The decision of a Division Bench of this Court in Bhavya Apparels Pvt. Ltd. Vs. Union of India [Special Civil Application No. 9284 of 2011 decided on 01.12.2011] was relied on and it was submitted that since the petitioners are unable to pay the pre-deposit amount, a respite may be granted and the Tribunal may be directed to decide the appeals on merits.
4.3 As against that it was submitted by learned advocate for the respondent that against the total demand of duty for more than Rs.5 crores and equivalent penalty, the property was only of the value of Rs.65 lacs, could be attached by the department in 2011 to realize the dues. It was submitted that the amount due was outstanding since 2005 and the assessee has all along avoided the payment. It was submitted that after issuance of order-in-original dated 20.01.2005, the petitioners made payment of only Rs.1,75,000/- and the other amount was paid prior to issuance of OIO which was considered. It was, therefore, submitted that the petitioners were misleading the Court. It was further submitted that the petitioners on their own had stopped manufacturing activities and rented out the property. Learned advocate submitted that the impugned orders were fully justified in the facts of the case.
5. Indisputably, the orders dated 12.03.2007 and 06.06.2007 were challenged by preferring Tax Appeal before this Court. That appeal came to be dismissed in 2008. The petitioners never appeared to be interested in seriously pursuing their challenge to the aforesaid orders. They did not make any attempt to restore the appeal which was dismissed only for non- removal of office objections. It amounted to giving up the challenge to the orders dated 12.03.2007 and 06.06.2007. Once the statutory appeal was not pursued, and the challenge having been abandoned at that stage in appeal, a subsequent challenge to the very orders in the writ petitions could not be entertained.
5.1 Looking at it from another angle, the present petition came to be filed after dismissal of restoration application. For period from 2007 to 2011, the petitioners remained inactive and indolent. Not only that, as stated above, they did not pursue the statutory appeal which they had filed to challenge the orders in question. The competent authority of the Excise Department attached the property on 23.08.2011. Only thereafter the petitioners again woke up from their slumber and filed restoration application. No explanation has been coming forth in respect of four years period from 2007 to 2011. The first segment was from 2007 when the original appeals were dismissed for non-compliance of pre-deposit order till July 2008 when the statutory Tax Appeal before this Court was dismissed on technical ground, which was not pursued for restoration. No reason is given for not pursuing the appeal. Again, until 23.08.2011 when the property was attached, the petitioners remained silent.
5.2 It is evident from the sequence of events that allowing of loss of time was culpable on part of the petitioners. There was a yawning inaction on their part for four years. After July 2008 when their Tax Appeal was dismissed, they woke up only when the order of attachment was passed in August 2011. The averments in the restoration applications did not spell out any explanation for inaction except that the petitioners had no financial means. The change of circumstances raised as ground on behalf of the petitioners does not convince us inasmuch as the circumstances were petitioners’ own creation. The events narrated above further depicted that the petitioners approached the forums/court of law at their convenient time. In the facts and circumstances, the conduct of the petitioners suggested only that they were interested in delaying and dodging. The conduct of the petitioners and the stock-plea about financial inability could not be countenanced.
5.3 When the proceedings of the court are made instrumental only for the purpose of whiling away time and to rid off the obligations arising from orders of court of law, it amounts to abuse of process of law. The conduct of the petitioners showed that they acted in that fashion and abused the process of law by approaching court/forums at their own convenience using the process to avoid the consequences of the orders of the competent authorities. It was far from bonafide.
6. The decision relied on by the petitioners may now be considered. In Venus Electronics (supra), the assessee had deposited the entire amount of duty as well as penalty as ordered subsequent to the expiry of the original time period and there was no amount outstanding. In that light, the Tribunal observed that the pre-deposit requirement was only procedural and the appeal was restored. In Jai Goga (supra) also the entire amount of duty was paid. In Sun Polytron (supra), the property of the assessee under attachment was disposed of and as there was no other property in the name of the company, it was held that it was not possible to recover additional dues. Moreover, sufficient security in shape of factory was already with the Revenue. In the context of such peculiar situation, as noted by the Tribunal, it waived the requirement of pre-deposit. The facts of the present case are different. The decisions in Venus (supra), Sun Polytron (supra) and Jai Goga (supra), which are of the Tribunal, even with their persuasive value at the best before this Court, were on the different set of facts. The decision of this Court in Bhavya Apparels (supra), which was pressed in service, was rendered in the special facts of that case. The facts of the present case are not comparable. In the present facts, the conduct of the petitioners was not honest and their plea was not bonafide. If the events noted hereinabove are recapitulated, it manifests that the petitioners wanted to dodge at every stage.
6.1 The Tribunal correctly observed about long inaction and loss of considerable time in moving restoration application. The reasons recorded by the Tribunal in the impugned order dated 18.01.2012 are germane and cogent. In the facts and circumstances of the case, the order dated 18.01.2012 of the Tribunal dismissing the restoration application did not suffer from any error so as to warrant interference in the writ jurisdiction. The prayers to set aside orders dated 16.03.2007 and 06.06.2007 were neither well-founded nor well-conceived. Therefore, they cannot be granted.
7. In view of above discussion and reasons, no relief could be granted in the petition. The petition is dismissed. Rule is discharged. There shall be no order as to the costs.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.)
(SN DEVU PPS)