ORDER
T.V. Sairam, Member (T)
1. The applicants has filed appeals challenging the order of the Commissioner of Central Excise, (Ghaziabad dated 30-4-2004.
2. The matter came up before this Tribunal on an earlier occasion too when this Tribunal directed the appellant to make pre-deposit vide its order dated 14-11-2005. Aggrieved by the said order of the Tribunal, the appellant filed a writ petition before the Hon’ble High Court of Allahabad, which as on 1-9-2006 has set aside the said order of the Tribunal with the direction to decide their application under Section 35F of the Central Excise Act afresh in the light of principles laid-down in the case of ITC v. CCE, Meerut-I and considering the affidavit filed by the applicant stating therein their financial conditions.
3. The guidelines referred to by the Hon’ble Allahabad High Court, reproduced in the said order is as follows:
In view of the above, the aforesaid authorities make it clear that the Court should not grant interim relief/stay of the recovery merely by asking of a party. It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned. While considering the application for stay/waiver of a pre-deposit, as required under the law, the court must apply its mind as to whether the appellant has a strong prima facie case on merit. In case it is covered by the judgment a Court/Tribunal binding upon the Appellate Authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit. If an appellant having strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be no financial restrain on the appellant running in a good financial condition. The arguments that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application. The order of the Appellate Authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with law. The expression “undue hardship” has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal. Dispensation of deposit should also be allowed where two view are possible. While considering the application for interim relief, the Court must examine all pros and cons involved in the case further examine that in case recovery is not stayed, the right of appeal conferred by the legislature and refusal to exercise the discretionary power by the authority to stay/waive the pre-deposit condition, would be reduced to nugatory/illusory. Undoubtedly, the interest of the Revenue cannot be jeopardized but that does not mean that in order to protect the interest of the Revenue, the court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual. It is also clear that before any good could be subjected to duty, it has to be established that it has been manufactured and it is marketable and to prove that it is marketable; the burden is on the Revenue and not on the manufacturer.
4. Following the above guidelines, we have heard both sides.
5. The main contention of the appellant is that the learned Commissioner has passed the order without involving them in the process of decision making and without hearing their side fully. It was strongly contended by the learned DR that several dates were fixed and several times hearing had got to be postponed due to non-co-operation on the part of the appellant. However, a perusal of the record indicates that on 15-3-2004, when the matter was posted for hearing before the learned Commissioner, the factory was closed and the premises were in the custody of PICUP right from October, 2002. It was argued also by the learned DR that intimation of personal hearing was sent to other officials of the applicant in the residential addresses. However, we note that in the body of the order itself, the learned Commissioner has made it clear that all the letters sent through speed post were received back undelivered (para 6 of the order-in-original refers).
6. There was also a contention that cross-examination of the traders was not allowed by the adjudicating authority and without taking this into account the final order has been passed, for which argument, the learned DR holds that the appellants were finally responding freely and but later on they had not co-operated with the department during adjudication.
7. The learned Counsel for the applicant heavily relies upon this Tribunal’s order in Paras Laminates Pvt., Ltd. v. CCE, Jaipur . dealing with an identical situation as in the subject case, the Tribunal had allowed the appeal of the manufacturer on the ground that cross-examination of the dealers who had made adverse statements against the manufacturer was not granted by the adjudicating authority, further, it was argued that evidences as available in the form of trading bill etc. was not verified by the Commissioner. The learned Advocate was also able to demonstrate a few invoices on the record to show that what was supplied to some such traders referred to 3mm items as clearly indicated in such invoices.
8. Further, the affidavit filed by the applicant on 12-09-2005 indicates that the factory have not operated after 5th October 2002 as the same remain under the seizure of PICUP, the financial institutions from whom the appellant had borrowed a sum of Rs. 80 lacs, in lieu of their dues and also dues of UPFC to the extent of Rs. 24 lacs approximately, labour dues, PPF, sales tax etc. The affidavit has also mentioned that the appellant could arrange for the buyer who had directly paid the dues owed to PICUP, UPFC etc. (Incidentally we have noticed that the total sale consideration for the factory including assets was shown as Rs. 1.30 lacs which including the cost of land, plant and machinery, which figure was corrected by the learned Counsel for the applicant as Rs. 1.30 crores) stating that it was a typing error’.
9. The learned DR relies upon a letter dated 11-1-2007 addressed to UPSIDC, Ghaziabad by the Superintendent, Central Excise on the body of which there is an endorsement by the Assistant Manager, UPSIDC stating that the current value of the land and building is Rs. 3,07,28,400/-.
REASONS:
10. As per the guidelines mentioned in the Hon’ble High Court order, we have heard the arguments and perused the records to ascertain whether the appellant has a strong prima facie case on merit. We find that during the material time when the adjudication has taken place and when the hearing was granted to the appellant, the land and building of their factory premises was under the custody of the UPSIDC for their financial dues and the appellants have make attempts to made good of these dues by entering into a sale agreement with a third party. In the meanwhile, the department has also issued letter on 5-11-2004 to the third party (M/s Kunj Bihari Lal Charitable Trust) stating that the land and building of the unit has since been attached by them on 15-10-2004 under rule of the Custom (attachment of Property of Defaulter for Recovery of Government Dues) Rules, 1995 as made applicable vide Notification No. 68/63-CE dated 4-5-63 as amended, advising the later not to go ahead with the said transfer as the Government dues shall become liable to be recovered from them. It is also on record before us that the said third party has promptly approached the Hon’ble High Court of Allahabad to issue necessary directions for restraining the Assistant Commissioner of Central Excise from taking in coercive measure in respect of the said plant and not to interfere with the transfer of the said property pending in the office of UPSIDC in favour of the petitioner.
11. In view of the above, the transfer of immovable property of the appellant is not yet complete. Admittedly, there is no sale deed without which no immovable property could be transferred as the sale agreement by itself is not a document of title of ownership. There is no evidence to show that the possession of the said property was handed over. Admittedly, the plant and machinery amounting to Rs. 55 lacs has not been sold by the appellant under the said agreement. Further, a perusal of the balance sheet as on 31st March 2006 in respect of the appellant company particularly schedule ‘A’ to ‘T’ forming parts of the accounts for the year ended as on 31-3-2006 shows that raw material worth Rs. 25.12 lacs as on 31-3-2005 was in the stock under the head inventories profit and loss account for the year ended as on 31st March 2006 shows that raw materials worth Rs. 25.12 lacs was consumed in the current year i.e. 31-3-2006. Further, the said profit & loss account for the year ended as on Rs. 31st March 2006 shows sales income of Rs. 27.90 lacs.
12. The learned Counsel, states that a sum of Rs. 30 lacs (in addition to already deposited Rs. 20 lacs) could be deposited if ordered waiver of rest of the duty and penalty against them. Considering the facts and circumstances of the case, it is directed that the appellant shall deposit a sum of Rs. 30 lacs over and above Rs. 20 lacs which is said to have been deposited during investigation within six weeks from today.
13. In so far as, the pre-deposit of penalty, it is ordered that Mr. Manoj Ratnakar Jain shall deposit Rs. 5 lacs, M/s. Ratnakar Enterprises Rs. 4 lacs and M/s Aar Em Plywood and Sunmica Rs. 4 lacs within six weeks from the date of this order, as we do not find any new reason forthcoming for not doing so. The remaining amount of penalty imposed on the appellants shall stand waived till the matter is finally taken up for hearing. The failure of depositing the said amount within the stipulated time by the applicants shall result in the concerned appeal being dismissed. All these applications are disposed of accordingly. Compliance to be reported on 16-4-2007
(Dictated & pronounced in the open Court)