ORDER
S. Kalyanam, Member (J)
1. The above applications arising out the common impugned order of the Collector of Central Excise, Bangalore dated 18-5-1993 have been filed for waiver of per-deposit of duty of Rs. 1,14,55,880.91 and penalty of Rs. 2 lakhs on appellant M/s. Ramachandra Rasins Pvt. Ltd. and penalty of Rs. 1 lakh each on the other two petitioners.
2. Shri Parameswaran at the outset submitted that the entire impugned order stands vitiated for reason of non-observance of the principles of natural justice. It was urged that as many as 479 files have been relied upon as documents detailed in the Annexure to the show cause notice and even though the petitioners were repeatedly requesting the authorities seeking permission to take photostat copies of those files the Department did not give the petitioners adequate time for the same with the result the petitioners could take photo copies of only 107 files and the petitioners were called upon to meet the charge without being furnished either the copies by the Department or without allowing the petitioners adequate time to take photo copies either. This has resulted in grave prejudice to the petitioner in the conduct of the case. The learned Counsel in this context placed reliance on the ruling of the Supreme Court in the case of Sanghi Textile Processors (P) Ltd. v. Collector of Central Excise, reported in 1993 (65) E.L.T. 357 and urged that as per the ratio of the ruling of Supreme Court it is just and proper for the Department to furnish the petitioners the copies of the documents set out in the show cause notice and relied upon against the petitioners. The learned Counsel also submitted that the DRI officers did not permit easy access to the petitioners to their own record in the office of the Collectorate which resulted in delay and even the complaint made to the Collector was of no avail. It was further urged that in respect of violation of the principles of natural justice prejudice is automatically presumed and therefore, prima facie the order is vitiated. The learned Counsel further submitted that reliance has placed on a quantity of 6 tonnes of PVC resins which the petitioner allegedly has used clandestinely and in spite of the fact that the same has been clearly accounted, the evidence has not been properly considered. Here also it was urged that adequate opportunity to the petitioner to explain the quantum of 6 tonnes was not given. The learned Counsel elaborately went through Para 45 of the impugned order and assailed the correctness of the same. It was urged that 90% of the sales of the petitioners are to Government Department and therefore, even on grounds on propriety there is hardly any possibility of clandestine removal of goods and this aspects has not been properly taken note of. It was further urged that in proof of charge of clandestine removal it is the bounden duty of the Department to take note of the normal quantum of production having regard to the installed capacity and the machineries in the factory, utilisation of raw materials, employment of labour, consumption of power etc. and unfortunately these objective tests were not resorted in the case of the petitioners resulting in prejudice. The learned Counsel further urged that the petitioners would get Modvat credit on all the materials used and in respect of PVC resins at the rate of Rs. 21/- per Kg. to which the petitioner is eligible for Modvat credit, the same would come to Rs. 1.25 crores, and the demand being more or less equivalent to the same there is no need to the petitioner to resort to any clandestine removal at all. Finally the learned Counsel pleaded total financial incapacity and crisis and urged that the unit has incurred a loss of Rs. 56 lakhs as on 31-3-1992. It was further urged that consequent on labour unrest the factory remains closed since the last 10 days and production has come to a stand still. Creditors of the petitioners, such as State Bank of India and Karnataka State Financial Corporation are demanding their dues. State Bank of India has sent a communication dated 12-5-1993 stopping further credit facilities and Karnataka State Financial Corporation has sent a notice to the petitioners for clearance of the loan and threatening to take penal action and for taking over possession of the assets of the company.
3. Shri Jeyaseelan, the learned D.R. submitted that the petitioner is guilty of total laches and inaction and the records would clearly bear out that as many as 11 months has lapsed since the date of issue of the show cause notice till the personal hearing and the petitioners themselves admitted that as many as 38 days they were permitted to have access to the records, within which time the petitioners could have taken complete copies of all the records. The learned DR further submitted that in Para 20-22 the adjudicating authority has dealt with the pleas of violation of natural justice at great length and adopted the same. It was further urged that even though the petitioners participated in the personal hearing, the record of personal hearing available would not show that the petitioner ever made any grievance of non-availability at that time and this would prima facie imply that the petitioners did not suffer any prejudice, nor did they make any grievance about non-availability of their own records. The learned DR submitted that Para 45 of the impugned order gives a clear answer to the petitioners’ plea with reference to the clandestine removal of 6 tonnes of PVC resins. The learned D.R. has no instructions about the financial crisis of the petitioners.
4. We have considered the submissions made before us. In regard to the plea of violation of natural justice we would only refer to para 20-22 of the impugned order where the entire plea has been dealt with in extenso. On going through the records we are satisfied prima facie that adequate opportunity was given to the petitioner to take photostat copies. However, at this interlocutory stage it would not be possible for us to take a view that the opportunity given was adequate or not and we keep this issue open and the learned Counsel also at this stage submitted that he would make arguments with reference to record as to how the opportunity given was wholly inadequate. No doubt the petitioners have made a grievance about want of adequate opportunity after the personal hearing was over by their letter dated 10-5-1993. We would be able to take this aspect into reckoning only at the time of final hearing of the appeal. Therefore, on prima facie grounds we do not think it would be proper at this stage, having regard to the facts and circumstances of the case, to remand the matter, and as rightly argued by the learned D.R., Plethora of evidence has been dealt with in the entire order which would require scrutiny and consideration and therefore, prima facie it would not be possible for us to hold that the order is not sustainable or suffers from any infirmity, particularly in the light of the elaborate reasons given by the learned adjudicating authority in dealing with various issues. Even with reference to the plea regarding availability of Modvat credit it would not be possible to hold prima facie on that ground that the order is not sustainable and that will have to be considered only at the time of final disposal.
5. Now coming to the financial position of the petitioner, we find that Karnataka State Financial Corporation by their communication dated 19-6-1993 has sent a statutory notice for taking over possession of the petitioners’ assets on pain of petitioners’ failure to discharge their loan liability to them. We also note that credit facilities are sought to be closed by the State Bank of India as per their communication cited supra. Added to the financial troubles the petitioner company would appear also be facing labour trouble resulting in closure of the factory for the past 10 days with virtual and total stoppage of production. We also note that the outstandings of the petitioners are very considerable compared to the amount due to the petitioners as reflected in the balance sheet for the year ending 31st March, 1992 and the petitioners have also incurred loss. Keeping all these facts into consideration and also keeping in mind the turnover of the petitioner company we are inclined to think that the interests of justice would be met if the petitioner company M/s. Ramachandra Resins Pvt. Ltd. is directed to pre-deposit a sum of Rs.15 lakhs (Rs. Fifteen lakhs) and we order accordingly.
6. Petitioner M/s. Subramanian and Co. is directed to pre-deposit a nominal sum of Rs. 2500/- (Rs. Two thousand five hundred). The above pre-deposits are directed to be made on or before 28th February, 1994 and compliance reported, subject to which pre-deposit of the balance of duty and the entire penalty on all of the petitioners would stand dispensed with pending appeal. We also grant stay of recovery, subject to the petitioners complying with this order.
7. The learned Counsel at this stage prayed that after complying with this order the petitioners may be permitted to take out an application for early hearing since vital questions of law are involved and the learned D.R has no objection.
8. The matter will be called on 28-2-1994 for reporting compliance. Pronounced in the open Court.
Pronounced in open Court.