Ganges Manufacturing Co. Ltd. vs Union of India (UOI)

Debasish Kar Gupta, J.—The Court: None appears on behalf of the Respondents. No accommodation is prayed for.

This writ application is directed against an order dated September 24, 2001 passed by the Respondent No. 2 in connection with an application for waiver of requirement of pre-deposit of duty and penalty in Appeal No. EV-335/2001.

A show-cause notice dated March 26, 1999 was served upon the Petitioner-company by the Respondent No. 3 in the matter of payment of central excise duty for the period from March 1, 1994 to February 28, 1997.

The above proceeding was disposed of by an order dated February 28, 2001. The Petitioner-company preferred an appeal before the Respondent No. 2. While disposing of the application filed in connection with the above appeal for waiver of pre-deposit of duty and penalty, the learned Tribunal directed the Petitioner-company to deposit a sum of Rs. 25 lacs by virtue of the impugned order.

It is submitted by the learned Senior Counsel appearing on behalf of the Petitioners that under the provisions of proviso to Section 35F of the Central Excise Act, 1944 the learned Tribunal was under obligation to consider the prima facie case as also the hardship of the Petitioner-company. According to him, the learned Tribunal failed and/or neglected to take into consideration the above aspect of the matter. It is submitted by him that the show cause notice dated March 26, 1999 was issued beyond the period of 6 months. But in accordance with the provisions of Section 11A of the Central Excise Act, 1944 the time limit to initiate a proceeding is 6 months. He further submits that the show cause notice was issued taking into consideration that there was no price difference between the factory gate sale and consignment sale. According to him, it was done in deviation from the settled principle of law decided in Indian Oxygen Ltd. Vs. Collector of Central Excise,

It is further submitted by him that though in the application under reference the financial hardship in case of pre-deposit of duty and penalty was shown, learned Tribunal did not pay any heed to the same. It is submitted by him that the Petitioner-company had been declared ''sick unit'' by an order dated March 30, 1993 in case No. 39 of 1990 by Board for Industrial and Financial Reconstruction and the management of the Petitioner-company was working under the scheme of BIFR. It had incurred loss of Rs. 34,73,98,436/-. It was evident from the profit and loss account and the balance sheet of the Petitioner-company which were annexed to the above application.

I have heard learned Counsel appearing for the Petitioner and also considered the facts and circumstances of the case. Admittedly, the show cause notice under reference was served upon the Petitioner-company in the month of March 26, 1999 in connection with payment of excise duty for the period from March 1, 1994 to February 28, 1997. It is also not in dispute that the learned Tribunal did not take into consideration the provision of Section 11A of the Central Excise Act, 1944 at the time of passing the impugned order. It is also evident that the question of taking into consideration the price difference in between the factory gate sale and consignment sale was not taken into consideration by the learned Tribunal.

Admittedly, in the application under reference it was categorically stated that the Petitioner-company was declared ''sick unit'' by the Board of Industrial and Financial Re-construction but the learned Tribunal did not take into consideration the above aspect nor the learned Tribunal took into consideration the question of financial loss of the company for arriving at a conclusion with regard to financial hardship of the Petitioner-company.

In view of the observation made hereinabove, I find that the learned Tribunal passed the impugned order without adhering to the provisions of the proviso to Section 35F of the Central Excise Act, 1944. Therefore, there was procedural impropriety. The impugned order dated September 24, 2001 passed by the learned Tribunal has been quashed and set aside with a direction upon the learned Tribunal to pass a reasoned order on the basis of the observation made hereinabove, in connection with the application filed by the Petitioner with the prayer for waiver of requirement of pre-deposit of duty and penalty made in Appeal No. EV-335/2001 within a period of two months from the date of communication of this order.

Till the above application is disposed of the Respondents are restrained from enforcing the order dated February 28, 2001 passed by the Respondent No. 3.

This application is thus disposed of.

There will be no order as to cost.

Urgent photostat certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.