2011 (4) TMI 1034 - HC - Central Excise

Application seeking modification - Deposit of amount against stay order - immovable property worth Rs.6 crores is under the attachment of the Excise Department - Petitioner permitted to raise loan of Rs.55 lacs on the properties already attached, so as to make payment of this amount to Excise Department with the condition that, attachment would not come in the way of the petitioners and any Bank or Financial Institution sanctioning the loan of Rs.55 lacs after creating charge or encumbrance on this property shall have first charge on this property - amount shall not be used for any other purpose, except for the purpose of making payment to the Excise Department. The Excise Department shall not raise any objection in petitioners getting the loan sanctioned by creating charge and/or mortgaging the attached property for the above purpose - Appeal restored and the CESTAT

Issues:
1. Modification of order regarding deposit of a sum of money.
2. Explanation sought from respondent regarding recovery efforts.
3. Petitioner's argument against dismissal of appeal for failure to pre-deposit.
4. Petitioner's reliance on legal precedents.
5. Court's decision to allow petitioners to raise a loan against attached property.

Issue 1: Modification of order regarding deposit of a sum of money
The applicant sought modification of an order to substitute the condition of depositing a specific sum of money by directing the respondents to accept land as security instead. The Court, after considering rival submissions and legal precedents, modified the order to allow the petitioners to raise a loan of Rs.55 lacs against the attached property to make the payment to the Excise Department. The loan amount was to be used solely for this purpose, and the property's attachment would not hinder the loan process. The Court set a deadline for completing this process and specified that the attachment would continue until the appeals were heard and disposed of by the Tribunal.

Issue 2: Explanation sought from respondent regarding recovery efforts
The Court had earlier called for an explanation from the respondent regarding the lack of appropriate steps taken for recovery of outstanding amounts from the petitioners. The respondent, Commissioner of Central Excise and Customs, Surat-I, provided a detailed affidavit explaining the actions taken by the Excise Department for enforcing recovery, including attaching immovable properties and issuing notices of demand. The Court noted the steps taken by the Department during the absence of any stay or injunction from the CESTAT.

Issue 3: Petitioner's argument against dismissal of appeal for failure to pre-deposit
The petitioners argued against the dismissal of their appeal for failure to pre-deposit the required amount, citing legal precedents where dispensation of pre-deposit was allowed or partial pre-deposit was accepted upon application. They contended that the Tribunal's direct dismissal of appeals for non-compliance was not in accordance with proper procedure and should be set aside. The petitioners highlighted the nature of the issue and previous remands by the Tribunal in similar cases.

Issue 4: Petitioner's reliance on legal precedents
The petitioners relied on legal precedents, including a case where the Supreme Court directed that the appellant need not deposit the impugned duty and the appeal should be disposed of expeditiously. They also cited a case where the Apex Court allowed the appellant to pay only a portion of the tax amount due. These precedents were used to support the argument that the appeals should be restored to the Tribunal for expeditious disposal considering the circumstances of the case.

Issue 5: Court's decision to allow petitioners to raise a loan against attached property
Considering the circumstances, including the attachment of property and partial payment made by the petitioners, the Court decided to permit the petitioners to raise a loan of Rs.55 lacs against the attached property to settle the amount owed to the Excise Department. This decision was made with the interest of justice in mind and was not to be considered as a precedent for future cases. The Court emphasized that this limited indulgence did not condone the petitioners' defaults or fully accept the respondent's explanation regarding recovery efforts.

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