2013 (5) TMI 376 - HC - Central Excise

Confiscation of leased out plant and machinery - impact of award granted by the Arbitrator - Held that - The confiscation order does not exclude the plaint and machinery of the petitione. The plant & machinery was leased out to M/s. RIL in the year 2003. A dispute arose between the petitioner and M/s. RIL in the year 2006, and was referred to the sole Arbitrator. The Arbitrator entered into the reference and was ceased of the matter until the award was made on 14.03.2012. It is not possible to believe that during the arbitration proceedings for five long years when the factory was close, the petitioner was not aware of the investigation and order of confiscation and penalties. Instead of informing the Delhi High Court in the arbitrary proceedings that the entire plant and machinery has been confiscated, the petitioner informed the Court that they have no objection for removing the plaint and machinery of the petitioner. We do not find anything on record that the Delhi High Court in the appeal arising out of Arbitration proceeding was informed, prior to our order dated 22.08.2012 that the plant and machinery cannot be removed, as the petitioner has been informed by the Central Excise Department vide letter dated 6.2.2012, that its request to grant permission for removal of its plant and machinery from the factory of M/s. Rathi Isptat Ltd., Ghaziabad (M/s. RIL) cannot be acceded to, since the same was confiscated and their ownership rested with the Government of India. - writ petition dismissed - decided against the assessee.

Summary

Issues involved:
1. Confiscation of plant and machinery leased by the petitioner to respondent no. 4 by the Custom and Central Excise Department.
2. Arbitration award in favor of the petitioner for removal of the leased equipment.
3. Appeal filed by respondent no. 4 against the arbitration award.
4. Writ petition challenging the order of confiscation and seeking permission to remove the plant and machinery.
5. Discrepancies in informing the courts about the confiscation during legal proceedings.

Issue 1: Confiscation of plant and machinery
The petitioner leased plant and machinery to respondent no. 4, leading to a dispute referred to arbitration. The Central Excise Department confiscated the equipment in 2007. The petitioner argued that under Rule 173Q of the Central Excise Rules, confiscation of the lessor's property was impermissible. However, the court noted that the confiscation order did not exclude the leased machinery, and the petitioner was aware of the investigation and confiscation during the arbitration proceedings. The court dismissed the writ petition, suggesting the petitioner file an appeal against the Central Excise Commissioner's order.

Issue 2: Arbitration award
The arbitrator's award directed respondent no. 4 to allow the petitioner to remove the leased equipment and pay outstanding dues. The award did not address the ongoing investigation and confiscation by the Central Excise Department. The petitioner informed the court about no objection to removing the machinery, but did not disclose the confiscation details. The court highlighted the lack of information provided to the Delhi High Court during the appeal arising from the arbitration proceedings.

Issue 3: Appeal by respondent no. 4
Respondent no. 4 appealed against the arbitration award, agreeing to hand over the machinery to the petitioner for dismantling. The petitioner filed a writ petition challenging the confiscation order and seeking permission to remove the equipment. The court dismissed the writ petition, emphasizing the need for the petitioner to pursue an appeal against the Central Excise Commissioner's order.

Issue 4: Writ petition and permission for removal
The petitioner filed a writ petition seeking permission to remove the plant and machinery from respondent no. 4's factory. The court noted discrepancies in the petitioner's communication to the courts regarding the confiscation. The writ petition was dismissed, with the court advising the petitioner to file an appeal against the Central Excise Commissioner's order.

Issue 5: Discrepancies in court communication
The court highlighted discrepancies in the petitioner's communication to the courts regarding the confiscation of the machinery. The petitioner did not fully disclose the confiscation details during legal proceedings, leading to confusion and subsequent dismissal of the writ petition. The court emphasized the importance of providing accurate and complete information during legal proceedings.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive understanding of the court's decision and the arguments presented by the parties involved.