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2014 (9) TMI 189 - HC - Central ExciseWaiver of pre-deposit - tribunal directed the petitioner to deposit a sum of ₹ 1.14 crores - petitioner raising various issues including the issue that the petitioner s company has been referred to Board for Industrial and Financial Reconstruction (in short BIFR ) and, therefore, the action for recovery of the amount is impermissible - held that - The impugned order completely lacks the finding on the net-worth of the company, which is one of the factors to be considered at the time of consideration of an application for stay or waiver of pre-condition deposit under Section 35F of the Central Excise Act. There is no absolute bar in entertaining the writ petition despite the availability of a remedy by way of an appeal or otherwise provided under the statute. The Writ jurisdiction is based on rule of discretion than of compulsion. The power cannot be circumscribed in a narrow compass, as the language under Article 226 of the Constitution is designedly couched in a broader language and not confining it only to the power to issue a prerogative Writ as understood in English Law, but can reach where the injustice is found. The order impugned is set aside. The CESTAT is directed to consider the application afresh in the light of the law laid down in case of Sagarika Acoustronics Pvt. Ltd. (2007 (3) TMI 723 - Supreme Court of India) and the observations made in this order, and shall restrict its decision on the net-worth of the company on the basis of the records and materials already produced by the petitioner. - Decided in favor of assessee.
Issues Involved:
1. Legality of the CESTAT's order directing the petitioner to deposit Rs. 1.14 crores as a condition precedent for maintaining the appeal. 2. Consideration of the petitioner's company being declared a sick company by BIFR and its impact on the deposit order. 3. Applicability of the Supreme Court judgments in Sagarika Acoustronics Pvt. Ltd. and Metal Box India Ltd. regarding the net-worth of the company. 4. Maintainability of the writ petition in the presence of an alternative remedy under Section 35G of the Central Excise Act. Issue-wise Detailed Analysis: 1. Legality of the CESTAT's Order: The petitioner challenged the CESTAT's order dated 8th May 2014, which directed a deposit of Rs. 1.14 crores as a condition for maintaining the appeal. The petitioner argued that this order was a replica of an earlier order dated 13th November 2013, which had been set aside by the High Court with directions for reconsideration. The Tribunal, however, reiterated the same quantum without addressing the net-worth of the company, which was a crucial factor as per the Supreme Court's judgment in Sagarika Acoustronics Pvt. Ltd. 2. Consideration of the Petitioner's Company Being Declared Sick: The petitioner's company was declared a sick company by BIFR, and the petitioner argued that directing the payment would result in undue hardship, contrary to the Supreme Court's ruling in Sagarika Acoustronics Pvt. Ltd. The Tribunal was required to consider the net-worth of the company before directing any deposit. However, the Tribunal failed to record any findings on the net-worth, thus not adhering to the Supreme Court's directive. 3. Applicability of Supreme Court Judgments: The High Court noted that the Tribunal misinterpreted the Supreme Court's judgment in Sagarika Acoustronics Pvt. Ltd., which emphasized considering the net-worth of a company under BIFR before directing any deposit. The Tribunal erroneously relied on its own judgment in Nicco Corporation Ltd., which misapplied the principle of ratio decidendi. The High Court clarified that there was no conflict between the judgments in Sagarika Acoustronics Pvt. Ltd. and Metal Box India Ltd., as they addressed different legal points. The High Court reiterated that the net-worth of the company is a significant factor in deciding the waiver of pre-deposit under Section 35F of the Central Excise Act. 4. Maintainability of the Writ Petition: The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy under Section 35G of the Central Excise Act. However, the High Court held that there is no absolute bar on entertaining a writ petition despite the availability of an alternative remedy. The Court emphasized that writ jurisdiction is based on discretion and can be exercised to prevent injustice, especially when the Tribunal's order lacked adherence to judicial directions and principles. Conclusion: The High Court set aside the impugned order of the CESTAT and directed the Tribunal to reconsider the application afresh, specifically addressing the net-worth of the company in light of the Supreme Court's judgment in Sagarika Acoustronics Pvt. Ltd. The Tribunal was instructed to complete this exercise within three weeks. The writ petition was disposed of without any order as to costs.
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