1987 (12) TMI 40 - HC - Central Excise

Issues Involved:
1. Denial of cross-examination of witnesses.
2. Reliance on the Chemical Analyst's report without providing a copy to the petitioner.
3. Arbitrary computation of differential duty.
4. Tribunal's failure to consider the petitioner's liquidity position.
5. Tribunal's order as a non-speaking order and violation of principles of natural justice.

Detailed Analysis:

1. Denial of Cross-Examination of Witnesses:
The petitioner argued that the order of the Collector was based on statements from employees and customers without providing an opportunity for cross-examination. The Tribunal upheld the Collector's order, rejecting the petitioner's plea for cross-examination, citing valid reasons.

2. Reliance on the Chemical Analyst's Report:
The petitioner contended that the Collector relied on a Chemical Analyst's report without furnishing a copy to the petitioner. This was a significant ground for disputing the differential duty imposed. The Tribunal did not adequately address this issue, leading to an argument that the order violated principles of natural justice. The Court noted that the failure to provide the report and denial of cross-examination resulted in grave injustice, referencing decisions like M/s. Gupta Tobacco Co. v. Union of India and Rungta Sons (P) Ltd. v. Collector of Customs.

3. Arbitrary Computation of Differential Duty:
The petitioner challenged the computation of differential duty as arbitrary and based on hypothetical calculations. The Collector's order was said to be based on assumptions about the quality and value of tread rubber, relying on one sale-bill and the Chemical Analyst's report. The Court found the Tribunal's acceptance of these computations without proper scrutiny problematic. The Court highlighted that the differential duty was calculated on a flat rate assumption of Rs. 23.50 per kg, which was not justified.

4. Tribunal's Failure to Consider the Petitioner's Liquidity Position:
The petitioner argued that the Tribunal failed to consider the financial hardship that would result from the requirement to deposit the entire duty amount. The Tribunal's order did not address the petitioner's liquidity issues adequately, leading to a potential dismissal of the appeal if the deposit was not made. The Court emphasized that the Tribunal should exercise its discretion under Section 35F of the Act judiciously to avoid imposing practically impossible conditions.

5. Tribunal's Order as a Non-Speaking Order and Violation of Principles of Natural Justice:
The petitioner contended that the Tribunal's order was not a speaking order and lacked fair consideration of the grounds for dispensing with the pre-deposit. The Court agreed, noting that the Tribunal's order was arbitrary and lacked application of mind. The Court emphasized that the Tribunal must pass orders considering each ground urged for dispensing with the pre-deposit, ensuring adherence to principles of natural justice.

Conclusion:
The Court found that the Tribunal's order suffered from significant infirmities, including failure to provide a speaking order and violation of principles of natural justice. The Court modified the Tribunal's order, directing it to hear the appeal without insisting on the pre-deposit of Rs. 13,24,725.90ps, provided the petitioner deposits Rs. 7,04,667.88ps within four weeks. The rest of the Tribunal's order remained undisturbed.

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