1994 (5) TMI 26 - HC - Central Excise

Summary

Issues:
1. Pre-deposit of duty as a condition for maintaining appeals before CEGAT.
2. Jurisdiction of High Court under Article 226 of the Constitution of India.
3. Financial liquidity of the petitioners.
4. Analysis of the petitioners' financial position.
5. Requirement of bank guarantee and cash deposit for the total amount of duty assessed.

Analysis:

Issue 1: Pre-deposit of duty as a condition for maintaining appeals before CEGAT
The case involved two connected writ petitions concerning pre-deposit of duty as a condition for maintaining appeals before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The CEGAT had earlier passed orders directing the petitioners to deposit a significant amount in cash and furnish a bank guarantee. The petitioners challenged these orders through writ petitions in the High Court.

Issue 2: Jurisdiction of High Court under Article 226 of the Constitution of India
The High Court, while reviewing the orders of pre-deposit passed by CEGAT, acknowledged the limited scope of its jurisdiction under Article 226 of the Constitution of India. The petitioners had previously withdrawn their writ petitions to approach CEGAT for modification, but the CEGAT maintained its stance despite the petitioners' efforts.

Issue 3: Financial liquidity of the petitioners
During the proceedings, the petitioners argued that their financial liquidity was insufficient to comply with the CEGAT's deposit orders. They proposed a staggered payment plan and offered share certificates as collateral. However, the Additional Solicitor General contended that the analysis of the petitioners' financial position indicated otherwise.

Issue 4: Analysis of the petitioners' financial position
The government's analysis and a supplementary affidavit highlighted the petitioners' supposedly sound financial position. The court considered these submissions along with the balance sheets of the company and other relevant particulars presented during the proceedings.

Issue 5: Requirement of bank guarantee and cash deposit
One argument raised was that requiring a bank guarantee would necessitate the petitioners to deposit the cash equivalent of the bank guarantee, effectively demanding the total duty amount upfront. The court deliberated on this aspect and modified the CEGAT's order accordingly.

In the final judgment, the High Court directed the petitioners to deposit a specified amount in cash as determined by CEGAT. Regarding the bank guarantee, the court dispensed with the requirement but imposed conditions related to asset encumbrance and alienation. The petitioners were given a timeline for compliance with the modified orders, ultimately disposing of the writ petitions based on the outlined modifications.