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Issues involved: Show cause notice for recovery of Central Excise Duty, violation of principles of natural justice in passing the order, legality of direction for deposit under Section 35F of Central Excise Act.
Recovery of Central Excise Duty: The Commissioner of Central Excise issued a show cause notice to the petitioner regarding the recovery of Central Excise Duty amounting to Rs. 80,72,573.45 and penalization for contravening provisions of the Excise Act and Rules. The case was adjudicated by Central Excise Meerut, confirming the duty demand. The Tribunal found the Commissioner's order to be in violation of natural justice and quashed it, remanding the matter for reconsideration. The Tribunal also directed the assessee to deposit Rs. 20 lakhs under Section 35F of the Central Excise and Salt Act, 1944. Violation of Principles of Natural Justice: The petitioner contended that since the appeal was disposed of by quashing the Commissioner's order, no tax or penalty remained payable, and there was no pending appeal before the Tribunal. Therefore, the direction for depositing Rs. 20 lakhs under Section 35F was deemed illegal and without jurisdiction. The department argued that since the appeal did not decide the merits of the case, the pre-deposit was justified. Legality of Direction for Deposit under Section 35F: The High Court considered the submissions of both parties and concluded that as the appeal and stay waiver application were disposed of together, no appeal remained pending before the Tribunal. Hence, the direction for pre-deposit under Section 35F was deemed illegal and contrary to the law. Citing previous decisions, the Court emphasized that when an appeal is allowed with consequential relief, the pre-deposit must be refunded. Therefore, the direction for payment of Rs. 20 lakhs was declared illegal and without jurisdiction. The Court ordered a stay on the pre-deposit as directed by the Tribunal. Additional Order: The Court clarified that its order did not prevent the Commissioner from proceeding based on the show cause notice and passing an appropriate order after giving a proper hearing to the petitioner. The writ petition is scheduled for a future hearing, with the respondents directed to file a counter affidavit within three weeks and any rejoinder affidavit within two weeks thereafter. The matter has been adjourned for five weeks.
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