2004 (5) TMI 86 - HC - Central Excise

Issues Involved:
1. Legality and validity of the orders dated 6-6-2003 and 31-3-2004.
2. Requirement of pre-deposit under Section 35F of the Central Excise Act, 1944.
3. Retrospective amendment by Section 154 of the Finance Act, 2003.
4. Non-issuance of notice before passing the impugned order.
5. Impact of the Supreme Court's stay order dated 12-1-2004.
6. Supersession of earlier notifications and their legal effect.

Detailed Analysis:

1. Legality and Validity of the Orders Dated 6-6-2003 and 31-3-2004:
The petitioners challenged the legality and validity of the orders dated 6-6-2003 and 31-3-2004, which demanded the payment of Rs. 27,62,44,664/-. The Deputy Commissioner of Central Excise, Guwahati, issued the order on 6-6-2003, demanding recovery of Rs. 2,16,10,577.43 refunded to the petitioners and confirming a demand of Rs. 25,46,34,087/-. The Commissioner of Central Excise (Appeals) ordered the deposit of the said amount as a pre-condition for hearing the appeal. The petitioners argued that the appellate authority admitted no notice was issued to them and that the earlier notification had not been superseded.

2. Requirement of Pre-Deposit Under Section 35F of the Central Excise Act, 1944:
Section 35F mandates the deposit of the amount demanded before an appeal can be entertained. The appellate authority may dispense with such deposits if it forms an opinion that it would cause undue hardship to the appellant. The petitioners were asked if they were willing to deposit at least 50% or 25% of the amount, which they refused. The respondents agreed to accept 50% or even 25% as a Bank Guarantee. The appellate authority found that the petitioners did not have a strong prima facie case and rejected the stay application, directing the petitioners to deposit the entire amount.

3. Retrospective Amendment by Section 154 of the Finance Act, 2003:
Section 154 retrospectively amended Notification No. 32/99, withdrawing the benefit of exemption to Pan masala containing tobacco. The Deputy Commissioner relied on this amendment to order the recovery of the amount and reject the refund claims. The appellate authority noted that the relief granted in the writ appeal was no longer available to the petitioners due to the stay order by the Supreme Court and the retrospective amendment.

4. Non-Issuance of Notice Before Passing the Impugned Order:
The petitioners argued that the order dated 6-6-2003 was bad in law due to the non-issuance of notice, which resulted in prejudice against them. The appellate authority acknowledged the lack of notice but emphasized that the retrospective amendment and the stay order by the Supreme Court nullified the relief granted in the writ appeal. The court noted that the petitioners failed to show any material prejudice caused by the non-issuance of notice.

5. Impact of the Supreme Court's Stay Order Dated 12-1-2004:
The stay order by the Supreme Court maintained the status quo from the date of the order and did not undo actions already carried out pursuant to the judgment in the writ appeals. The appellate authority considered the stay order and concluded that the petitioners did not have a strong prima facie case. The court agreed that the stay order did not wipe out the judgment but maintained the status quo, impacting the relief granted to the petitioners.

6. Supersession of Earlier Notifications and Their Legal Effect:
The petitioners argued that the appellate authority could not substantiate the supersession of the notification dated 8-8-2003. However, subsequent notifications dated 25-8-2003 and 21-1-2004 restored partial and total benefits, respectively. The court noted that the letter dated 27/29-4-2004 clarified that the instructions contained in the letter dated 8-8-2003 were infructuous due to the subsequent notifications. The court emphasized that statutory provisions cannot be superseded by instructions or letters.

Conclusion:
The court dismissed the writ petitions, upholding the orders dated 6-6-2003 and 31-3-2004. It emphasized the statutory requirement of pre-deposit under Section 35F, the impact of the retrospective amendment by Section 154 of the Finance Act, 2003, and the Supreme Court's stay order. The court found no merit in the petitioners' arguments regarding non-issuance of notice and the supersession of earlier notifications. The petitioners were granted liberty to challenge Section 154 of the Finance Act, 2003, independently of these proceedings.

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