2006 (7) TMI 225 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the order of the Customs Excise and Service Tax Appeal Tribunal directing pre-deposit.
2. Imposition of penalties by the Commissioner, Central Excise.
3. Alleged evasion of excise duty by the petitioners.
4. Validity of statements and evidence considered by the Tribunal.
5. Tribunal's discretion in determining the quantum of pre-deposit.
6. Supervisory jurisdiction of the High Court under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Legality of the Order of the Tribunal Directing Pre-deposit:
The petitioners challenged the Tribunal's order dated 12-4-2006, which mandated a pre-deposit of Rs. 2 crores by each petitioner as a condition for hearing their appeals against the Commissioner's order. The Tribunal's power to ask for a pre-deposit is undoubted, and it is within its discretion to determine the appropriate amount based on the facts of each case. The High Court emphasized that it cannot substitute its discretion for that of the Tribunal unless the order is perverse or based on extraneous considerations.

2. Imposition of Penalties by the Commissioner, Central Excise:
The Commissioner imposed penalties of Rs. 21 crores on Devi Das Garg, Rs. 25 crores on Rakesh Kumar Garg, and Rs. 21 crores on Santosh Kumar Garg under various Central Excise Rules. The penalties were based on the clandestine evasion of excise duty amounting to Rs. 33,20,03,239/- by M/s. Amar Jyoti Packers. The High Court noted that the Commissioner's detailed order explained the basis for these penalties, considering the evidence collected during the search and seizure operations.

3. Alleged Evasion of Excise Duty by the Petitioners:
The petitioners were accused of evading excise duty through M/s. Amar Jyoti Packers, a firm allegedly set up by their Pujari, Mahesh Kumar Gautam, who acted as a front man. The Excise Department's investigation revealed that the petitioners were actually running the operations and evading excise duty by not maintaining proper records of raw materials and production. The High Court acknowledged the prima facie involvement of the petitioners in the evasion, as reflected in the evidence collected by the Revenue Authorities.

4. Validity of Statements and Evidence Considered by the Tribunal:
The petitioners argued that the Tribunal did not consider the retraction of statements by Mahesh Kumar Gautam. However, the High Court noted that while Mahesh Kumar retracted his statements, he did not deny his financial incapacity to purchase machinery or establish a factory. The Tribunal considered all the facts and documents found during the search, and the High Court found no reason to question the Tribunal's reliance on this evidence.

5. Tribunal's Discretion in Determining the Quantum of Pre-deposit:
The petitioners contended that the pre-deposit amount of Rs. 2 crores each was unreasonable and amounted to denying their right of appeal. The High Court, however, found that the Tribunal acted reasonably and showed leniency by ordering a pre-deposit of less than 10% of the penalties. The Tribunal had given the petitioners a hearing and considered all relevant facts before determining the pre-deposit amount.

6. Supervisory Jurisdiction of the High Court under Article 226 of the Constitution:
The High Court reiterated that its role under Article 226 is supervisory, not appellate. It can only interfere if the Tribunal's decision is unfair, unreasonable, or violates principles of natural justice or statutory provisions. The High Court found that the Tribunal's order met all procedural requirements and was based on substantial evidence. Therefore, there was no scope for interference.

Conclusion:
The High Court dismissed the writ petitions, finding no grounds to interfere with the Tribunal's order. However, it extended the period for making the pre-deposit by two months, allowing the petitioners to seek revival of their appeals before the Tribunal if the pre-deposit is made within this extended period. No costs were awarded.