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2018 (8) TMI 170 - HC - Central ExciseWaiver of Interest - Recovery of Excise Duty - BIFR Scheme - the excise duty had been collected by the petitioner from its customers but not paid to Government - the petitioner company was declared as a Sick Industry on 16.11.1994 as contemplated under Section 18 of SICA. Held that - Admittedly, the petitioner collected excise duty from their customers during the course of their business. The fact that the petitioner collected excise duty is not denied. At the same time, the petitioner did not remit it to the credit of Excise Department. Therefore, the presumption would be that the petitioner had retained the duty collected from their customers and utilised it for their own purpose - the long drawn process of rehabilitation to rehabilitate the petitioner company, however, should not be at the cost of the creditors who were waiting for a long time for settlement of their legitimate dues or such rehabilitation process should not frustrate the creditors or make them fall within the scope and ambit of sick industry. The object with which SICA was enacted is to put the rehabilitation process, to rehabilitate a sick industrial company in the fast track mode to expeditiously settle the creditors. It would be imperative to revive and rehabilitate the potentially viable sick industrial companies as quickly as possible. The process for rehabilitation must not be time consuming as it would prejudice the creditors of the company. A scheme for rehabilitation has to be drawn and genuine attempts have to be made to rehabilitate the sick industry within a reasonable time and it should not be at the cost of the creditors of the company and to make them to drive from pillar to post to get their legitimate dues recovered from the sick industry - In the present case, admittedly, the petitioner company was declared as a sick industry. Now, more than two decades have lapsed from the date on which the petitioner company was declared as a sick industry. After declaring the petitioner company as a sick industry, several rehabilitative measures were drawn, schemes were put in place and creditors have held consultative process to explore the possibility of rehabilitation so as to get their dues settled at the earliest. However, several attempts made to rehabilitate the petitioner company has failed - the order passed by the first respondent, which is impugned in this writ petition, need not be interfered with. Under the garb of rehabilitating the petitioner company, the second respondent cannot be deprived of their statutory dues which are pending for a very long time. The decision of Division Bench of the Andhra Pradesh High Court in the case of Andhra Cements Limited vs. Commissioner of C.Excise & S.T., Guntur, 2017 (4) TMI 694 - ANDHRA PRADESH HIGH COURT squarely applies to the facts of present case, where it was held that A person who gained advantage by an interim order of the Court cannot, subsequently, turn around and seek umbrage under Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985. Petition dismissed - decided against petitioner.
Issues Involved:
1. Validity of the order dated 24.08.2012 by the first respondent. 2. Waiver of interest and penalty on excise duty. 3. Implementation of the rehabilitation scheme for the petitioner company. 4. Priority of excise duty dues over other debts. Detailed Analysis: 1. Validity of the Order Dated 24.08.2012 by the First Respondent: The petitioner challenged the order dated 24.08.2012, which allowed the appeal by the Commissioner of Central Excise, Cuddalore, thereby setting aside the order dated 06.10.2008 by BIFR. The petitioner argued that the second respondent had consented to the waiver of penalty and interest, as confirmed in their rejoinder, and that the first respondent's decision to direct the payment of excise duty levy was without material evidence. The petitioner contended that the first respondent's order undermined the rehabilitation scheme framed by BIFR, which included concessions necessary for the company's revival. 2. Waiver of Interest and Penalty on Excise Duty: The petitioner argued that the rehabilitation scheme formulated by BIFR included clauses for the waiver of interest and penalty on excise duty, citing the Division Bench of the Allahabad High Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs. Union of India, which supported the waiver of interest and penalty under a rehabilitation scheme. Conversely, the second respondent maintained that there is no provision under the Central Excise Act or Rules for waiver of interest, emphasizing that excise duty is an indirect tax collected from customers and retained by the petitioner, thus necessitating compensation to the state for the use of public funds. 3. Implementation of the Rehabilitation Scheme for the Petitioner Company: The petitioner company was declared a sick industry on 16.11.1994, and several rehabilitation schemes were formulated but failed. The petitioner sought modifications in the scheme and argued that the concessions granted by BIFR were essential for the company's revival. The second respondent opposed the rehabilitation scheme's concessions, particularly the waiver of interest, arguing that the petitioner had collected excise duty from customers but failed to remit it to the excise department, utilizing the funds for other purposes. 4. Priority of Excise Duty Dues Over Other Debts: The first respondent, in its order dated 28.09.2012, directed the petitioner to pay the principal amount of excise duty within a month and rejected the waiver of interest and penalty, stating that the petitioner had collected duty from customers and retained it, thus owing compensation to the state. The first respondent emphasized that the rehabilitation process should not be at the cost of creditors, including the excise department, whose legitimate dues had been pending for a long time. Conclusion: The court upheld the first respondent's order, emphasizing that the petitioner's long-drawn rehabilitation process should not prejudice the creditors, particularly the excise department, which had legitimate statutory dues. The court noted that the petitioner had been given several opportunities for rehabilitation but failed to settle the creditors' dues. The court dismissed the writ petition, stating that the first respondent's order was well-reasoned and did not warrant interference. The court referenced the decision of the Andhra Pradesh High Court in Andhra Cements Limited vs. Commissioner of C.Excise & S.T., Guntur, which supported the non-waiver of statutory dues in rehabilitation schemes.
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