2021 (6) TMI 517 - SC - Central Excise

Classification of goods - industrial chemical Sikko Sol - classifiable under sub-head No. 2710 1213 of the Central Excise Tariff Act,1985 or otherwise? - period from 01.04.2011 to 31.12.2015 - HELD THAT - A notice was issued under Section 174(2)(e) of the Central Goods Service Tax Act, 2017 on 02.02.2021, for initiation of process of recovery. On 22.02.2021, the raw material/finished goods, movable and immovable properties were attached. Plant and machinery was also attached - it is deemed fit and proper in the interests of justice to restore the appeal before the CESTAT which shall be decided on its own merits. The petitioner shall give an undertaking that it shall neither alienate movable or immovable property nor create third party rights - The respondents are directed to defreeze the bank accounts and the petitioner shall undertake to utilize it only for the purpose of his business - SLP disposed off.

Summary

Issues:
1. Classification and duty liability of industrial chemical 'Sikko Sol' under the Central Excise Tariff Act, 1985.
2. Dismissal of appeal by CESTAT for non-compliance with deposit requirements.
3. Challenge of CESTAT's order before the High Court and subsequent dismissal.
4. Issuance of recovery notice under the Central Goods & Service Tax Act, 2017.
5. Attachment of properties and machinery due to non-compliance with deposit requirements.
6. Request for condonation of delay in depositing the amount and restoration of appeal before CESTAT.
7. Imposition of terms for restoration of the appeal.
8. Directions regarding the petitioner's movable and immovable properties, bank accounts, and business operations.

1. Classification and Duty Liability: The petitioner, a manufacturer of industrial chemicals, received a demand notice proposing the classification of 'Sikko Sol' under a specific sub-head of the Central Excise Tariff Act, 1985. A substantial amount was levied on the petitioner for the mentioned period. The demand was confirmed by an Adjudication Order, leading to subsequent legal challenges.

2. Dismissal of Appeal by CESTAT: The petitioner's appeal before CESTAT was dismissed due to non-compliance with the deposit requirement under Section 35(f) of the Central Excise Act, 1944. This dismissal prompted the petitioner to challenge the decision before the High Court, which was also dismissed, resulting in the filing of a special leave petition.

3. Challenge Before High Court and Special Leave Petition: The High Court dismissed the writ petition filed by the petitioner, leading to the filing of a special leave petition before the Supreme Court to contest the adverse decision and seek relief regarding the classification and duty liability of the industrial chemical.

4. Issuance of Recovery Notice: A notice was issued under the Central Goods & Service Tax Act, 2017, for the initiation of the recovery process. Subsequently, properties, including raw materials, finished goods, and machinery, were attached due to the outstanding dues.

5. Attachment of Properties and Machinery: The attachment of movable and immovable properties, including plant and machinery, was carried out as a consequence of the non-compliance with the deposit requirements, leading to a significant financial burden on the petitioner.

6. Restoration of Appeal and Condonation of Delay: The petitioner sought the restoration of the appeal before CESTAT, requesting the condonation of the delay in depositing the required amount. The Supreme Court, considering the interests of justice, decided to restore the appeal before CESTAT to be heard on its merits.

7. Imposition of Terms for Restoration: The restoration of the appeal before CESTAT was subject to the petitioner providing an undertaking not to alienate properties or create third-party rights. Additionally, certain terms were imposed for the restoration, ensuring compliance with the legal procedures.

8. Directions Regarding Properties and Business Operations: The Supreme Court directed the defreezing of the petitioner's bank accounts, with a specific instruction to utilize the funds solely for business purposes. Moreover, the petitioner was directed to maintain the status quo regarding movable and immovable properties, ensuring no third-party rights were created. The special leave petitions were disposed of, and pending applications were also resolved accordingly.