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TMI Blog2012 (5) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... lative penalty of Rs. 20 Crores. CEAC No. 14/2010 is directed against the order dated 19th July, 2010 [2010 (259) E.L.T. 269 (Tribunal)] passed by the Tribunal dismissing the original appeals filed by the appellant for failure to deposit the tax amount in terms of the earlier order dated 15th February, 2010. In this manner, the two appeals are interconnected. 2. Questions of law as formulated by the appellant in the two appeals read as under :- CEAC 5/2010 A. Whether, in view of the specific direction of the Hon'ble Supreme Court directing that each Show Cause Notice must be limited to the case made out therein by the Revenue, it was open to the Learned Tribunal to refer to and rely upon the allegations contained in the third Show Cause Notice for the purpose of holding that there was no prima facie case in favour of the Appellants? B. Whether, the requirement to pre-deposit the said amount will cause undue hardship to the Appellant as the impugned demand has been confirmed in violation of the directions of the Hon'ble Supreme Court as well as in violation of the principles of natural justice? C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p is normally associated with economic hardship but the use of word 'undue' before the word 'hardship' would show that it should be excessive hardship or hardship greater than what the circumstances warrant. The other aspect which has to be kept in mind is the need and requirement to safeguard the interest of Revenue. Tribunals while disposing of applications for waiver of pre-deposits have to keep in mind the said two factors. 5. In the case of Union of India v. Adani Exports Limited, 2007 (218) E.L.T. 164 (S.C.) = 2009 (13) S.T.R. 81 (S.C.), the Supreme Court examined a similar provision of pre-deposit in Section 129E of the Customs Act, 1962. It was held that prima facie case is one of the aspects which has to be taken into consideration to decide whether or not to grant full or partial stay but the interest of the Revenue is important and cannot be ignored. Right to appeal is neither an absolute right nor an ingredient of natural justice, principles of which must be followed in all judicial or quasi-judicial adjudications. The right to appeal is a statutory right which can be circumscribed by the condition for the grant. [See Govt. of Andhra Pradesh v. P. Laxmi Devi, (200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that three other contentions have been raised by the appellant. Firstly, the adjudication order dated 12th March, 2009 passed by the Commissioner of Central Excise (Adjudication), New Delhi is ex-facie contrary to law and is liable to be set aside for the reason, it is based upon the third show cause notice dated 2nd September, 1985, which was struck down by the Supreme Court in its decision dated 22nd July, 1997, reported in 1997 (94) E.L.T. 9 (S.C.). Secondly, the Tribunal has failed to take into consideration the earlier order dated 9th December, 2005 in GTC Industries Ltd. v. Collector of Central Excise, 2006 (198) E.L.T. 121 (Tri.-Del.), which dealt with same/similar contentions of the Revenue and lastly, security deposit was a norm in the industry which was followed by other cigarette/tobacco manufacturers. The Supreme Court in the case of ITC Ltd. v. Commissioner of Central Excise, New Delhi and Anr. - 2004 (171) E.L.T. 433 (S.C.), has held that the excise duty can be charged on the basis of retail sale price. 8. The first contention is based upon the order of the Supreme Court dated 22nd July, 1997 [1997 (94) E.L.T. 9 (S.C.)] in the first round of litigation. The oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo show cause notices. This as per the Commissioner (Adjn.) is permitted and as per law. He in this connection has referred to Indore Wire Company Limited v. UOI, 2006 (203) E.L.T. 179 (S.C.) and decision of the Tribunal in the appellant's own case reported as 2002 (144) E.L.T. 632 (Tri.-Del.). 10. The second and third contention of the appellant has also been noted by the Commissioner (Adjn.) and dealt with. It may be noted that the order of the Tribunal dated 9th December, 2005 related to different show cause notices which were issued in 1986 and related to a different period. The question and issue raised was decided vide order dated 9th December, 2005 on the evidence and material on record. The contention of the Revenue is that a finding of fact based upon the evidence and material available and on record, does not constitute a binding ratio decendi. Against the said order, the Revenue has filed appeals which are pending before the Supreme Court. This order dated 9th December, 2005 of the Tribunal is reported in 2006 (198) E.L.T. 121 (Tri.-Del.). In paragraph 13 of this order, the Tribunal has referred to lapses on the part of the Revenue in making enquiries and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1.........................This scheme was further extended to other brands like Blue Bird Regular (BBR), Golden Gold Glake Filter King (GGFTK), Golden Gold Flake Regular (GGFTR), and Prince Filer Regular (PFTR). The WBs did not oppose the NDS because they did not lose any money of their own but were returning M/s. GTC's money out of EPM created by lowering the invoice price of cigarettes. III. 22. It is observed that during 1979, GTC had devised a scheme called "New Security Scheme". They contended that the scheme was devised to safeguard their interest against risks involved in selling cigarettes on credit, against unfounded claims and dictates of such customer and transporters. M/s. GTC contended that this was a normal feature of their business with the customers who purchased their cigarettes on credits and this practice prevailed almost in the entire cigarette industry. IV. 22.1 I observed that the two SCNs alleges that the real purpose of the NDS was to ensure a continuous flow of interest on sales outstanding at the rate of 15% to 20% depending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vert Rs. 1,20,000/- towards security deposit and to credit the balance of Rs. 175/- only, in the supply A/c against the bill amount. Thereby Rs. 1,20,000/- was shown as outstanding due to the company against the sales and it was considered as credit given to the WB. Under the NSD scheme M/s. GTC would pay an interest at only 6% on the said deposit amount, artificially, built up as mentioned above and simultaneously M/s. GTC would demand and recover an interest @ 18% on the amount due on the M/s. GTC i.e. identical to the amount of deposit. As a result, on an artificially created deposit and a credit there would be surplus of interest, in favour of M/s. GTC at the differential rate of 12%. Detailed instructions regarding the conditions and the procedure to be followed in this regard were circulated by M/s. GTC and were binding on the WB. It is interesting to note that the rate of interest was unilaterally fixed and changed from time to time by M/s. GTC without asking consulting the WB. The interest due to M/s. GTC from WB at 18% was called "over due interest" (ODI) and it was calculated on daily basis or product method and demanded by way of a debit note every month. In this manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected as interest on sales balance created artificially by crediting the payment to security deposits instead of sales account. The interest on so called outstanding balance was not actually interest but was the part of the sale consideration and was based on quantity sold. II. 24. The fact that M/s. GTC collected money from its wholesale buyers per M specified for each brand is further corroborated by "Notes on NSD" prepared by Shri Prasad, Regional Manager of M/s. GTC found in the files of M/s. GTC. The relevant portion is extracted as under : "Just after 1979 Budget we started an NSD system to recover EPM surplus amounts from WB's. The system started keeping in view that we will recover at rate of Rs. 3.80 per 'M' on PPL Vol. From each buyer. Later, we included BBRI and other 5 brands @ Rs. 4/- per 'M' GGFTD Rs. 5/- GGFTR and Price FIR @ Rs. 5.60 per 'M'." The aforesaid extracts brings out the real nature of the "New Security Deposit Scheme' (NSD). The cover for the recovery of flow back from the Wholesale buyers was sought to be provided by NSD. As already observed, the collections were made at fixed rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of interest for a particular period was more than the actual 'on account' payments received during the period, no efforts were made to recover more amounts from the wholesale buyers but the security deposit amounts were reduced so that the outstanding amounts were also reduced to that extent resulting in lower interest debit note to match the "generations minus allowable expenses". These generations were out of the sale considerations which were over and above the invoice price. VI. 37. It is seen from the various evidences discussed above that the purpose of this NSD Scheme was nothing but to give a cover to the flow back of the amounts recovered from the Wholesale buyers at fixed rates as mentioned earlier. No credit, in fact, was given to the WB because the WB had paid the full purchase price against the bill or before receipt of the consignments. Similarly, no deposit was in fact ever built up or paid by the WB. However, to give some cover to these fictitious transactions, income tax was deducted at source by both the parties, under instructions of M/s. GTC. The tax deducted at source, (TDS) by the WB, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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