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TMI Blog2018 (8) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reconstruction (in short BIFR) under Section 15 (1) of The Sick Industrial Companies (Special Provisions) Act, 1985 (in short SICA). The reference was registered by BIFR as case No. 29 of 1992 and the petitioner company was declared as a sick industry as contemplated under Section 18 of The Sick Industrial Companies on 16.11.1994 and a scheme was sanctioned on 16.11.1994 (SS-94). For the purpose of giving effect to the scheme for rehabilitation, M/s. ICICI Bank was appointed as the Operating Agency. Since the scheme formulated for rehabilitating the petitioner company failed, BIFR, by an order dated 05.02.2002, directed the petitioner company to submit a fresh revival proposal failing which the Operating Agency appointed under the scheme would be entitled to issue a notice for change of management. Aggrieved by the same, the petitioner company has filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction (in short AAIFR) in Appeal No. 43 of 2002. The appellate authority, by order dated 11.02.2003, allowed the appeal and set aside the order dated 05.02.2002 of BIFR and sanctioned a revival scheme (SS-03) for rehabilitation of the petitioner company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 (4) of the Securities and Financial Reconstruction (in short SARFAESI) Act inasmuch as the petitioner company was unable to pay the dues to three lenders namely IDBI Bank, ICICI Bank and Life Insurance Corporation of India. At the same time, it was brought to the notice of the appellate authority that the petitioner's other division namely Sanitaryware Division was continuing the operation, albeit with a low capacity utilisation. In such circumstances, BIFR directed the Monitoring Agency to submit a report indicating the details of the creditors to whom the petitioner company is liable to pay the amount. Subsequently, as directed by BIFR, the Monitoring Agency has submitted a letter dated 24.05.2007 indicating the details of outstanding amount as on 03.02.2007 and forwarded the copies of the same to the creditors namely IDBI Bank and Bank of India with a request to express their willingness to acquire the assets of the petitioner's company under Section 13 (4) of the SARFAESI Act for settlement/payment of their outstanding dues. At this stage, the petitioner company in their letter dated 13.08.2007 brought to the notice of the Board stating that M/s. Vig Projects Pvt Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitting sale of the assets in favour of the highest bidder. Further, the Excise department was directed to vacate their charges in respect of the assets of the petitioner company's Tiles Division although Excise Department was permitted to hold charges in respect of the assets of the Sanitary Division to secure their dues. BIFR also permitted the company to pay the statutory dues and workers dues from the No Lien Deposit of ₹ 1071 lacs subject to verification of dues by the Operating Agency namely Bank of India. While so, BIFR received a modified revival scheme from the Monitoring Agency vide their letter dated 27.02.2008. The petitioner company has also written a letter dated 24.03.2008 informing BIFR that Excise Department has not vacated the charges in respect of the assets of the Tiles Division and therefore, the sale in favour of the highest bidder could not be executed. Therefore, BIFR, in exercise of power conferred under Section 32 (1) of SICA, passed an order dated 28.05.2008 directing Central Excise Department to vacate charges in respect of the company's tiles Division and inspite of the same, the Excise Department continued to hold charges on the assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal No.89 of 2009 before AAIFR. The appeal was allowed by the AAIFR by the order dated 28.09.2012 holding that it will be unfair to direct the Central Excise Department to sacrifice it's dues in the garb of revival of the petitioner company, especially when the company has collected excise duty from their customers and utilised the amount so collected for some other purpose. Accordingly, AAIFR set aside the order dated 06.10.2008 of BIFR and allowed the appeal. Aggrieved by the same, the petitioner company has come forward with this writ petition. 7. The learned counsel for the petitioner would vehemently contend that the second respondent, in the rejoinder filed before the first respondent in Para No.4 and 8 clearly stated that the total duty payable was confirmed to be ₹ 5,89,628/- in respect of the tiles Division and ₹ 1,24,46,617/- in respect of the sanitary ware division. The objection raised by the second respondent with respect to the scheme formulated for rehabilitation of the petitioner company is only with regard to waiver of the Central Excise duty for certain points and there was no objection with respect to waiver of penalty and interest under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad virtually negated the scheme framed by the BIFR for revival of the company and it is contrary to the object with which the SICA has been framed. Therefore, the learned counsel for the petitioner prayed for allowing the writ petition. 9. By way of reply, the learned counsel for the second respondent would vehemently oppose the writ petition by contending that as per the provisions of Rule 8 (1) of the Central Excise Rules, 2002, the duty on the goods removed from the factory or warehouse during the relevant month has to be paid before 5th of the following month and for the month of March, the duty shall be paid by 31st March. In terms of sub-rule (3) of Rule 8 of Central Excise Rules, 2002, if the assessee fails to pay the duty in time, he shall be liable to pay the outstanding amount with interest at the rate specified by the Central Government vide notification under Section 11AB of the Act on the outstanding amount. There is no provision under the Central Excise Act or Rules made thereunder for waiver of interest. Central Excise duty being an indirect tax is not borne by the assessee but it is being passed on to their customers. The duty payable on the manufactured goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpted from paying tax. All that happened was that payment of tax was deferred. Thus, the appellants collected tax from the customers but were not paying the same over to the Government. The concession of deferral did not mean that the payment had not become due. Payment became due with the filing of the returns. The deferral was granted as payment had become due. The appellants knew that it was due but due to the concession granted under the scheme, they were not paying the same. 23. Thus, in our view, there being no express waiver of interest, the statutory provision must prevail. We thus do not find any infirmity in the order of the High Court. 11. Based on the aforesaid decisions, it was contended by the learned counsel for the second respondent that several opportunities have been given to the petitioner company for revival but the schemes formulated have been failed. In such circumstances, in the guise of securing the interest of the petitioner company, the second respondent cannot be deprived of their legitimate tax dues. The tax dues are pending for more than a decade and therefore, at this stage, this Court need not interfere with the order passed by the first respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econstruction and they have come forward to assist the petitioner company in their rehabilitation process. The said VPPL also helped the petitioner to company to pay the dues to some of the creditors. 13. As far as the present writ petition is concerned, the second respondent herein is one of the creditors and who claim payment of excise duty by the petitioner. According to the second respondent, towards payment of excise duty, they have detained some goods of the petitioner valuing about ₹ 177 lakhs, however, the duty amount payable by the petitioner company upto November 2008 itself amounts to ₹ 2,12,85,856/- apart from payment of interest till 30.11.2008 which hovers at ₹ 1,30,32,670/-. Therefore, the second respondent objected to the modified draft rehabilitation scheme formulated for revival of the petitioner company. Notwithstanding such objections raised by the second respondent, BIFR, in the order dated 06.10.2008, had permitted the petitioner company to pay the principal amount of excise duty in equal 12 quarterly instalments. Opposing such concession given by BIFR in the order dated 06.10.2008, the second respondent has filed an appeal mainly contendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 5.89 lakh in respect of Tiles Division and has also paid ₹ 93.49 lakh against the principal duty of ₹ 124.46 lakh. However, CED has confirmed in para 4 of their rejoinder dated 10.08.2010 in this appeal that the total excise duty payable by the respondent is 5.89 lakh. As regards the sanitary ware division, the dues, excluding interest is ₹ 1,24,46,617/-. Since there is no reluctance on the part of the company to pay the principal, we direct that the company should pay, after due reconciliation, principal amount within a month from the issue of this order as according to the company, they had already paid ₹ 93.43 lakh against the principal duty of ₹ 124.46 lakh in respect of the sanitary ware division. The MSRS had stipulated that the payment of past principal outstanding amount of excise duty both current arrears were to be made in 12 equal quarterly instalments from the date of the sanction of the proposed scheme. Since the BIFR had sanctioned the scheme on 06.10.2008, 12 quarterly instalments are long over. It is presumed that by this time, the company must have paid the dues as stipulated. We are, therefore, directing that if some amount has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of SICA, several rehabilitation measures were initiated to rehabilitate the petitioner company, but they failed. As regards the second respondent herein, they are making claim for payment of excise duty with interest. 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. We feel that 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. 18. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er company, the second respondent cannot be deprived of their statutory dues which are pending for a very long time. In such circumstances, we see no reason to interfere with the order passed by the first respondent. In this context, we are fortified by the decision relied on by the counsel for the second respondent rendered by the Division Bench of the Andhra Pradesh High Court in the case of (Andhra Cements Limited vs. Commissioner of C.Excise S.T., Guntur) reported in (2017) (350) E.L.T. 537 (A.P.) wherein in para No.31, it was held as follows:- 31. Therefore, neither the order of the AAIFR nor Section 32 of the Act is of any assistance to the petitioner for successfully challenging the impugned Order-in-Original. As a matter of fact, the petitioner does not appear to deserve any sympathy, as can be seen from the long litigation and they have fought over a period of 30 years 1988. As we have pointed out in the narration of facts, the petitioner originally filed a Writ petition on the file of the Delhi High Court in C.W.P. No. 1653 of 1989 claiming the benefit of the notifications. Though they succeeded before the learned single Judge, the Department went on appeal in L.P.A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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