9911796707
TMI Blog2000 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner of Customs and Central Excise (Appeals), Hyderabad as per the directions of this Hon'ble High Court in W.P. No. 31505/97, dated 27-11-1997; (ii) declaring that as a consequence of the final order Nos. 1644-1659/98, dated 20-8-1998 of the Customs, Excises and Gold (Control) Tribunal (CEGAT), South Regional Bench, Chennai setting aside the Order-in-Appeal No. 114/96(H), CE/A No. 1891/95(H) C.E., dated 9-3-1996 as well as the Order-in-Original (C.No. V/73/17/15/95-VC/Adjn. order No. 62/95, dated 20-9-1995) of the Asstt. Commissioner of Central Excise, Hyderabad-I Division, an amount of Rs. 1 crore deposited as a pre-condition for the hearing of the appeal before the Commissioner of Customs and Central Excise (Appeals), Hyderabad is liable to be refunded immediately; (iii) setting aside the Order-in-Original RC. No. 226/99/Adjn/Order No. 22/99, dated 18-11-1999 passed by the Asstt. Commissioner of Central Excise, Hyderabad-I Division and consequently direct the respondents immediately to refund the amount of Rs. 1 crore (Rupees one crore only) paid as a pre-deposit on 28-11-1997 with interest as per Sec. 11BB of the Central Excise Act, 1944 from the date immediately a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Heading 7308.90 of the Tariff and confirmed the duty demand of Rs. 12,45,19,736/-. On an appeal filed by the petitioner Company against the above said order, the Commissioner of Central Excise (Appeals), Hyderabad accepted the claim of the petitioner Company vide order in Appeal No. 114/96(H)CE/A.No. H891/95(H)CE, dated 9-3-1996 that the Box Strappings are classifiable under Heading 7212.30 of the Tariff. However, the Commissioner (Appeals) did not allow Modvat Credit and certain other claims of the petitioner Company. Therefore, the petitioner Company filed a statutory appeal. The Excise Department also filed an appeal disputing the correctness of the classification made by the Commissioner of Central Excise under Heading 7212.30 of the Tariff. The CEGAT South Regional Branch, Chennai disposed of the appeals by final order No. 1644/1659/98, dated 20-8-1998 by setting aside the Order-under-Appeal No. 114/96 (H)CE/A. No. 891/95(H)CE, dated 9-3-1996 as well as the Order-in-Origmal No. C. No. V/73/17/15/95/VC/Adjn. Order No. 62/95, dated 20-9-1995 and remanded the matter to the first respondent for de novo consideration of the classification issue and other attendant issues. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier, subject to the condition of the petitioner Company depositing a sum of Rs. l crore within a period of two weeks. Accordingly, the petitioner Company deposited a sum of Rs. 1 crore as a pre-deposit. This Court while disposing of the above writ petition also observed that as the demand was raised as a sequel to the order dated 9-3-1996 of the Commissioner (Appeals), which was the subject-matter of the appeal before CEGAT, the first respondent may pass appropriate orders in the light of the final orders that may be passed by CEGAT and raise the demand accordingly. As pointed out supra, the CEGAT passed final order remanding the matter to the first respondent suggesting, inter alia, that it is better to await the outcome of the Civil Appeal No. 7868 of 1995 pending in the Supreme Court. In the meanwhile, and as a consequence of the order of the CEGAT, the second respondent also passed an order in Appeal No. 146/99(H)CE, dated 20-10-1999 setting aside the order in C.No. V/73/171/5/95-CE, dated 31-3-1997/17-4-1997 of the first respondent. The resultant position is that there is neither the adjudication order of the first respondent nor any order for demand of duty and both the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent, in the facts and circumstances of the case, is just and legal, and in the public interest, therefore, there is no warrant for this Court to interfere with the impugned order in exercise of its discretion under Article 226 of the Constitution. The learned Standing Counsel would also maintain that the impugned order of the first respondent is an appealable order under Section 35 of the Act and the petitioner has not stated any valid reason or ground to bypass the statutory appeal remedy and to rush to this Court straightaway under Article 226 of the Constitution and therefore, the writ petition is liable to be dismissed in limine on the ground of non-exhaustion of alternative remedy without going into the merits of the dispute. 8.It is true that against the impugned order of the first respondent dated 18-11-1999 an appeal lies to the Commissioner (Appeals) under Section 35 of the Act. It is also true that the remedy under Article 226 of the Constitution being, in general, discretionary, the High Court may refuse to grant it where there exists an alternative remedy, equally efficient and adequate unless there are good grounds therefor. Whether the alternative remedy is eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund of Rs. 1 crore is tenable or legal. The reasons for refusal are found in paragraphs 7 and 8 of the impugned order. They read as follows: Now, therefore, the case before me is"(7) whether Rs. 1 Crore should be returned to ITW or not. Although, the case in question and the reworkings made by the Assistant Commissioner had been remanded. Yet the said remand is conditional and has direct bearing on the outcome of the Hon'ble Supreme Court of India in the Civil Appeal referred to above. It is not only important but also imperative to note that the duty originally demanded the case was Rs. 11,35,63,282/- BED + Rs. 1,09,56,453/- SED, which is manifold more than Rs. 1 crore involved. Suppose, if the Hon'ble Supreme Court upholds department's appeal, the goods in question will become liable to duty. Then the lone question remains to be settled succinctly is about classification. In any case, the chances of subject demand becoming a nought is scarce. That apart, the fact remains large chunk of revenue remained unpaid by ITW for more than four years. Hence, in the facts and circumstances, I feel it is just and equitable to hold back Rs. 1 crore against a possible demand of more than one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner Company in pursuance of the order of this Court should undoubtedly be treated as a pre-deposit only. Lastly, the observation of the first respondent that the stay order granted by this Court on 27-11-1997 in W.P. No. 31505 of 1997 remains operative subject to payment of Rs. 1 crore till such time the CEGAT disposes of the dispute finally on merit, obviously referring to a future uncertain event, is totally misconceived and erroneous. Thus, we find the impugned order suffers from many apparent factual and legal flaws. In that view of the matter, and since the first respondent has not decided on the jurisdictional fact, i.e., whether the petitioner Company has passed on the incidence of duty to the consumers or not, and since we are of the considered opinion that the first respondent cannot refuse to refund Rs. 1 crore except on the ground that the petitioner Company has passed on the incidence of duty to the consumers, we are not inclined to dismiss the writ petition solely on the ground of non-exhaustion of appeal remedy under Section 35 of the Act. 11.Section 11B of the Act deals with claims for refund of duty. Sub-section (1) of Section 11B reads as follows: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the facts of this case. The above contention of the learned Counsel is grounded on the hypothesis that Rs. 1 crore paid by the petitioner Company as a pre-deposit cannot be treated as a duty, as on the date, for both the Order-in-Original of the first respondent dated 31-3-1997/17-4-1997 and the Order-in-Appeal dated 20-10-1999 of the Commissioner of Central Excise and Customs (Appeals), Hyderabad stand set aside and the proceedings stand remitted to the first respondent for de novo determination of the duty, and the first respondent is yet to determine the duty payable by the petitioner Company after de novo adjudication. This contention is sought to be supported by the judgment of the Delhi High Court in Voltas case (supra). In Aswal Agro Limited v. Assistant Commissioner of Central Excise [1994 (70) E.L.T. 48 S.C.] where the assessee furnished bank guarantee as directed by the Court and the same was encashed by the Revenue. On the issue of applicability of Section 11B to refund of such amounts the Supreme Court held that a bank guarantee issued for security in favour of the Revenue is not the payment of duty, and that eventually if the appeal is decided in favour of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mind. In our opinion, once the order of adjudication was set aside, the Tribunal could not have ordered the amount of pre-deposit to be retained awaiting the order of adjudication. There is no provision in the law requiring certain amount to be retained as a pre-deposit pending finalisation of the adjudication proceedings. As the amount is being withheld without any authority of law, it is liable to be refunded." 14.So opining, the Delhi High Court allowed the civil writ petition and directed that the amount in deposit shall be refunded to the petitioner-assessee. 15.We have perused the above judgment of the Delhi High Court. Though the above judgment was delivered on 9-11-1998, nowhere in the judgment, the Delhi High Court has referred to/considered the provisions of Section 11B of the Act. Further, the Delhi High Court has not noticed the judgment of the Supreme Court in Mafatlal's case (supra). The Delhi High Court also did not examine the question whether the duty in question was passed on to the consumers by the petitioner Company. Further, the Delhi High Court has nowhere stated that Section 11B is not applicable to the facts of that case. When that is the position, onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the present case, the first respondent has not at all applied his mind to the crucial aspect, namely, whether disputed duty has been passed on to the buyers. Undoubtedly, the burden of proof that the duty had not been passed on to the consumers rests with the petitioner Company. From the records placed before us it is not clear whether the petitioner Company has produced any evidence before the first respondent to satisfy him that the duty in question had not been passed on to the consumers. In that view of the matter, it is appropriate for us to set aside the impugned order and remand the proceedings to the first respondent to dispose of the claim application of the petitioner Company filed in Form R, afresh, in accordance with law and in the light of this decision. 18.Although the petitioner Company has sought for a direction to the respondents to pay interest in terms of Section 11BB of the Act, since the petitioner Company's entitlement to seek refund of Rs. 1 crore is yet to be established before the first respondent by proving that the incidence of duty has not been passed on to the consumers, granting interest at this stage does not arise. Therefore, the claim of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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