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TMI Blog2005 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal suddenly gets active to sit in appeal over its earlier order dated 10-8-2004, virtually holds that the earlier order is wrong, further holds that prima facie the contention of the appellant as raised in the additional grounds that the products supplied by it to its customers did not involve an occasion to levy excise duty is the correct proposition. It holds on this occasion that the appellant-assessee has a strong prima facie case in its favour and in such view of the matter, deems it proper to modify the earlier interim order to grant full waiver of the pre-deposit requirement in respect of duties demanded which were subject-matter of appeals in Appeal. It is also clear that the Tribunal after having exercised jurisdiction for the purposes of passing an order for waiver of pre-deposit under the proviso to Section 35F of the Act cannot modify that order subsequently like an appellate authority, nor can keep tinkering with the order as and when applications for modification of the order are filed. It is significant to notice that the Supreme Court has ruled that the Tribunal does not even have the power to review its orders while exercising its appellate power u/s 35C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee nor any awareness shown with regard to the safeguard that is required by way of conditions to be imposed on the assessee to protect the interest of the revenue. - D.V. SHYLENDRA KUMAR, J. Shri Ashok Haranahalli, Advocate, for the Petitioner. Shri Habibulla Badsha, Sr. Counsel for Ms. S.R. Anuradha, Advocate, for the Respondent. ORDER The orders of the Tribunal which is functioning under Section 35B of the Central Excise Act, 1944 [for short the Act ] and passing orders in exercise of powers under the proviso to Section 35F of the Act have always been the subject-matter of controversy and subject for further litigation to approach the High Court by invoking the provisions of Articles 226 and 227 of the Constitution of India and on an occasion or two, even the Supreme Court. 2. While more often than not, it is the assessee who is normally aggrieved by the orders passed by the Tribunal either granting partial waiver of the amount required to be deposited for maintaining the appeal before the Tribunal or in some cases not granting any waiver, this time the Revenue is before this court questioning the legality of one such order passed by the Tribunal where under the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 729 and 730 of 2004 for modification and Misc. Application No. 851/2004 for raising additional grounds. Respondent had also filed an application for dispensation of the pre-deposit in the appeal for the subsequent period i.e., in Appeal No. 1051/2004 through the Stay Application No. 633/2004. 6. The Tribunal has disposed of all these applications, namely, Misc. Applications that had come to be filed in pending Appeal Nos. 590 591/2004 and stay application in Appeal No. 1051/2004. The Tribunal under the order, while modified its earlier order dated 10-8-2004 that had been passed under the proviso to Section 35F of the Act and permitted total waiver of the requirements of pre-deposit, following such an order allowed the stay application filed in Appeal No. 1051/2004 and also permitted total waiver of the pre-deposit of a sum of Rs. 29 crores, subject-matter of appeal in A. No. 1051/2004. 7. The net result of this order in the several applications is that the Tribunal has granted total waiver of requirement of pre-deposit of a sum of Rs. 64 crores in all and the revenue feeling greatly at loss for having suffered such an order, has approached this Court invoking jurisdiction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass such an order; that it cannot sustain scrutiny for the purpose of conformity with the requirement of proviso to Section 35F of the Act; that the order requires to be set aside. 12. Submissions are elaborated by drawing attention to the relevant portions of the order; that while the earlier order that had been passed in Appeals No. 590 591/2004 has come to be modified allowing total waiver of the pre-deposit requirement, in respect of the other appeal, the same order has been simply followed and granting such an order in favour of the respondents in other appeal suffers from the same defect; that both the orders are required to be set aside. 13. Sri Ashok Haranahalli, learned Counsel for the petitioner, further submitted that until and unless the Tribunal has taken into consideration the relevant aspects and has shown its awareness to such aspects and the order itself indicates the awareness of mind on the part of the Tribunal to such aspects, the order becomes one which is a non-speaking order, in the sense that, the reasons for the order are not forthcoming in the very order and the order cannot be sustained. Learned Counsel has placed reliance on the single Bench decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue hardship and the question of safeguarding the interest of the revenue. Mr. Haranahalli further submits that the Tribunal has based its order solely on its finding that the applicant has a good prima facie case and has passed such orders. 15. In this regard, learned Counsel for the petitioner draws the attention of the Court to the judgment of the Supreme Court in Jesus Sales Corporation s case (supra). Submission is that the Tribunal has exhibited a total lack of awareness about the existence of the factual hardship to the petitioner and also total lack of awareness on the part of the Tribunal to apply its mind with regard to the aspect of protecting the interest of the revenue. 16. Learned Counsel for the petitioner has also placed reliance on a decision of the division Bench of this Court in the case of M/s. Wipro Infotech Ltd. v. Customs, Excise Gold (Control) Appellate Tribunal [1995 (75) E.L.T. 266 (Kar.) = ILR 1994 KAR 3224] and has drawn the attention of the Court to Para 21 of this judgment wherein the division Bench had an occasion to refer to the caution sounded by the Supreme Court in the case of Assistant Collector of Central Excise v. Dunlop India Ltd. and Others [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner points out that even the very conduct of the assessee had indicated that the assessee had accepted the duty liability in respect of the activity of mixing food flavours which it was supplying to its customers including the bottling plants which were functioning under the licence from the assessee; that the dispute arose only in the context of the valuation of the food flavours that was being sold by the assessee; that the assessee for all the earlier years had paid the duty on its own, based on the invoice value of the product as and when cleared from the factory and in a situation of this nature, particularly, after the Tribunal had observed that there was no strong prima facie case in favour of the assessee, the Tribunal has done a somersault in coming to the diametrically opposite view that the assessee had a very strong prima facie case by upsetting the earlier finding which virtually amounts to acting like an appellate authority and the exercise of such power is much beyond the scope of even Rule 41 of the Rules and clearly beyond the very appellate power under Section 35C of the Act itself. 19. Sri Haranahalli submits that while the order insofar as it relates to the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter had been listed for orders on the application for vacating stay, with the consent of the learned Counsel for both sides, the matter was heard for disposal. In fact, Sri Habibulla Badsha, learned Senior Counsel appearing for the respondent expressed the view that even if the interim order is modified, that may not serve the purpose of the respondent, inasmuch as, the Tribunal may not be very enthusiastic in proceeding with the main appeal during the pendency of the writ petition before this Court and as such it is only the disposal of the writ petition that can pave the way for the Tribunal to proceed further in the matter and therefore sought for passing final orders. 23. Statement of objections are quite elaborate and voices preliminary objection about the maintainability of the very writ petition. It is pointed out that the writ petition being one directed against an interim order passed by the Tribunal in appeals pending before it, there is no occasion for this Court to interfere with such interim orders of the Tribunal in the exercise of writ jurisdiction. Statement of objections dwells upon the merits of the matter with regard to the tenability of the grounds and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct such errors of either facts or law more so when the nature of the order being an interim order and therefore the writ petition requires to be dismissed in limine. 25. Sri Habibulla Badsha further submits that on a perusal of the writ petition pleadings, it is obvious that the challenge to the order is mainly on the ground that the Tribunal has modified its earlier order. This was in the context of the order passed in Appeal Nos. 590 591/2004; that insofar as Appeal No. 1051/2004 is concerned, there is no modification of any earlier order; that the order granting full waiver of the requirement of the pre-deposit was passed for the first time and therefore no fault can he found with this order so far as it relates to the waiver granted in Appeal No. 1051/2004; that when once the Tribunal has found that the appellant before it had a strong prima facie case and therefore was entitled to full waiver of requirement of pre-deposit, there is no scope for this Court to interfere with such an order in the exercise of writ jurisdiction. Learned Counsel elaborating the scope of interference with such orders, has placed reliance on the decision of the Supreme Court reported in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Supreme Court in the case of Mehsana Dist. Co-op. Milk P.U. Ltd. v. Union of India [2003 (154) E.L.T. 347 (S.C.)] and submits that the Tribunal has jurisdiction to grant full waiver of requirement of pre-deposit in a given case; that an order passed by the Tribunal granting full waiver without insisting on any condition by itself cannot be characterized as an order bad in law and one calling for interference. Even assuming that it is erring in any manner in not imposing any condition, an order of this nature cannot be interfered in the exercise of writ jurisdiction and therefore urges for dismissal of the writ petition. 28. On consideration of the petition pleadings and submissions of learned Counsel appearing for the petitioner and respondent, the only question that arises for consideration is as to whether the order can be interfered and if so in what manner. While the Tribunal having jurisdiction to pass orders in exercise of the power under proviso to Section 35F of the Act is neither in doubt nor ever disputed, the question is not as to whether the Tribunal has jurisdiction, but the question is the manner in which such jurisdiction is exercised for example as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount subject-matter of dispute in the appeal should be pre-deposited except as provided for in the proviso. The exception comes into play when the requirement results in causing undue hardship to the person who is required to pre-deposit and in such situations, if the Tribunal is of the view that it so results in such hardship to said person, it may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interest of the revenue. Section 35F reads as under : Section 35F. Deposit, pending appeal, of duty demanded or penalty levied. - Where in any appeal under this chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied. Provided that where in any particular case, the Commissioner [Appeals] or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstances, the Tribunal was of the view that in lieu of the requirement of pre-depositing a sum of Rs. 35 crores towards duty and another sum of Rs. 35 crores towards penalty which was the subject-matter of appeal, deposit of a sum of Rs. 25 crores may be sufficient and deposit of the balance duty and penalty were all waived and stay to that extent granted; but the assessee on coming up with an application for raising additional grounds, additional grounds wherein the assessee sought to contend that the activity was not even excisable, for the first time before the Tribunal, the Tribunal suddenly gets active to sit in appeal over its earlier order dated 10-8-2004, virtually holds that the earlier order is wrong, further holds that prima facie the contention of the appellant as raised in the additional grounds that the products supplied by it to its customers did not involve an occasion to levy excise duty is the correct proposition. It holds on this occasion that the appellant-assessee has a strong prima facie case in its favour and in such view of the matter, deems it proper to modify the earlier interim order to grant full waiver of the pre-deposit requirement in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it in Appeal No. 1051/2004 is also waived in its entirety. The effect of this order is that the Tribunal has dispensed with the requirement of pre-deposit of total duty amount of Rs. 64 crores as also the penalty amount of Rs. 35 crores without showing any awareness as to the existence of any undue hardship to the assessee if the assessee is required to comply with the provisions of Section 35F and the proviso and in total disregard of the interest of the revenue by not providing sufficient safeguard. In fact, while in the earlier order, it is held that the appellant has not even pleaded any financial hardship, in the present order, nothing is mentioned at all. Here is a typical case of the Tribunal acting more loyal than the King! 35. A specialized Tribunal like the Excise Tribunal is expected to act taking into consideration all relevant aspects and should never ignore the responsibility of safeguarding the interest of the revenue while exercising jurisdiction under the proviso to Section 35F of the Act. The order is totally lacking in conforming to the requirement of Section 35F of the Act. The exercise of power becomes totally arbitrary and if the petitioner complains detriment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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