9911796707
TMI Blog2018 (8) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... floor tiles and sanitary ware products. The petitioner had set up two manufacturing facilities, one at Vadalur for manufacturing sanitary ware products and the other at Pondicherry for production of floor tiles. While the sanitary ware operations have been profitable, the tiles division has not been performing satisfactorily due to a variety of reasons, as a result, during the course of their business, the petitioner company has become indebted and eventually a reference was made to the Board for Industrial and Financial 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 rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 30.11.2004 or on the date on which the petitioner parts with the sanitary wares division to the Joint Venture Company, whichever is earlier. With the above directions, the writ petition is ordered accordingly...." 4. During the pendency of the appeal on 28.02.2007, it was brought to the notice of the Appellate Authority that the Monitoring Agency (ICICI Bank) had acquired the assets of the tiles division of the petitioner company situated at Pondicherry by invoking the provisions contained under Section 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 submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sale of assets of the tiles division of the petitioner company wherein it was stated that the tender document for sale of assets of the tiles division of the company was not issued to them. Therefore, on 12.12.2007, BIFR directed the company to offer their view in regard to the complaints received. In the meantime, the complainants have filed Writ Petition No. 36585 and 36586 of 2007 before this Court and they were dismissed on 07.12.2007. Thereafter, on 25.02.2008, BIFR issued certain other directions 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as indicated in the scheme, the increased amount should be paid to the department. Accordingly, the dues were reconciled and the principal amount of duty payable was confirmed to be Rs. 5,88,628/- in respect of the tiles division and Rs. 1,24,46,617/- in respect of the sanitary ware division, which was also confirmed by the Central Excise Department in their rejoinder vide para Nos. 4 and 8. Challenging this order dated 06.10.2008, Central Excise Department has filed an 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, it was contended that the scheme formulated for rehabilitation of the petitioner company contemplates clauses for waiver of interest and penalty, while so, the first respondent ought not to have allowed the appeal filed by the second respondent on the ground that the petitioner company had already collected the excise duty from it's customers and therefore, they are liable to pay the same. In any event, the order passed by the first respondent had 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted that this authority shows that a liberal interpretation has to be given and that the assessee should not be made liable for interest amounts. In our view, the authority is against the appellants. This authority shows that the tax becomes due on the date the returns are filed. In J.K. Synthetics case, 1994 4 SCC 276, the assessee had paid the tax which the assessee thought was payable. In this case, the appellants were not exempted 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 resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n scheme could not be implemented due to varied reasons of delay in completion of 'due diligence' by the intending purchasers or investors and for other reasons. In such circumstances, the promoters of the company have started negotiation with various parties for investment and ultimately, the petitioner company entered into an understanding with M/s. Viz Projects Pvt Ltd (VPPL) a company engaged in the business of Assets Reconstruction 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 Rs. 177 lakhs, however, the duty amount payable by the petitioner company upto November 2008 itself amounts to Rs. 2,12,85,856/- apart from payment of interest till 30.11.2008 which hovers at Rs. 1,30,32,670/-. Therefore, the second respondent objected to the modified d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (current/arrears) in 12 equal quarterly instalments from the date of the sanction of the proposed scheme by the BIFR and to waive interest and penalty charged/proposed to be charged by the Department and in 10 (l) (1) (f) it has been prescribed to quash the levy of penalty and interest on account of delayed remittances. We find that the company has already paid the entire principal duty of Rs. 5.89 lakh in respect of Tiles Division and has also paid Rs. 93.49 lakh against the principal duty of Rs. 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 Rs. 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 Rs. 93.43 lakh against the principal duty of Rs. 124.46 lakh in respect of the sanitary ware division. The MSRS had stipulated that the payment of past principal outstanding amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid. It is also evident that even though the principal amount was permitted to be paid in 12 quarterly instalments, the petitioner did not pay the amount in time and the period within which the amount has to be paid had expired long back. 17. It is to be noted that the petitioner company was declared as a sick industry on 16.11.1994. Admittedly, in terms of the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not bind the Central Excise Department especially when the Central Excise Act does not provide for waiver of interest for the customs duty payable. Such a clause can at best be applicable to other creditors or financial institutions and not for the Central Excise Department. Therefore, we are of the view that under the garb of rehabilitating the petitioner 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 li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt would squarely apply to the facts of the present case. In the present case also, the petitioner company was given several opportunities to rehabilitate by formulating many schemes from the year 1994 thereby the protection conferred under the Scheme was extended to the petitioner company for several years. However, the petitioner company could not utilise those rehabilitative measures and to improve the business operation to settle the creditors. In any event, in the present case, the petitioner company had settled a major portion of the payment towards Excise Duty levy made by the Central Excise Department and only the balance amount stood payable by the petitioner company. Further, the amount payable by the petitioner is a statutory payment payable to the Central Excise Department, which cannot be exempted In any event, at this length of time, this Court is of the view that the first respondent has considered the claim made by the petitioner and rightly rejected it by assigning reasons, which needs no interference by this Court.
20. In the result, the writ petition fails and it is dismissed. No costs. Consequently, connected miscellaneous petition is closed. X X X X Extracts X X X X X X X X Extracts X X X X
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