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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 ..... Revenue is before this court questioning the legality of one such order passed by the Tribunal where under the Tribunal has granted full waiver of the requirement of the deposit of the amount, amount that is the subject-matter of dispute in the appeals pending before it, in terms of the Order dated 13-12-2004. The impugned order is one passed in common in several appeals pending before the Tribunal, namely, Excise Appeal Nos. 590-591/2004 and Excise Appeal No. 1051/2004. 3. The value of the subject-matter in Appeal Nos. 590-91/2004 is said to be of a sum of Rs. 35 crores and the value of the subject-matter in Appeal No. 1051/2004 is said to be Rs. 29 crores. It is mainly disputing this liability which the respondent was required to meet in terms of the adjudication orders passed by the Commissioner of Central Excise who had adjudicated certain show cause notices that had been issued to the respondent No. 2, inter alia, apprising the respondent No. 2 that it is liable for payment of such excise duty for the period from April-1997 to March-2001, in all, totalling Rs. 35 crores in terms of the order dated 28-2-2004 and the liability for the period April-2001 to March-2004 amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in all and the revenue feeling greatly at loss for having suffered such an order, has approached this Court invoking jurisdiction under Articles 226 and 227 of the Constitution of India. 8. It is no doubt true that these writ petitions present a new dimension of the good old problem of the manner in which the Tribunal has exercised its power under the proviso to Section 35F of the Act, but this new dimension is rather unusual and even one that can be characterized as startling. 9. The respondent took notice on 1-3-2005 (who had entered caveat) and an interim order staying the operation of the order of the Tribunal dated 13-12-2004 for a period of four weeks was passed with liberty reserved to the respondent to seek for modification of the order. The matter had been listed on further dates and at one point of time it was at the stage of exploring the possibilities of an amicable settlement between the assessee and the Revenue insofar as the question of the requirement of pre-deposit was concerned and for such purpose, meetings had taken place through their learned Counsel. However, that having not come through and the respondent having come up with an application praying for mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this Court in the case of 'M/s. Sunshine Tube Private Limited v. Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) and Another' [1997 (91) E.L.T. 296 (Kar.) = 1996 (6) KLJ 643]; that the Tribunal has not at all adverted to the aspect of hardship, particularly by examining the financial position of the respondent; that the order is totally lacking for want of such examination; that it is no order in the eye of law and therefore the orders are required to be set aside. 14. It is the further submission of Sri Haranahalli that the requirement of deposit is the normal rule as provided under the main provision of Section 35 of the Act and the proviso which confers a discretion in favour of the Tribunal to dispense with any part of such deposit is only an exception to the normal rule of pre-deposit; that such dispensation can be ordered only if the Tribunal is satisfied about the undue hardship that the person may suffer if insisted on complying with the requirement of pre-deposit; that even while dispensing with the pre-deposit wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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' [1985 (19) E.L.T. 22 (S.C.)]. The observation of the judgment of the Supreme Court at Paragraph 21 of the judgment of this Court reads as under : "But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of public interest. There are many such factors worthy of consideration. We often wonder why in the case indirect taxation where the burden has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les 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 question of waiver of pre-deposit in respect of Appeal Nos. 590 & 591/2004 is concerned, suffers for allowing full waiver by way of modification, the order insofar as Appeal No. 1051/2004 is concerned, having merely followed the reasoning as spelt out in passing the modified order and not based on any independent reasoning nor the Tribunal having discussed the capacity and the situation in the context of the application for waiver of pre-deposit filed in Appeal No. 1051/2004, the order in this appeal also suffers from the same error apparent on the face of it. Learned Counsel submits that the writ petition is one challenging these orders; that a prayer has been expressly sought for quashing the order dated 13-12-2004 inclusive of the order for waiver of pre-deposit passed in Excise Appeal No. 1051/2004 also. 20. One another contention urged on behalf of the petitioner is that the assessee had never raised any dispute about the excisability of the product; that it was sought to be raised for the first time only before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim 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 additional grounds urged on behalf of the assessee before the Tribunal; that the conclusion reached by the adjudicating authority for holding that certain payments in the nature of royalty was received by the assessee from its customers in the context of the products sold to the customers, was not available on record; that the view taken by the Hyderabad Commissionerate in the case of Shaw Wallace Company Ltd., with regard to the excisability of the activity of mixing food flavour was required to be adjudicated in the present case also; that confirmation of the demand notice was not tenable in law; that on the identical questions, the matter had come to the Tribunal on an earlier occasion and on such occasion, the Tribunal had permitted pre-deposit of sum of Rs. 2 crores and had waived the balance pending disposal of the appeal; that as the Tribunal had not considered various legal contentions that had been urged on behalf of the appellant-assessee while passing earlier order dated 10-8-2004 on the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of 'Smt. Ujjam Bai v. State of Uttar Pradesh' [AIR 1962 SC 1621 - Paragraph 15] as also the decision of the Supreme Court in the case of 'Dharanghadra Chemical Works Ltd. v. State of Saurashtra and Others' [AIR 1957 SC 264 Paragraphs 17 & 18]. 26. Sri Habibulla Badsha further submits that it is a well settled principle that in tax matters, there is no question of the applicability by the principle of res judicata; that it is not as though the assessee assuming once had paid duty in respect of the activity of mixing of food flavours to be a dutiable activity and had paid excise duty on the same, could not because of that conduct contend that the activity is not a dutiable activity; that there is no duty liability on the part of the assessee in respect of such activity; that a question of this nature being in the nature of a question of law, the assessee can raise such a question at any stage even in the appellate stage and before the Tribunal; that it is not estopped from raising such a ground before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 to whether the Tribunal can keep passing successive orders in the exercise of this jurisdiction, as to whether it can modify an earlier order passed by it on merits, like an appellate authority or act like a forum which has the power to review its orders and if such successive orders are passed by the Tribunal can it still be said that the Tribunal has the jurisdiction to pass such subsequent orders substantially altering or modifying its earlier orders. 29. The Customs, Excise and Service Tax Appellate Tribunal is a Tribunal constituted under the provisions of the Excise Act and a specialized Tribunal. A Tribunal of this nature is more a judicial forum than either being understood as an administrative or quasi-judicial forum. Even while administrative authorities pass orders touching upon the rights of parties, it is expected that such administrative authority should pass reasoned orders after taking into consideration the relevant aspects. An order passed by an administrative author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided 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, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue." 31. A reading of the proviso clearly indicates that it is a precondition that the Tribunal should be satisfied about the cause of undue hardship to the person if the requirement of pre-deposit is to be waived. For exercise of the power under the proviso to Section 35F of the Act, such satisfaction should be reflected in the order and with reasons. Then follows the further requirement on the part of the Tribunal to impose such conditions as it deems fit so as to safeguard the interest of the revenue. It means that even while the Tribunal is fully satisfied that the requirement of pre-deposit, may cause undue hardship to the appellant, if the pre-deposit is insisted, while dispensing that, the Tribunal should necessarily take into consideration the interest of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Nos. 590 & 591/2004. The modification order allows the assessee to maintain the appeal without depositing any part of Rs. 35 crores of duty and the penalty of Rs. 35 crores that it was liable to pay under the order appealed against. Even while passing this order, the Tribunal neither shows any awareness that the requirement of pre-deposit causes any undue hardship to the assessee 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. 33. I am unable to accept the contention that an existence of mere prima facie case in itself amounts to causing undue hardship to an assessee if the assessee is required to fulfil the requirements of pre-deposit. It is necessary to recall some words of caution and wisdom sounded by the Supreme Court in this regard in the case of Jesus Corporation referred to earlier. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 to its interest before this Court, this Court cannot shut its eyes to such glaring disparities writ large on the face of the record in the name of non-interference with an order of the Tribunal just because it is urged that the Tribunal has jurisdiction to pass an order in exercise of such statutory power. The argument of non-interference with an order passed by the Tribunal with jurisdiction is called in aid only to safeguard and protect the order which the assessee has managed to obtain before the Tribunal. It may be in the interest of the assessee to retain such order and obviously the assessee seeks to support the order. But, the question is as to whether such an order can pass the test of a reasoned order. An order which cannot speak for itself, an order which has not taken into consideration all relevant aspects, particularly, the statutory requirements of the proviso to Section 35F of the Act, in my view is an order that is not at all sustainable. It is a cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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