2014 (5) TMI 93 - HC - Central Excise

Court quashes duty deposit, demands legal questions, evidence corroboration, criticizes expert reliance.

M/s Union Enterprises & Another Versus Union of India & Others

The court quashed the decision requiring a 25% pre-deposit of demand duty, citing the availability of writ jurisdiction for substantial questions of law ... Maintainability of appeal - Alternative remedy - Writ Petition or appeal - Appeal u/s 35F - whether the order seeking dispensation of the deposit of the demand duty can be assailed in a writ jurisdiction. - Held that:- Though every order passed by the Tribunal, in a pending appeal is amenable to be challenged in an appeal but such appeal is entertainable, if the remedy of appeal is somehow restricted, the same cannot be said to be an efficacious remedy and, therefore, the jurisdiction of the High Court under Article 226 of the Constitution cannot be taken away - There is no absolute bar against the invocation of power of judicial review under Article 226 of the Constitution, even if, there is an alternative remedy available to the aggrieved person. It is not a rule of exhaustion of the remedy but a rule of convenience and discretion. - This Court, therefore, does not find the writ jurisdiction is completely taken away because of the existence of an alternative remedy by way of an appeal under Section 35 F of the Central Excise Act. Whether the disparity in consumption of electricity can be a sole factor in arriving at the conclusion that the person has suppressed the actual production of the final product which attracts the excise duty in absence of any other corroborative evidence - Held that:- The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption or various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. Therefore, there can be no generalzation nor any uniform norm of 1046 units as sought to be adopted by the Revenue especially when there is no norm fixed under Rule 173E till date by the Revenue and notified by it. The electricity consumption varies from one unit to another and from one date to another and even form one heat to another within the same date. There is, therefore, no universal and uniformly acceptable standard of electricity consumption, which can be adopted for determining the excise duty liability that too on the basis of imaginary production assumed by the Revenue with no other supporting record, evidence or document to justify its allegations - Strangely enough, the Tribunal records that there was no other report available on the record except the report of Dr. Batra. This shows the non-application of mind by the Tribunal in disposing of the said application. Furthermore, when the Tribunal or the Court have interpreted the statutory provisions, the Tribunal cannot take a contrary view but are bound by the same. - Decided in favour of assessee. Issues Involved:1. Whether the order seeking dispensation of the deposit of the demand duty can be assailed in a writ jurisdiction.2. Whether the disparity in consumption of electricity can be a sole factor in arriving at the conclusion that the person has suppressed the actual production of the final product which attracts the excise duty in absence of any other corroborative evidence.Detailed Analysis:1. Assailing the Order Seeking Dispensation of Deposit in Writ Jurisdiction:The petitioner challenged the CESTAT's order directing a 25% pre-deposit of the demand duty. The primary argument was that the decision was based on a report by Dr. Batra, which the petitioner claimed was perverse and that another expert report provided by the petitioner was ignored. The respondent argued that the writ petition was not maintainable due to the availability of an alternative efficacious remedy under Section 35 G of the Central Excise Act.The court examined whether the existence of an alternative remedy barred the writ petition. It referenced the Supreme Court's judgment in Raj Kumar Shivhare, which held that statutory forums should not be bypassed. However, the court noted that the appeal under Section 35 G is limited to substantial questions of law, distinguishing it from the broader scope of judicial review under Article 226 of the Constitution. The court concluded that the writ jurisdiction is not entirely barred and can be invoked if substantial questions of law are involved.2. Disparity in Consumption of Electricity as a Sole Factor:The court addressed whether the disparity in electricity consumption alone could justify the conclusion of suppressed production and evasion of excise duty. The petitioner relied on the precedent set in R.A. Castings Pvt. Ltd. v. Commissioner of Central Excise, Meerut, where it was held that electricity consumption alone is insufficient to determine duty liability without corroborative evidence.The court noted that the CESTAT had ignored other expert reports and solely relied on Dr. Batra's report, which was disputed. It emphasized that mere excess consumption of electricity without evidence of excess raw material procurement, conversion into final products, and clandestine clearance does not justify the presumption of duty evasion. The court found that the CESTAT's decision lacked application of mind and was contrary to established legal principles.Conclusion:The court quashed the impugned decision and remanded the matter back to the Tribunal for reconsideration. The Tribunal was directed to distinguish between a strong prima facie case and an arguable case, applying judicial discretion rationally and reasonably. The writ petition was disposed of with no order as to costs.