1995 (3) TMI 216 - AT - Central Excise

Tribunal orders pre-deposit in Punjab Anand Batteries case to prevent undue hardship

PUNJAB ANAND BATTERIES LTD. Versus COLLECTOR OF C. EX., CHANDIGARH

PUNJAB ANAND BATTERIES LTD. Versus COLLECTOR OF C. EX., CHANDIGARH - 1995 (78) E.L.T. 258 (Tribunal) Issues:- Application for dispensing with pre-deposit of duty- Financial hardship claimed by the applicant- Violation of principles of natural justice- Merits of the case and contentious issues- Priority of debts, liability, and obligations in case of company liquidationAnalysis:The case involved an application by M/s. Punjab Anand Batteries to dispense with pre-deposit of duty amounting to Rs. 29,95,310.99, citing prima facie favorability of their case and financial hardship due to the company's liquidation. The applicant, represented by a Chartered Accountant, argued that the company was wound up by the High Court, declared a sick unit by BIFR, and had transactions with M/s. ITC on an arm's length basis without any special relationship. The applicant also highlighted the lack of funds to pay the duty, citing Company Act provisions prioritizing workmen's dues and secured creditors. Additionally, the applicant claimed a violation of natural justice as they were not effectively heard by lower authorities, referencing relevant case law.The respondent, represented by the ld. SDR, contended that the applicants were given ample opportunities to present their case and disagreed with the applicant's arguments on merits. The respondent pointed out the shareholding, loans, brand usage, and management aspects involving M/s. ITC, citing a Tribunal judgment in a similar case. On the financial hardship claim, the respondent argued that Central Excise duty should be paid first before other obligations, emphasizing the need for pre-deposit due to the substantial sale proceeds of the company.Upon hearing both sides, the Tribunal found no violation of natural justice regarding the opportunities provided to the applicants by lower authorities. The Tribunal acknowledged the contentious and arguable nature of the raised issues on merits, requiring detailed examination. Referring to a Supreme Court decision, the Tribunal emphasized the state's priority over debts and liabilities in cases of company liquidation. Considering the financial circumstances and the insufficient sale proceeds to meet workmen's dues as a first charge, the Tribunal ordered a pre-deposit of Rs. 7,50,000 within 12 weeks, with a stay on the remaining duty recovery during the appeal period to prevent undue hardship, emphasizing compliance by a specified date.