TaxTMI 
TaxTMI 
2010 (6) TMI 384
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....firmed and the penalties imposed on the Appellants by the above mentioned order of the Commissioner are as under : S. No. Appellant Duty demand Confirmed Rs. Penalties imposed Rs. 1. Narinder Pulp & Paper Mills Ltd. (M/s. NPPML) 1,26,22,075/- along with interest 1,26,22,075/- under Section 11AC and 1,50,00,000/- under Rule 26 of CER'02 2. M/s. Narinder Paper Mills Ltd.(NPML) 2,65,23,790/- along with interest 2,65,23,790/- under Section 11AC of the Excise Act 3. M/s. Charan Kamal Card Board & Paper Mills Ltd.(CKML) 2,61,26,881/- along with interest 2,61.26,881/- under Section 11AC of the Excise Act 4. M/s. Narindera Paper Products Ltd. 1,77,08,854/- along with interest 1,77,08,854/- under Section 11AC of the Excise Act and 1,50,00,000/- under Rule 26 of CER'02 2. The above stay applications had been heard by this Bench on 4-12-09 and this Bench vide stay order No. 15-18/2010-Ex. dt. 11-1-2010 had directed the Appellants to deposit the entire amount of duty demands confirmed against each one of them within a period of eight weeks from th....
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....ction 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA) but the BIFR had initially rejected their applications for their registration as sick unit and considering Rehabilitation Package; that while in respect of NPPML, appeal to AAIFR is being filed, in respect of NPML, on appeal filed to AAIFR, the AAIFR remanded the matter to BIFR for de novo consideration, where the matter is still pending, that in case of CKML, the appeal is still pending before AAIFR, that in respect of NPPL, on the matter being remanded by AAIFR, BIFR declared it a sick unit and thereafter directed for issue of a show cause notice for winding it up, that in view of this, all these companies have to be treated as sick companies meriting protection under SICA from coercive action for recovery of dues and also waiver from the provisions of Section 35F of the Excise Act; that the Appellants have received notices from Punjab State Industrial Development Corpn. Ltd., Chandigarh (PSIDCL) for recovery of huge amount of loan along with interest which had been taken by the Appellant company from PSIDCL; that in addition to this, the Appellant companies have huge demand....
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....pellant companies have been cheating Punjab Electricity Board as a result of which they are faced with huge demands from the electricity board, that profit and loss account of NPPL for the year ending 31-3-06 showed the profit of about Rs. 1.6 crores; that merely being declared a sick unit by the BIFR under Section 22 of the SICA does not automatically give immunity to the Appellants from the provisions of Section 35F of Excise Act and in this regard he relies upon Hon'ble Supreme Court's judgment in the case of Metal Box India Ltd. v. CCE, Bombay reported in 2003 (155) E.L.T. 13 and Indu Nissan Oxo Chemicals Industries Ltd. v. UOI reported in 2008 (221) E.L.T. 7 (S.C.); that undue hardship alone is not the only criteria to grant waiver from the provisions of Section 35F and in this regard, Hon'ble Gujarat High Court in the case of Special Prints Ltd. v. UOI reported in 2009 (238) E.L.T. 738 (Guj.) has held that the Tribunal is required to consider twin requirements of undue hardship and imposition of conditions to safeguard revenue interests while considering the applications for waiver of pre-deposit and the contention that petitioner is entitled to full waiver of pre-deposit due....
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.... (supra), and Tata Davy Ltd. v. State of Orissa (supra) and judgments of Hon'ble Bombay High Court in case of New Vinod Silk Mills Pvt. Ltd. v. UOI (supra) and Delhi High Court in case of M/s. Surekha Coated Tubes & Sheets Ltd. v. CEGAT (supra), the condition of pre-deposit of duty demand, interest and penalty under Section 35F of the Excise Act has to be waived. 5.1 The status of the Appellant's applications before BIFR is as under : 5.1.1 NPPML had filed an application before BIFR in 2005 and the same was granted registration as case No. 43/06. However, the application has been rejected on the ground that as on 31-3-05 their net worth had not totally eroded. An appeal before AAIFR against BIFR's order is being filed. 5.1.2 NPML had filed an application before BIFR which was registered as case No. 20/26. However, BIFR vide order dated 30-10-06 rejected the application on the ground that net worth of the company had not entirely eroded as on 31-3-05. The Appellant filed an appeal before AAIFR which vide order dated 13-8-09 has remanded the matter to BIFR; where it is still pending. 5.1.3 CKML had filed an application before BIFR which was registered as c....
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....r dated 15-7-09, against which the Appellant company has again filed an appeal before AAIFR which is pending before it. In case of NPPL, while on appeal to AAIFR against BIFR's order dated. 23-10-07, AAIFR remanded the matter to BIFR and BIFR vide order dated 20-1-09 declared the company as a sick company and appointed Punjab & Sind Bank as OA for formulating a draft rehabilitation scheme (DRS), on account of non-corporation from NPPL, the BIFR vide order dated 4-2-10 ordered the issue of a show cause notice for winding it up. In this regard, para 4, 5 & 6 of the BIFR's order dated 4-2-10 are reproduced below : "4. In the hearing held today (4-2-2010), the learned Advocate of PSB(OA) submitted that they have sent a registered letter to the last available address of the company, which has been received back from the postal authorities with the remarks "premises closed". The company has not paid the OA fees as per direction of this Board. 5. The Bench observed that no one appeared on behalf of the company whereas notice for hearing having been issued well in advance on 21-1-2010 as well as the date of next hearing having been conveyed to the company vide summary Record of Pro....
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....f de novo proceedings before BIFR on the directions of AAIFR, the representative of State Bank of India (SBI) had submitted that the promoter of company was not interested in reviving the company and the company was interested only in enjoying the protection of SICA, 1985 to keep its secured creditors at bay. 6.2 In view of the orders of BIFR, record of proceedings before BIFR and conduct of the Appellant companies in proceedings before BIFR, we are not at all convinced that the Appellant companies are genuinely sick companies. 7. Moreover as discussed in the earlier stay order dt. 11-1-2010, the Appellant companies, which are owned and controlled by the members of the same family, were being run as one company and the separate entities - NPPML, NPML, NPPL and CKML had been created only to wrongly avail of duty exemption. In this regard, it would be worthwhile having a look at the findings of the Commissioner in para 19(i) and 21(iii) of the impugned order, the relevant portion of which are reproduced below : "19(i) ..................Shri Vipul Kumar, Partner of M/s. Ram Lal Kapoor Sons, Ludhiana, in his statement dated 10-10-03 disclosed that for purchase of goods m....
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....mption to the clearances of paper board, craft paper etc. upto 3500 m.t. in a financial year. If just to wrongly avail this exemption and evade the duty, manufacture and sale of the goods is artificially split up into four companies and on records, a company is shown to be working only for 3 to 4 months in a year and its production is under reported, each such artificial entity created only on paper, would sooner or later, have to be declared a sick company as such level of operation is not commercially viable. But such sickness would not be genuine sickness. The Commissioner's findings in para 19(i) and 21(iv) of the impugned order cast serious doubt about the correctness of the books of accounts of the Appellant companies and their claim of their net worth having been fully eroded. When the records of production and clearance of the Appellant companies are not genuine, their books of account and profit and loss account based on the same cannot be genuine. 8. In view of our above prima facie findings, none of the judgments cited by the Appellant are applicable to the facts of this case. It is observed by BIFR in its order dated 4-2-2010 in respect of application filed by NP....