TaxTMI 
TaxTMI 
2024 (12) TMI 152
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....18-19 dated 29.09.2018 in Show Cause Notice dated 08.08.2017 issued vide F.No. V.Ch.24(04)01/ Altaf-KKGutkha/ H-1/ Prev/ Adj/ Commr.2017-18. (c) Pending the admission, final hearing and disposal of the present Special Civil Application be pleased to stay implementation, operation and execution of the Order-in-Original dated 25.03.2021 bearing No. VAD-EXCUS-002-COM-29-20-21, in Show cause notice dated 19.11.2019 bearing No. V Ch 24 (04) / Altaf-KK-Guthka/H-l / Prev/Adj /Commr /03/2019-20 passed by Principal Commissioner, Central GST & Central Excise, Vadodara - II; (d) Quash and set aside Show Cause Notice dated 08.08.2017 bearing F. No. V.Ch.24 (04)01 / AltafKK-Guthka/ H-I/Prev/Adj/Commr./ 2017-18 issued by Principal Commissioner, Central GST & Central Excise, Vadodara - I. (e) Quash and set aside Show Cause Notice dated 19.11.2019 bearing F. No. IV/6-Pre / 66 / KKGuthka / 2016-17 / Gr.A / Part-II in V.Ch.24(04) 01 / Altaf / KK-Gutkha / HI / Prev / Adj /Commr / 03 / 2019-20 issued by Principal Commissioner, Central GST & Central Excise, Vadodara - II; (f) Quash and set aside the Order-in-Original dated 25.03.2021 bearing No. VAD-EXCUS-002-COM-292....
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....the above purpose, so as to get waiver of the amount of pre-deposit of Rs. 10 Crore for preferring an appeal before the CESTAT as provided under Section 35F of the Central Excise Act, 1944 (for short, "the Act"), submissions were made on two counts, firstly, the financial incapacity of the petitioner to deposit Rs.10 Crore as pre-deposit and secondly, to make out a prima facie case in favour of the petitioner on merits for waiver of pre-deposit. 6. Before we advert to the submissions in detail, it would be germane to refer to the bare facts emerging from the record. 6.1 The petitioner is the owner of a 'Gutkha' (tobacco) manufacturing unit named "M/s. K.K. Gutkha" situated at Village: Kumbhani, District: Chotaudepur. It is the case of the respondents that the petitioner was involved in the activity of manufacture of 'Gutkha' under various brand names, viz. "KK Gutkha", "RR Gutkha" and "Goa Gutkha" with the aid of Form, Fill and Seal pouch packing machines (FFS machines), classifiable under "CETH 2403 9990". The said machines were neither registered with the respondent Department under the Central Excise Rules, 2002 (for short 'the Rules') nor were declared as such under the P....
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.... From the first part of the factory premises. 2 Gutkha Manufacturing Machine 10 From the third part of the factory premises. 3 Gutkha Manufacturing Machine 01 From the second part of the factory premises. 4 OPPO Mobile (Model-A33F) IMEI - 863710031542417 01 From labour's room of second part of the factory premises. 5 INTEX Mobile (Model-Cloud Cube) IMEI 0911497600140400 /18 01 From labour's room of second part of the factory premises. 6 Finished goods 10 bories From outside field which is around 100 metres away from factory premises. 7 Packing material 03 Rolls (01-Goa,01-KK& 01-RR) From the second part of the factory premises. 6.4 The above seized goods were loaded in two trucks bearing registration number GJO1AU3396 and GJ20U4896 for transporting the same from Chhotaudepur to Vadodara. Further, the Officers, in the presence of Panchas, sealed all the three parts of the said premises with paper seals duly signed by Panchas and officers. 6.5 The statements of the Employees / Workers / Labourers viz. Shri Sushil Kumar, Shri Pradeep Kumar Gautam, Shri Lavlesh Kumar, Shri Ranu Rajput, Shri Amar Rajput, Sh....
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....sacks (bories) of Supari, 49 sacks of Katha, 65 sacks of Tobacco and 235 sacks of mix material appears to be unpacked Gutkha total 447 sacks were unloaded and samples from different sacks (bories) were drawn as detailed in the table below and sealed in different covers, duly signed by Panchas. Further, the seized goods / items were stored and sealed in two go-downs in office premises of Vadodara-I Commissionerate. Sr. No. Goods appeared to be Sack No. from sample taken No. of sample taken 1 Supari 867 04 sample taken 2 Tobacco 71 04 sample taken 3 Katha 30 04 sample taken 4 Mix material 242, 258, 236, 181, 128, 102, 50, 31, 78, 150 03 sample from each sack 6.8 It appears that after the aforesaid searches, two separate show cause Notices were issued to the petitioner. The first Notice dated 21.02.2017 related to the goods seized under Panchnama dated 15/16.02.2017 valued at Rs.6,71,200/-; whereas, the second Notice dated 08.08.2017 related to levy of duty and for imposition of penalty under Rule 25 of the Rules and Rule 17 of the Rules of 2008. The petitioner was, thereby, asked to show cause as to why; "(i) Cen....
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....e 17 of Pan Masala Packing Machines Rules (Capacity Determination and Collection of Duty) 2008, which shall not exceed the duty involved in the excisable / notified goods. As the investigation regarding determination of duty is still under progress, as discussed above under para 6.3, I am constrained by the pending status of the investigation, in not quantifying the penalty amount at this stage." 6.10 Thereafter, on 25.03.2021, the impugned Order-in-original came to be passed by the respondent authority and final portion of the said order reads as under; " : ORDER : (i) I hereby determine the demand of Central Excise duty amounting to Rs. 433,11,24,000/- (Rupees Four Hundred Thirty Three Crores Eleven Lakhs Twenty Four Thousands only), as summarized in ANNEXURE - A & A-1 to the Show Cause Notice, for the period from October-2014 to February- 2017 and order for recovery of the same from Shri Altafhusen Mayuddin Khatri, Owner of Gutkha manufacturing Unit known as M/s. K.K. Gutkha, Kumbhani village, 8 km from Zoj, Nr. Tejgadh Village, District Chhotaudepur, Gujarat-391165 under Section 11A(10) of Central Excise Act, 1944 which has been kept in force post 01.07.201....
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....10,00,000/- (Rupees Ten Lakhs only) on Shri Raju Kumbhani alias Rajubhai Govindbhai Rathva, Supervisor of Gutkha manufacturing Unit known M/s. K.K. Gutkha, Kumbhani village, 8 km from Zoj, Nr. Tejgadh Village, District Chhotaudepur, Gujarat-391165, under Rule 26(1) of the Central Excise Rules, 2002, which has been kept in force post 01.07.2017 vide Section 142 and 174 of the Central Goods and Services Tax Act, 2017, for supervising all manufacturing activity of exciseable goods, i.e. Pan Masala/Gutkha illegally under unregistered factory premises and also transporting, removing and keeping record of the said goods which he knows or has reason to believe to confiscated under the Central Excise Act and rule made there under. (vi) I impose penalty of Rs.5,00,000/- (Rupees Five Lakhs only) on Shri Bhangrabhai Undalbhai Rathva, Kumbhani Village, 8 K. M from Zoz, Chhota Udeipur, Landlord of Gutkha manufacturing Unit known M/s. K.K. Gutkha, Kumbhani village, 8 km from Zoj, Nr. Tejgadh Village, District Chhotaudepur, Gujarat-391165, under Rule 26(1) of the Central Excise Rules, 2002, which has been kept in force post 01.07.2017 vide Section 142 and 174 of the Central Goods and Ser....
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....e provisions of sub-clause (ii) of Rule 12 of the Rules of 2008, if the retail sale price of the goods is un-ascertainable, then the same is to be ascertained by conducting enquiry in the retail market where such goods are formally sold. It was submitted that the respondent authorities have relied upon the statements of workers who have stated that a pouch of "Gutkha" was sold in the retail market anywhere between Rs.2.50 to Rs.3.00 but no formal inquiry was conducted in the retail market. 8.3 Thirdly, a total number of 17 machines were taken into consideration for computation of the alleged evasion of Duty; however, only 06 (six) machines were in working condition. Therefore, the amount calculated by the respondent authority would come down to anywhere between Rs.20 to 30 Crore instead of Rs.433 Crore (rounded off). 9. Learned advocate Mr. Raju referred to and relied upon the findings given in the impugned Order-in-original dated 25.03.2021 to demonstrate that the petitioner has a very good prima facie case for waiver / reduction of the amount of pre-deposit. It was pointed out that the respondent authority has considered the period of operation for the Duty liability by rel....
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.... for filing an appeal before the CESTAT. 10. In support of his submissions, learned advocate Mr. Raju placed reliance on a decision of the Hon'ble Jharkhand High Court in the case Satya Nand Jha, R/o Staff Quarters, Kendriya Vidyalaya, PO RIMS, Bariyatu, PS Sadar, District Ranchi, Jharkhand Versus Union of India & others reported in 2016 SCC OnLine Jhar 2323. It was also pointed out that against the aforesaid judgment, S.L.P. filed before the Hon'ble Apex Court was also dismissed. By relying upon the aforesaid decision, it was submitted that a writ petition under Article 226 of the Constitution of India would be maintainable in the facts of the present case considering the prima facie case in favour of the petitioner. It was submitted that in extreme cases, the assessees are not remedy less and that a writ petition under Article 226 of the Constitution could be preferred, which was upheld by the Hon'ble Apex Court. While upholding the judgment of the Hon'ble Jharkhand High Court, the Hon'ble Apex Court also upheld the Constitutional validity of the amendment of Sections 35F & 35D of the Act. It was pointed out that before the Hon'ble Jharkhand High Court, while contesting the vi....
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.... either side in hearing of appeal before the CESTAT. 11.2 It was further submitted by learned advocate Mr. Utkarsh Sharma that all the three contentions raised on behalf of the petitioner regarding the period of operation, the number of machines at the factory premises and the issue of retail price, involves interpretation of Rules 12 and 17(2) of the Rules, 2008 respectively as also analysis of the facts and documents on record, which would give rise to disputed questions of fact and, hence, this writ petition may not be entertained. 11.3 It was further submitted that the petitioner has been precluded from making any submissions on merits by order dated 16.12.2021 inasmuch as paragraph-3 of the said order clearly refers to the financial difficulty of the petitioner and not about the merits of the case. 11.4 In support of his submissions, learned advocate Mr. Sharma referred to and relied upon the judgment rendered by the Division Bench of this Court in the case of M/s. Universal Gems Versus Union of India rendered in Special Civil Application No.16139 of 2023 dated 05.01.2024. It was pointed out that the Hon'ble Apex Court has also dismissed the S.L.P. preferred against t....
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....nder this section shall not exceed Rupees Ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014. Explanation.-For the purposes of this section "duty demanded" shall include,- (i) amount determined under Section 11D; (ii) amount of erroneous CENVAT credit taken; (iii) amount payable under Rule 6 of the CENVAT Credit Rules, 2001 or the CENVAT Credit Rules, 2002 or the CENVAT Credit Rules, 2004." 13. A bare perusal of the above provision makes it clear that the petitioner is liable to make pre-deposit of Rs.10 Crores, being the minimum amount for filing an appeal before the CESTAT. This Court is, therefore, not required to examine whether there is any prima facie case in favour of the petitioner in view of the fact that after the insertion of Section 35F, no discretion whatsoever has been left for granting any waiver / reduction in the amount of pre-deposit for preferring an appeal. Therefore, this Court would not be in a position to grant waiver or to reduce the amount of pre-d....
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....ed the writ petition filed by the respondent? As regards the power of the High Court to issue directions, orders or writs in exercise of its jurisdiction under Article 226 of the Constitution of India, the same is no more res integra. Even though the High Court can entertain a writ petition against any order or direction passed/action taken by the State under Article 226 of the Constitution, it ought not to do so as a matter of course when the aggrieved person could have availed of an effective alternative remedy in the manner prescribed by law (see Baburam Prakash Chandra Maheshwari vs. Antarim Zila Parishad now Zila Parishad, Muzaffarnagar and also Nivedita Sharma vs. Cellular Operators Association of India & Ors.). In Thansingh Nathmal & Ors. vs. Superintendent of Taxes, Dhubri & Ors., the Constitution Bench of this Court made it amply clear that although the power of the High Court under Article 226 of the Constitution is very wide, the Court must exercise self imposed restraint and not entertain the writ petition, if an alternative effective remedy is available to the aggrieved person. In paragraph 7, the Court observed thus: (Thansingh Nathmal case, AIR p.1423) "7. A....
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....Ltd. & Anr. Vs. State of Orissa & Ors., wherein it is observed that where a right or liability is created by a statute, which gives a special remedy for enforcing it, the remedy provided by that statute must only be availed of. In paragraph 11, the Court observed thus: "11. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the Prescribed Authority under subsection (1) of Section 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-section (3) of Section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under Section 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a specia....
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....e decision of the Hon'ble Jharkhand High Court in Sri. Satya Nand Jha's case (supra), which has upheld the vires of Section 35F of the Central Excise Act, 1944 by referring to the concession made by the respondent authority that, in extreme cases, the assessee is not remedy-less and that it can prefer a writ petition. The Hon'ble Delhi High Court, while considering the aspect of wrong valuation has directed waiver of the amount of penalty in the case of Mohammed Akmam Uddin Ahmed (supra) to grant an opportunity to the assessee to prefer an appeal. Whereas, the Hon'ble Allahabad High Court, in the case of Shukla & Brothers (supra) has observed that the phrase "undue hardship" would also cover a case where the appellant has a strong prima facie case. 18. Considering the aforesaid dictum of law, it appears that the petitioner, therefore, must satisfy this Court that he has a good prima facie case to the effect that he is likely to succeed in the appeal. In order to come to the conclusion that the petitioner would succeed in the appeal, having a good prima facie case, so as to grant waiver of the pre-condition of pre-deposit for filing the appeal, the petitioner is required to discl....