PUNJAB NATIONAL BANK Vs. UNION OF INDIA

JUDGEMENT

(1.) The present Civil Appeal arises out of the judgment and order dtd. 5/8/2008 passed by the Allahabad High Court, wherein the writ petition filed by the Appellant was dismissed in limine.

(2.) The brief facts of the case, relevant for the purpose of the present appeal, are that the Commissioner, Customs and Central Excise, Ghaziabad (Respondent No. 2) issued a show cause notice dtd. 31/12/1996 to M/s Rathi Ispat Ltd./Respondent No. 4 (for short "RIL ") for evasion of excise duty and violation of the Central Excise Act, 1944. By an order dtd. 25/11/1997, Respondent No. 2 confirmed an excise duty demand of Rs.6,97,62,102.00­ against RIL and imposed a penalty of Rs.7,98,03,000.00­ under Rule 173Q(1) and confiscated the land, building, plant and machinery of RIL under Rule 173Q(2) of the Central Excise Rules, 1944 (for short "1944 Rules "). Sub­rule 2 of Rule 173Q of the Central Excise Rules, 1944, came to be omitted by a notification dtd. 12/5/2000 issued by the Government of India. Subsequently, the order dtd. 25/11/1997 was set aside by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT), now known as the Customs Excise and Service Tax Appellate Tribunal (CESTAT), on the ground of violation of principles of natural justice, and the matter was remanded back for de novo proceedings.

(3.) In 2005, RIL availed credit facilities under various schemes from the consortium of banks, with the Appellant/Punjab National Bank as the lead bank, and mortgaged/hypothecated all its movable and immovable properties for securing the loan. RIL created a charge on both the assets (raw material, stock in progress, finished goods, receivables etc.) and block (land, building, plant, machinery and other fixed assets) of the company in favour of the Appellant bank.