IMPERIAL TRADING CO Vs. UNION OF INDIA

JUDGEMENT

(1.) The prayer in the writ petition is as follows:

(2.) The petitioner is a partnership firm carrying on business of manufacture of pre-stressed cement concrete poles, at Kollandode, Kanyakumari district. X show cause notice was issued on 4.4.1989 directing the petitioner to show cause as to why the excise duty on the pre-stressed cement concrete poles (hereinafter referred to as the "PSCC poles") should not be demanded and also a penalty should not be imposed under the Central Excise Act, 1944 and Rules. After considering the explanation of the petitioner, the third respondent rejected the explanation of the petitioner and passed an order dated 14.9.1989 demanding payment of a sum of Rs. 25,36,041.41 as duty and another sum of Rs. 21,462.21 towards the duty on PSCC poles supplied to Tamil Nadu Electricity Board. Penalty was also imposed under Rule 173-Q of the Central Excise Rules. Aggrieved by that order, the petitioner preferred an appeal before the second respondent. Along with the said appeal, he has also filed a petition for stay of collection of the amount demanded. By order dated 4.9.1990, the second respondent directed to deposit the entire amount of duty demanded within three months from the date of such order and on compliance with that direction the deposit of penalty of Rs. one lakh will stand disposed and the recovery shall stand waived till the disposal of appeal. The petitioner preferred a writ petition No. 4656 of 1991 before this Court and Kanakaraj, J. by order dated 3.4.1991 passed an order, a portion of which runs as follows:

(3.) Mrs. Nalini Chidambaram, the learned senior counsel appearing for the petitioner contends Section 35-B that provides for appeal and the Tribunal is constituted by the Central Government under Section 129 of the Customs Act, 1962, that it is a statutory authority and that it has to function in accordance with the provisions of the Act. The learned senior counsel further argues that the appeal is maintainable even if the petitioner did not pay the penalty and duty and that the appeal will not get abated for the failure of such deposit. It is further argued that the consequence of the non-compliance of the mandatory requirement of deposit of duty is not expressly worded in Section 35-F of the Act and that the Tribunal cannot dismiss an appeal for the non-deposit of duty or penalty pending appeal. The argument of the learned senior counsel is that Section 35-F of the Act does not give the Tribunal such a wide power of dismissing appeals for non-payment of duty and penalty. It is further contended that an order rejecting an appeal for non-payment of duty is not an order within the meaning of Section 35-C of the Act. The learned senior counsel points out that Rule 20 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 empowers the Tribunal to dismiss the appeal for the appellant's default in appearance but it cannot dismiss the appeals for non-payment of duty. The learned senior counsel further argues that if at all the department has to recover, it has to recover the amount under Section 11 of the Act which provides for the recovery of the amount. The learned senior counsel further points out that in view of the aforesaid provision the only remedy available to the Central Government for recovery of excise duty is to take recourse provided under the Act and as such the impugned order in this case is arbitrary in nature. The learned senior counsel further contends that the appeal is maintainable even if the petitioner does not pre-deposit the amount. According to the learned senior counsel the appeal does not abate. It is further argued that if the section is construed that the payment is a precondition, then the constitutional right of appeal given in the Act will become illusory. According to the learned senior counsel for the petitioner whether the amount is deposited or not, the Tribunal is bound to hear the appeal and pass orders on merits.