By TIOL News Service

KOLKATA, MAY 01, 2014: A show-cause notice dated 2nd March, 2007 was issued to the petitioner alleging the suppression of the actual production figures of MS Ingots for the period 2001-2002 to 2005-2006 being not incommensurate with the pattern of consumption of the electricity. A further show-cause notice dated 03.05.2007 was issued on the identical ground covering the period from April 2006 to February 2007. The petitioner replied the respective show-cause notices and denied the allegation of suppression. Against the Adjudicating Authority's confirmation of demand of duty, interest and penalty, the assessee appealed to the CESTAT. The Tribunal's order directing the petitioner to deposit 25% of the duty is challenged in writ petition before the High Court.

The main thrust of the argument before this Court by the petitioner is that the decision is solely based on the report of Dr. Batra of IIT Kanpur which is perverse and liable to be quashed and set aside. It is further submitted that there was another report of the technical expert filed by the petitioner which was not taken note of and the CESTAT wrongly recorded that no other report of a technical expert is available in the proceedings. The petitioner submits that it is a consistent view of the various tribunals that the decisions solely based on the disparity in consumption of electricity is not proper.

There was a preliminary objection to the writ petition as there was an alternate efficacious remedy of appeal.

The points for consideration by the High Court are:

1. whether the order seeking dispensation of the deposit of the demand duty can be assailed in a writ jurisdiction;

2. whether the disparity in consumption of electricity can be a sole factor in arriving at the conclusion that the person has suppressed the actual production of the final product which attracts the excise duty in absence of any other corroborative evidence.

Stay Order of Tribunal - Appeal or Writ ? The High Court noted that every order passed by the Appellate Tribunal except an order relating to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment, is amenable to be challenged in an appeal before the High Court, if the High Court is satisfied that the case involved substantial question of law. The Madras High Court in Metal Weld Electrodes held that "every order" passed by the Tribunal includes an order passed under Section 35F and refused to entertain the writ proceeding on the ground of alternative efficacious remedy. The High Court held that though every order passed by the Tribunal, in a pending appeal is amenable to be challenged in an appeal but such appeal is entertainable, if the remedy of appeal is somehow restricted, the same cannot be said to be an efficacious remedy and, therefore, the jurisdiction of the High Court under Article 226 of the Constitution cannot be taken away. The power under Article 226 cannot be brindled to protect the legal rights of a person subjected to injustice. In the realm of public law, the High Court exercises the power of judicial review against the illegality, irrationality and procedural impropriety of an order passed by the State or the statutory authorities and does not act as an appellate authority. Under Article 226 of the Constitution, High Court not only protects the fundamental right of the citizen but also the other legal right from injustice wherever it is found. The exercise of power under Article 226 cannot be restricted and is an essential part of the rule of law and have been expressly entrusted as sentinel in qui vive. There is no absolute bar against the invocation of power of judicial review under Article 226 of the Constitution, even if, there is an alternative remedy available to the aggrieved person. It is not a rule of exhaustion of the remedy but a rule of convenience and discretion.

The High Court found that writ jurisdiction is not completely taken away because of the existence of an alternative remedy by way of an appeal under Section 35 F of the Central Excise Act.

Whether the disparity in consumption of electricity can be a sole factor in arriving at the conclusion that the person has suppressed the actual production : The show-cause notice issued in the instant case was based on the variation recorded in the consumption of electricity forming the opinion that there has been a clandestine clearance of the final product by relying upon the report of Dr. Batra of IIT Kanpur. There is no other corroborative evidence shown to exist with the department justifying the suppression, clandestine removal of the final product. Furthermore, a letter issued by the IIT Kanpur annexed to this writ petition stated that the said report was not submitted by the said institution and, therefore, they do not accept the genuinity and/or credibility recorded therein. The petitioner have also relied upon the report of the another expert which contains a finding contrary to the findings recorded by Dr. Batra. Strangely enough, the Tribunal records that there was no other report available on the record except the report of Dr. Batra. This shows the non-application of mind by the Tribunal in disposing of the said application. In R.A. Castings , the Tribunal held that the law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis . Furthermore, when the Tribunal or the Court have interpreted the statutory provisions, the Tribunal cannot take a contrary view but are bound by the same. This Court, therefore, finds that the impugned decision is not capable of being sustained and, therefore, is quashed and set aside. Matter is remanded to Tribunal.

(See 2014-TIOL-612-HC-KOL-CX)