Mavi Industries Ltd v. Union of India & Ors.

V.Sridharan with Prakash Shah i/b. PDS Legal for the petitioner. M.I.Sethna, senior counsel with R.Ashokan and S.D.Bhosale for the respondents. CORAM : V.C.DAGA AND K.K.TATED, JJ. DATED : 22nd April 2010. P.C. : Heard. Perused petition.

Rule, returnable forth with. Respondents waive service. Petition is heard finally by consent of parties. Introduction :

This petition is directed against the order dated 15th February, 2010 passed by the respondent No.2- 2 Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (“Tribunal” for short) directing the petitioner to pre-deposit penalty of Rs.25 lakh as a condition for hearing the appeal on merits. Submissions :

Mr.Sridharan, learned counsel appearing for the petitioner submits that the basic foundation of the impugned order is the alleged breach of post-importation conditions of the notification holding that the petitioner- Export Oriented Unit (EOU) has not complied with the export obligation. He submits that in view of the grant of extension for further five years to comply with the export obligation vide order dated 27th March, 2009 passed by the Assistant Development Commissioner, Seepz, SEZ, this . The said ground was not available to the Tribunal for being used against the petitioner to record adverse finding on this count. He further submits that prior to remand, the Tribunal itself, vide its order dated 29th November, 2007 had dispensed with pre-deposit considering the fact that the petitioner- company was under BIFR. He further submits that the petitioner- company even today continues to be under B.I.F.R. He, thus, submits that the impugned oder is unsustainable and liable to be quashed to the extent it directs pre-deposit of Rs.25 lakh.

Mr.Sethna, learned senior counsel appearing for the Revenue tried to support the impugned order to the extent it directs pre-deposit in the sum of Rs.25 lakh. However, he could not dispute the grant of extension for another five years from 1st April, 2009 vide order dated 27th March, 2009 and on earlier 3 occasion, prior to remand by this Court to the Tribunal for consideration afresh, a complete waiver of pre- deposit was granted by the Tribunal vide order dated 29th November, 2007, which was accepted by the Revenue since it was not challenged in any higher forum. Consideration :

Having heard both parties and having examined the impugned order in the light of the order of extension dated 27th March, 2009 referred to above, it is clear that the period of five years effective from 1st April, 2009 has been extended to discharge export obligation as EOU subject to the conditions mentioned therein. It is also not in dispute that complete waiver was granted under the order dated 29th November, 2007 and that it was accepted by the Revenue. Even on the date of filing of the petition and hearing thereof, the petitioner- company continues to be a company under the B.I.F.R. The status of the company on this count still continues. The Tribunal was not justified in overlooking these two important factors around which findings revolve, while considering the prayer for dispensing with pre-deposit.

It is, no doubt, true that the petitioner could not comply with the export obligation considering its status as EOU. However, once the period for discharging export obligation is extended, the said ground can hardly be used against the petitioner unless petitioner fails to discharge its obligation as EOU in the extended period. The petitioner- company is under B.I.F.R. as on date is also not in dispute. Under these circumstances, the impugned order to the extent it 4 directs pre-deposit of Rs.25 lakh is unsustainable since it suffers from non-application of mind, as such liable to be quashed and set aside. Decision :

In the result, for the reasons recorded, impugned order to the extent it directs pre-deposit of Rs.25 lakh is quashed and set aside. The Tribunal is directed to hear and dispose of the appeal on merits with expeditious despatch, at any rate, within four months from the date of receipt of this order.

Rule is made absolute in terms of this order with no order as to costs. (K.K.TATED, J.) (V.C.DAGA J.)