HINDUSTAN COCA COLA BEYERAGE (P) LTD.versusUNION OF INDIA AND ORS.

                         [2014] 7 S.C.R. 632


A        HINDUSTAN COCA COLA BEYERAGE {P) LTD.
                                  V.
                    UNION OF INDIA AND ORS.
                  (Civil Appeal No. 3380 OF 2010)
                       SEPTEMBER 04, 2014
B
      [DIPAK MISRA AND ABHAY MANOHAR SAPRE, JJ.]

         Central Excise Act, 1944: s.35 - Demand - Stay of- Held:
    If an order of recovery is made by. Excise department then it
C   is not appropriate to allow assessee to enjoy the benefit of
    stay of recovery on the basis of a bank guarantee.

       Constitution of India, 1950: Article 226 - Writ jurisdiction
  - Scope of - Held: The factual aspects cannot be adjudged
D or adjudicated by High Court u!Article 226 of the Constitution.
         Pursuant to certain Notifications, few benefits were
    availed of by the assessee. The Finance Act, 2003 was
    brought into force and by virtue of Section 153 of the Act,
    certain Notifications were amended with retrospective
E   effect from 8.7.11999 i.e. the date of original Notification.

       After the amendment came into force, the Assistant
  Commissioner referred to the amendment and the
  notifications and passed order that the entire amount
F sanctioned with retrospective effect is required to be
  recovered from the appellant. The appellant filed a writ
  petition before the High Court on the ground that without
  affording an opportunity of hearing to the appellant and
  without issuance of the notice, the Assistant
G Commissioner had passed an order of recovery which
  was absolutely impermissible. The High Court adverted
  to the merits olf the case and dismissed the writ petition.
  Hence the appeal .

       . Partly allowing the appeal, the Court
H                               632
 HINDUSTAN COCA COLA BEVERAGE (P) LTD. v. 633
             UNION OF INDIA
     HELD: 1. The first ground taken by the assessee was A
whether the appellant-assessee was entitled to be given
notice to show cause before proceeding for recovery in
view of the language employed under Section 153(4) of
the Finance Act, 200~. The assessee had not
demonstrably argued this ground and addressed the lis B
on merits before the High Court. Therefore, the said
question has been left open. [Para 9] [641-E•F; 642-F-G]

     2. The second question was whether the High Court
was justified in addressing the lis on merits when series C
of factual aspects were involved. The High Court should
not have entered into the factual score to decline the relief
to the appellants. It can only be adjudicated upon with
reference to the documents on record. The documents
mean the transactions, quantum of CENVAT availed of,
the amount that was taken as refund by paying from the D
P.L.A. and further not availing refund of CENVAT credit
at any point of time. The said aspect are in the realm of
facts which could not have been adjudged or adjudicated
by the High Court under Article 226 of the Constitution
as the order of recovery was challenged on the. ground E
that no notice was issued to the appellant and that it was
not liable to pay in the obtaining factual matrix. [Para 10]
[642-G-H; 643-A-C]

    3. There is no cavil over the fact that an appeal lies F
under Section 35 of the Central Excise Act, 1944 to the
Commissioner (Appeals) who can address both the
issues relating to facts and law keeping in view the
applicability ·of the relevant notifications. The assessee-
appellant had furnished a bank _guarantee amounting to G
Rs.2,20,18,124/- for obtaining an .t>rder of stay. It would not
be appropriate to give an oppo~unity to the appellan~ to
prefer statutory appeals and allow it to enjoy the benefit
of stay of recovery on the basis of a bank guarantee.
Therefore, the assessee is directed to deposit Rs.2.5
                                                                H
    634      SUPREME COURT REPORTS                [2014] 7 S.C.R.


A crores before the adjudicating authority within six weeks
  and after the salid deposit is made and the receipt
  obtained, the appeal would be entertained within the said
  period. On an appeal being filed, the Commissioner
  (Appeals) shall deal with the matter on merits.
B Considering the amount in question in various appeals
  it is directed that in case the bank guarantees furnished
  by the assessees have been encashed no deposit shall
  be made. If the bank guarantees have not yet been
  encashed the amount as mentioned plus rupees five
C lakhs shall be deposited within the stipulated time. It is
  directed that after deposit of the said amount, the bank
  guarantees furnished in favour of the jurisdictional
  Commissioner shall be returned to the assessee-
  appellants. [Paras 11 and 12] [643-C-F; 644-D-F]

D       R. C. Tobacco (P) Ltd. v. Union of India (2005) 7 SCC
    725: 2005 (3) Suppl. SCR 342 - referred to.
                         Case Law Reference:
          2005 (3) Suppl. SCR 342      Referred to      Para 7
E
        CIVIL APPEL.LATE JURISDICTION : Civil Appeal No.
    3380 of 2010.

       From the Judgement and order dated 24-06-2009 of the
F   Gauhati High Court in Writ Appeal No. 435 of 2006.

                                WITH
                    .
    C.A. Nos. 3381, 3383, 3384, 3385, 3386, 3387, 3388, 3389-
    3392 of 2010.
G
           S.K. Bagaria, ~onu Bhatnagar, Somnath Shukla, Udit Jain,
    Srir;iivas Vijay Kumar, Kumar Ajit S.ingh, Abhimanyu Bhandari,
    Kartika Sharma, Naveen Kumar, Praveen Kumar, Jagjit Singh
    Chhabra, Naveen Kumar, Rajiv Tyagi, Ajay Kumar for the
    Appellant.                                  '
H
  HINDUSTAN COCA COLA BEVERAGE (P) LTD. v.                  635.
              UNION OF INDIA

    Mukul Rohtagi, AG., K. Swami, Rupesh Kumar, Devanshi A
Singh, B. Krishna Prasad for the Respondents

     The Judgment of the Court was delivere9 by

      DIPAK MISRA, J. 1. The present appeals, by special
lleave, have been preferred against the judgment and order B
 dated 24th June, 2009 passed by the Division Bench of the
 High Court of Gauhati in Writ Appeal No. 435 of 2006 and other
 connected appeals whereby it has affirmed the common
 judgment and order dated 21.09.2006 passed by the learned
 Single Judge in a batch of writ petitions. For the sake of clarity C
 and convenience we shall advert to the facts in Civil Appeal No.
 3380 of 2010 and at the relevant time we shall refer to quantum.
 involved in other appeals.

     2. The facts, in a nutshell, are that with a view to provide  o
necessary impetus to the development of industries in the north-
eastern region a new Industrial Policy Resolution was notified
by the Government of India on 24.12.1997. In pursuance of the
said policy, a Notification was issued on 8.7.1999 and
thereafter further Notifications were issued on 29.06.2001 and E
23.12.2002. Pursuant to the said Notifications, certain benefits
were availed of by the assessees. At that juncture, The Finance
Act, 2003 (for brevity "the Act") was brought into force and by
virtue of Section 153 of the Act certain Notifications were
amended with retrospective effect from 08.07.1999, i.e. the F
date of original Notification which we have mentioned
hereinabove.

     3. After the amendment came into force, the Assistant
Commissioner, Central Excise, Jorhat referred to the
amendment and the notifications and eventually passed the G
following order on 3.6.2003:-

     "/n consideration of the above the entire refund amount
     sanctioned with effect from 8. 7. 99 is required to be
     reviewed in terms of the provision of the Eighth Schedule H
    636      SUPREME COURT REPORTS                  [2014] 7 S.C.R.


A         of the Finance Act, 2003 which on being re-assessed, it
          appears that an amount of Rs.2.20, 18.124.00 is required
          to be recovered from the said unit being the refund
          granted earlier which have become not eligible by virtue
          of the Clause 145 of the Finance Bill, 2003. Details of
B         duty paid month wise, refund sanctioned and amount
          required to be realized are furnished in Annexure-1 to the
          Order 'enclosed.

          Now in terms of the provision of Finance Act, 2003 Mis.
          Hindustan Coca Cola Beverages Pvt. Ltd., P. 0. R. R.L.,
c         Jorhat is hereby required to make payment of the said
          amount of Rs.2,20, 18, 124.00 within a period of 30 (thirty)
          days with effect from 13th May, 2003. Failure to comply
          with this Order with the specified date an interest @ 15%
          p.a. shall be payable from the date immediately after the
D         expiry of the said period,of thirty days till the payment is
          made."

          4. Being aggrieved by the aforesaid order, the appellant
    preferred a writ petition before the High Court. The validity of
E   Notification No. 65/03 dated 06.08.2003 and certain other
    notifications including the original notification No. 33/99 dated
    3.7.99 were called in question. Before the High Court, the
    constitutional validity of the amendment of the Finance Act was
    also called in question. In the course of hearing, the challenge
F   to the validity was abandoned. It was contended in the writ
    petition that without affording an opportunity of hearing to the
    appellant and without issuance of the notice, the Assistant
    Commissioner had passed an order of recovery which was
    absolutely impermissible.

G        5. The High Court did not address to the retrospective
    application of the provision as the assail to the same was
    abandoned. It also did not address to the impact of non-
    issuance of notice prior to passing an order of recovery. It
    adverted to the merits of the case, that is, whether the recovery
H   could have been directed by the Assistant Commissioner or
     HINDUSTAN COCA COLA BEVERAGE (P) LTD. v.               637
           UNION OF INDIA [DIPAK MISRA, J.]
not and repelling the proponements advanced by the assessee         A
accepted the stand of the revenue.

     6. Mr. S.K. Bagaria, learned senior counsel appearing for
the appellant very fairly stated that the assessee had correctly
abandoned the challenge pertaining to the constitutional validity   8
of the provision. Learned senior counsel submitted that an
order of recovery could not have been straightaway passed
without issuing notice to the appellant as that violates the
principles of natural justice, The learned senior counsel further
contended that the High Court has dwelled upon the- merits of       C
the case on an erroneous footing inasmuch as the assessee-
appellant had totally utilized the CENVAT Credit and not taken
the refund of the same. It is further urged that in view of the
amendment made by the Finance Act, it was not payable and
consequently not recoverable.
                                                                    D
     7. Mr. Muku/ Rohtagi, learned Attorney General appearing
for the Union of India submitted that as the time schedule is
fixed under Section 153 (4) for recovery is thirty days, by
implication, the principle of issue of any show cause notice is
not attracted. To support the said submission, he has drawn         E
strength from the decision in R. C. Tobacco (P) Ltd. v. Union
of India , especially paragraph 41 of the said pronouncement.
Additionally, it is submitted by him that post facto hearing may
be thought of after the amount is deposited and the sphere of
hearing may be limited with regard to payability or the refund      F
of the sum.

    8. To appreciate the controversy from a proper
perspective it is seemly to reproduce Section 153 of the Act ·
which reads as under:
                                                                    G
       "Section 153. Amendment of notifications issued
       under Section 5A of the Central Excise Act for certain
       period.

1.    c2005) 1 sec 125.                                             H
    638       SUPREME COURT REPORTS                   [2014] 7 S.C.R.


A         (1) The notification of the Government of India in the
          erstwhile Ministry of Finance (Department of Revenue),
          Nos. G.S.R. 508 (E), dated the 8th July, 1999 and G.S.R.
          509 (E), dated the 8th July, 1999, issued under sub-section
          (1) of Section 5A of the Central Excise Act read with sub-
B         section (3) of Section 3 of the Additienal Duties of Excise
          (Goods) of Special Importance) Act, 1957 (58 of 1957)
          and sub-section (3) of Section 3 of the Additional Duties
          of Excise (Textiles and Textile Articles) Act, 1978 (40 of
          1978) by the Central Government shall stand amended and
c         shall be deemed to have been amended in the manner as
          specified in the Eighth Schedule, on and from the 8th day
          of July, 1999 to the 22nd day of December, 2002 (both
          days inclusive) retrospectively, and accordingly
          notwithstanding anything contained in any judgment,
          decree or order of any court, tribunal or other authority, any
D
          action taken or anything done or purported to have been
          taken or done under the said notifications, shall be deemed
          to be and always to have been, for all purposes, as validly
           and effectively taken or done as if the notifications as
           amended by this sub-section had been in force at all
E
           material times.

          (2) For the purposes of sub-section(1 ), the Central
          Government shall have and shall be deemed to have the
          power to amend the notifications referred to in the said
F         sub-section with retrospective effect as if the Central
          Government had the power to amend the said notifications
          under sub-section (1) of Section 5A of the Central Excise
          Act read with sub-section (3) of Section 3 of the Additional
          Duties of Excise (Goods of Special Importance) Act, 1957
G         (58 of 1957) and sub-section (3) of Section 3 of the
          Additional Duties of Excise (Textiles and Textile Articles)
          Act, 1978 (40of1978), retrospectively at all material times.

          (3) Notwithstanding the cessation of the amendment under
          sub-section (1) of the 22nd day of December, 2002, no
H
 HINDUSTAN COCA COLA BEVERAGE (P) LTD. v.                  639
       UNION OF INDIA [DIPAK MISRA, J.]
    suit or other proceedings shall be maintained or continued A
    in any court, tribunal or other authority for any action taken
    or anything done or omitted to be done, in respect of any
    goods under the said notifications, and no enforcemept
    shall be made by any court; tribunal or other authority of
    any decree or order relating to such action taken or anything B
    done or omitted to be done as if the amendment made by
    sub-section (1) had been in force at all material times.

    (4) Notwithstanding the cessation of the amendment under
    sub-section (1) on the 22nd day of December, 2002,.
    recovery shall be made of all amounts of duty or interest C
   ·or other charges which have not been collected or, as the
    case may be, which have been refunded but which would
    have been collected, or, as the case may be, which would
    not have been refunded if the provisions of this section had
    been in force at all material times, within a period of thirty D
    days from the day on which the Finance Bill, 2003 receives
    the assent of the President, and in the event of non-
    payment of duty or interest or other charges so
    recoverable, interest at the rate of fifteen per cent, per
    annum shall be payable, from the date immediately after E
    the expiry of the said period of thirty days, till the date of
    payment.

    Explanation- For the removal of doubts, it is hereby
    declared that no act or omission on the part of any person    F
    shall be punishable as an offence which would not have
    been so punishable if the notifications referred to in sub-
    section (1) had not been amended retrospectively by that
    sub-section."

    As the provision contained under Section 153(1) would         G
reveal the effect of the amendment has to be understood in the
backdrop of the EIGHTH SCHEDULE. THE EIGHTH
SCHEDULE reads as follows:

                                                                  H
    640       SUPREME COURT REPORTS                  [2014) 7 S.C.R.

A          "[See Section 153(1 )]

     SI.No. Notification No.          Amendment           Date of
                                      and date            effect of
                                                          amendment
B    (1)            (2)                  (3)               (4)
     1.         G.S.R. 508(E)         In the said         8th July,
                dated the 8th July,   notification,       1999
                1999 -- Central       in paragraph 2,
c               Excise, dated the     in clause (b),
                8th July, 1999)       the following
                                      proviso shall
                                      be inserted,
                                      namely:-
D
                                      Provided that
                                      such refund shall
                                      not exceed the
                                      amount of duty
                                      paid less the
E                                     amount of the
                                      CENVAT credit
                                      availed of, in
                                      respect of the
                                      duty paid in the
F                                     inputs used in
                                      or in relation to
                                      the manufacture
                                      of goods cleared
                                      under this
G                                     notification."
     2.         G.S.R. 509 (E),       In the said         8th July,
                dated the 8th July,   notification, in    1999
                1999 {33/1999-        paragraph 2, in
                Central Excise,       clause (b), ttie
H
 HINDUSTAN COCA COLA BEVERAGE (P) LTD. v.                  641
       UNION OF INDIA [DIPAK MISRA, J.]

         dated the 8th July,   following proviso                  A
         1999}                 shall be inserted,
                               namely:-
                  I
                               "Provided that
                               such refund shall                  B
                               not exceed the
                               amount of duty
                               paid less the
                      '
                          I
                               amount of the
                               CENVAT credit                      c
                                                       ;
                               availed of, in
                               respect of the
                               duty paid on the
                               inputes used in
                               or in relation to '
                                                                  D
                               the manufacture
                               of goods cleared
                               under this
                               notification."

    9. The first submission, as we find centres round the issue   E
whether whether the appellant-assessee was entitled to be
given notice to show cause before proceeding for recovery in
view of the language employed under Section 153(4) of the Act.
In RC. Tobacco (P) Ltd. (supra) the court interpreting Section
153(4) has observed as follows:-                                  F

    "In the present case Section 153(4) specifically and
    expressly allows amounts to be recovered within a period
    of thirty days from the day Finance Bill, 2qb3 received the
    assent of the President. It cannot but be held therefore that G
    the period of six months provided under Section 11-A
    would not apply."                  ·

     In the said case while dealing with the question of notice
prior the recovery the court ruled:-
                                                                  H
        642       SUPREME COURT REPORTS                   [2014] 7 S.C.R.


    A         "On the question of notice prior to the recovery irrespective
              of Section 11-A, it is contended by the petitioners relying
              on the decision of this Court in East India Commercial Co.
              Ltd. v. Collector of Customs4 SCR at p. 361 that whether
              a statute provides for notice or not, it was incumbent upon
    B         the respondents to issue notice to the petitioners disclosing
              the circumstancE~ under which proceedings are sought to
              be initiated against them and that any proceedings taken
              without such notice would be against the principles of
              natural justice. Assuming that the principles were
    c         applicable to the case before us, in fact notices of personal
              hearing were served on the· petitioners by the Assistant
              Collector for a personal hearing before the Assistant
              Collector passed the orders by which the petitioners were
              held liable to repay the refunds made and to pay the excise
              on the goods cleared for the subsequent periods."
    D
            Relying on the same it is submitted by Mr. Rohatagi that
      as the computation and the recovery are to be made within a
      time frame of thirty days, issue of a show cause notice cannot
      be read into such a provision. In essence, the submission is
    E that the principles of natural justice have been kept at bay by
      implication. Per contra, Mr. Bagaria has submitted that in the
      above-referred decision notices have already been given and,
      therefore, issuance of notice is a must. Ordinarily we would
      have adverted to said submission advanced at the bar but we
    F find, the assessee had not demonstrably argued this ground
      and addressed the lis on merits before the High Court and,
      therefore, we are not inclined to interpret whether the concept
      of natural justice would be read into the said provision or not.
      The said question is left open.
    G
            10. The next submission pertains to the issue whether the
      High Court was justified addressing the lis on merits when
      series of factual aspects are involved. We are disposed to think
      that the High Court should not have entered into the factual score
1
    H to decline the relief to the appellants. We are obliged to say
  HINDUSTAN COCA COLA BEVERAGE (P) LTD. v.                   643
        UNION OF INDIA [DIPAK MISRA, J.]

so as Mr. Bagaria, learned senior counsel has contended that A
it can only be adjudicated upon with reference to the documents
on record. The documents mean the transactions, quantum of
CENVAT availed of, the amount that was taken as refund by
paying from the P.L.A. and further not availing refund of
CENVAT credit at any point of time ..Needless to emphasise, B
the said aspect are in the realm of facts which could not have
been adjudged or adjudicated by the High Court under Article
226 of the Constitution as the order of recovery was challenged
on the ground that no notice was issued to the appellant and
that it was not liable to pay in the obtaining factua,I matrix. c
       11. Be it stated, there is no cavil over the fact that an
 appeal lies under Section 35 of the Central Excise Ad, 1944
 to the Commissioner (Appeals) who can address both the
 issues relating to facts and law keeping in view the applicability
 of the relevant notifications. It is borne out from the record that D
 the assessee-appellant had furnished a bank guarantee
 amounting to Rs.2,20,18,124/- for obtaining an order of stay.
 In our considered opinion it would not be appropriate to give
 an opportunity to the appellant to prefer statutory appeals and
 allow it to enjoy the benefit of stay of recovery on the basis of a E
 bank guarantee. Therefore, we would direct the assessee to
 deposit Rs.2.5 crores before the adjudicating authority within
 six weeks and after the said deposit is made and the receipt
 obtained, the appeal would be entertained within the said
.period. On an appeal being filed, the Commissioner (Appeals) F
 shall deal with the matter on merits. Learned Attorney General
 very fairly stated that the Revenue would not raise the issue of
 limitation as the period spent before the High Court and this
 Court a.nd the time granted for depositing of the ambunt would
 stand excluded for the purpose of preferring the appeal.            G

     12. At this juncture, it is apposite to mention here that the
bank guarantees furnished by the other appellants in respect
of their respective appeals. They are as under:
                                                                     H
    644      SUPREME COURT REPORTS                  [2014] 7 S.C.R.


A     CIVI~ APPEAL           NAME OF                AMOUNT{Rs.)
      No.                    ASSESS EE

      C.A. No. 3381/10 Assam Roofing                 16,62,336/-
      C.A. No. 3383/10 Ozone Pharmaceuticals 1,01,20,672/-
B
      C.A. No. 3384/10      Ozone Ayurvedics         1,01,20,672/-
      C.A. No. 3385/10      Herbo Foundation         39,81,566/-
      C.A. No. 3386/10      Belle Herbals            4,44,740/-
      C.A. No. 3387/10      Eminent Healthcare       22,01,868/-
c
      C.A. No. 3388/10      Tread & Patels           42,44,456/-
      C.A.Nos.3389/92/10 Godres Sara Lee             36,51,495/-
                                                     19,12,132/-

o         Considering the amount in question in various appeals it
    is directed that in case the bank guarantees furnished by the
    assessees have been encashed no deposit shall be made. If
    the bank guarantees have not yet been encashed the amount
    as mentioned hereinabove plus rupees five lakhs shall be
E   deposited within the stipulated time frame of six weeks. As we
    have directed for dE~position of the amount, it is directed that
    after deposit of the said amount, the bank guarantees furnished
    in favour of the jurisdictional Commissioner shall be returned
    to the assessee-appellants.

F        13. In the result, the appeals stand allowed in part. The
    judgment and orders of the High Court in writ petitions and writ
    appeals are set aside and the assessee/appellants are
    directed to prefer appeals with the conditions precedent as
    imposed hereinabove. The appeals shall be disposed of within
G   a period of three months from the date of its presentation after
    giving opportunity of hearing to the parties. Needless to clarify,
    we have not expressed any opinion whatsoever on the merits
    of the case. There will be no order as to costs.

H   Devika Gujral                                 Appeal partly allowed.