P.K.Jain, J. - (1.) The petitioner is a company incorporated under the Indian Companies Act, 1956 having its registered Office at G.T. Road, Ghaziabad. It manufactures Banaspati Ghee (vegetable oil). During process of manufacturing vegetable oil a bye-product known as soap stock is generated. The petitioner's case is that the petitioner does not clear the soap stock as such it is used captively for manufacturing of acid oil which is cleared from the factory. Soap stock is not a marketable commodity as such and, therefore, not excisable. Prior to 23-7-1996 soap stock was exempted from payment of duty vide notification dated 1-3-1994. The said notification was rescinded w.e.f. 23-7-1994 and Central Excise authorities were of the view that soap stock was classifiable under Tariff Heading No. 1507.00 and petitioner was liable to pay Central Excise duty at the rate of 25 per cent. The petitioner filed the declaration under Rule 173C and declared the value of soap stock at the rate of Rs. 400 per tonne. The Central Excise authorities, however, served 3 show cause notices upon the petitioner for different periods on the ground that value of the soap stock shown by the petitioner at the rate of Rs. 400 per tonne was much less and the actual value was Rs. 7,620/- per tonne. After the petitioner filed reply to the show cause the adjudicating authority by order, dated 17-2-1998 had taken the value of the soap stock at the rate of Rs. 6,350/- per metric tonne and confirmed the demand of the show cause notice. The demand for Rs. 8,82,364/- being differential duty was raised by order/letter dated 24-2-1998. The petitioner felt aggrieved and filed appeals before the Commissioner (Appeals) Central Excise, Ghaziabad. Separate applications under Section 35F for waiving of the condition of per-deposit of the amount of duty as also for stay of the impugned orders were moved. The Commissioner of Appeals, respondent No. 1 by a common order directed the petitioner to deposit 50 per cent of the disputed amount of duty. The petitioner felt aggrieved by the said orders and filed the present writ petition with prayer that orders dated 16-6-1999 and 18-10-1999 be quashed and respondent No. 1 be directed to decide the appeals and condition for pre-deposit of duty for entertaining the appeals may be waived.
(2.) The department has contested the writ petition by filing counter affidavit of the Additional Commissioner, Central Excise. It is stated in the counter affidavit that the matter was considered in the light of undue hardship and respondent No. 1 after considering the prima fade case and financial hardship as pleaded, directed the petitioner to deposit 50 per cent of the disputed amount of duty within 15 days of its order dated 16-6-1999. Application for reconciliation was moved and this application was rejected. It was specifically stated in para 14 that from financial result for the period ending 31-3-1999 (vide Annexure 9 to the writ petition) it is evident that the income/receipts of the petitioner is about Rs. 433.73 crores and his current assets as per the balance-sheet is about Rs. 41 crores which includes bank balance of Rs. 5.7 crores.
(3.) In the rejoinder affidavit filed by the petitioner almost the same facts have been reiterated besides stating that the petitioner's company has been declared as a sick industrial company by the B.I.F.R. by order dated 30th September, 1998 and a rehabilitation scheme has been prepared by the officiated agency appointed by the B.I.F.R. It was also stated that Commissioner (Appeals) has not properly taken into account the financial position of the petitioner while disposing of the application for deposit of duty inasmuch as the petitioner company networth has been completely eroded and the petitioner company has incurred cash loss of Rs. 13.11 crores during financial year 1996-97, Rs. 10.53 crores during financial year 1998-99. In view of the huge accumulated losses of Rs. 27.94 crores as on 31st March, 1999, the liquidity position of the petitioner company is under severe strain.;