Case Brief: Tata Motors Limited v. Union of India and Ors.

Name of the Case	Tata Motors Limited v. Union of India and Ors.
Citation	MANU/JH/0161/2012
Date of the Judgement	15.02.2012
Petitioner	Tata Motors Limited
Defendants	Union of India and the State
Bench/ Judges	Hon'ble Chief Justice P.C. Tatia and Hon'ble Mr. Justice Aparesh Kumar Singh
Statutes Involved	Central Excise Tariff Act 1985 (Repealed)
Important Articles/ Sections	Central Excise Tariff Act 1985 (Repealed)- section 3

FACTS

Tata Motors manufactures motor vehicle chassis and sells these chassis after paying the appropriate excise duty. The company entered into an agreement with various bodybuilders who construct vehicle bodies on these chassis. The excise duty paid by the Tata Motors on the chassis is available as CENVAT Credit to the body builders, who are then required to pay duty on the completed vehicles who are then required to pay the duty after setting off CENVAT Credit for the chassis. Any unutilised Credit would belong to Tata Motors.

When Tata Motors Limited made an application for a complete waiver of pre-deposit of excise duty amounting to more than 21 crore Rupees and an equivalent penalty, the authority rejected and directed Tata Motors to deposit 25% of the confirmed duty as a precondition for entering its appeal against the duty demand.

 The manufacturers challenged this decision in the Tribunal, and the Tribunal ruled in favour of the department. Therefore the they made an appeal to the High Court.

PROVISIONS INVOLVED

Central Excise Tariff Act 1985 (Repealed)

Section 3: It is stated that excise duty is payable by the manufacturer of the product.

LEGAL ISSUES

The following issues have come before the bench

1. Whether the petitioner company ought not to be exempted from the payment of the excise duty, which is warranted by the tribunal, or should be granted relief based on the precedents?
2. Whether the bench should decide the case that the tribunal has decided with considerable and sufficient reasons?

ARGUMENTS FROM THE PETITIONER’S SIDE

The learned counsel from the petitioner’s side argued that 

1. Taking the earlier judgements of the Supreme Court and the division bench of the same court as precedents, they argued that Tata Motors should not be liable to pay the excise duty. It ought to be paid by the body builders of the vehicle.
2. They contended that as per chapter 87 of the Central Excise Act 1985, the body builder is the manufacturer, and therefore it is his liability to pay the excise duty under section 3.

ARGUMENTS FROM DEFENDANT’S SIDE

The learned counsel from the petitioner’s side argued that 

1. Contended that even in the Supreme Court judgement in Banara Valves Limited and others versus Commissioner of Central Excise and others, the court indicated that an interim order against the pre-deposit or waiver of the deposits cannot be just for asking, particularly on the ground of any consequential hardship.
2.  Argued that the tribunal has given a considered and detailed reason for not allowing them to waive the complete payment of the duty. 

JUDGMENT

The Hon’ble bench held that,

1. Relied on the Supreme Court judgement in the case of Benara Valves Limited v. Commissioner of Central Excise and another, reported in 2006, which held that merely establishing a prima facie case, an interim protection order should not be passed.
2. The Apex court in the same case cautioned that the petition should not be disposed of in a routine manner, and be mindful of the consequences flowing from the order. There can be no rule of Universal application in such matters, and the Order has to be passed keeping in view the factual scenario involved.
3. The Supreme Court also observed that for a hardship to be undue, it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself.
4. The bench decided to confine the plea so as not to influence the Tribunal in any manner against the petitioner or against the revenue, as issues raised required consideration by the tribunal itself and not by the court.
5. Therefore, the writ petition is dismissed.
6. The petitioner company is required to make a payment of a deposit of 25% of the amount within 6 weeks.  

CONCLUSION

The Court in this case concluded that Tata Motors was not entitled to a complete waiver of the pre-deposit requirement for its excise duty appeal. This judgment highlighted the need and importance of deciding the cases based on their circumstances and the hardships that could be faced by the petitioner. Thereby reiterating an important principle which increases faith of the people in the Judicial system.