Indira Banerjee, J.
1. This writ application is directed against an order No. 5-288/Kol/2006 dated 17th March, 2006 of the Customs Excise and Service Tax Appellate Tribunal, hereinafter referred to as the CESTAT, whereby the CESTAT has rejected the prayer of the petitioner for dispensation of the requirement of deposit of the disputed duty, pending hearing of Appeal No. ESM-369/05.
2. The facts giving rise to this appeal are briefly as enumerated hereinafter.
3. The petitioner company is inter alia engaged in manufacture of Insulated Electric Wires and Cables railing under Sub-Heading 8544 of the Schedule to the Central Excise Tariff Act, 1985, hereinafter referred to as the said goods, at its factory at Andul Road in Howrah district.
4. The petitioners contend, that under the provisions of Section 4 of the Central Excise Act, 1944, the petitioners are entitled to deduct freight and insurance charges and also interest on receivables from the invoice value for calculation of the assessable value of the said goods, for the purpose of computation of excise duly. According to the petitioners, the petitioners were allowed 0.56% deduction on account of freight and insurance, during the year 1994-1995.
5. By a letter dated 15th January, 1996 the petitioners informed the Assistant Commissioner that the petitioners would deduct 3.06% from the invoice value of the said goods on account of interest on receivables. and 0.96% on account of freight and insurance, with effect from 15th January, 1996.
6. The petitioners were issued a show-cause notice dated 18th June, 1996 calling upon the petitioners to show-cause why deduction admissible in relation to insurance and freight charges should not be limited to 0.56% as per calculations shown in the Annexure to the said show-cause notice and also why deduction towards interest on receivables should not be considered inadmissible.
7. The petitioners claim to have submitted their reply to the show-cause notice inter alia contending that the deductions allowed for the year 1994-95 were not relevant to the deductions claimed from 15th January, 1996 onwards.
8. An adjudication order dated 19th February, 1998 was passed by the Assistant Commissioner of Excise, Howrah allowing deduction of 0.52% for the financial year 1995-96 and 0.74% for the financial year 1996-97 towards freight and insurance and disallowing deductions towards interest on receivables.
9. On 31stMarch, 1998, the Adjudicating Authority passed another adjudication order allowing abatement of 0.52% and 0.74% towards freight and insurance for the financial years 1995-96 and 1996-97. The--Adjudicating Authority demanded duty of Rs. 3,92,393/- and imposed penalty of Rs. 40,000/-.
10. The petitioners filed appeals before the Commissioner of Central Excise (Appeals), Kolkata against the orders dated 19th February, 1998 and 31stMarch, 1998.
11. The Commissioner (Appeals) by an order dated 28th June, 2000 remanded the matter to the concerned Assistant Commissioner for passing a de novo order upon re-examination after giving the petitioner proper opportunity of defending their case.
12. The petitioners were served with an adjudication order dated 2nd February, 2005 of the Assistant Commissioner of Central Excise, Howrah West Division-I, confirming the demand of Central Excise duty of Rs. 7,20,330/- and imposing penalty of Rs. 1 lakh on the petitioner company.
13. The petitioners filed an appeal before the Commissioner of Central Excise (Appeal 1), challenging the adjudication order dated 2nd February, 2C05. By an order dated 11th July, 2005 the Commissioner (Appeals 1) rejected the appeal on the ground that the petitioners had not. submitted supporting documents.
14. The petitioners filed an appeal against the said order before the CESTAT being Appeal No. ESM-369/05. By the order impugned the petitioner has been directed to deposit Rs. 7,20,330/- within a period of 8 weeks failing which the appeal would stand dismissed.
15. The relevant portion of the order of the CESTAT is as follows:
2. ...The appellate Commissioner, therefore, held that the claim of abatement was not substantiated. There can be no dispute over the fact that claim of abatement was required to be substantiated when it was made in respect of freight and insurance charges. The appellant was required to prove the ' same by adequate documentary evidence.
3. The learned Counsel for the appellant contended that the appellant company was before the BIFR and in view of its adverse financial conditions the pre-deposit may be waived. We are unable to accept this view because Section 22 of SICA will have no application to the provisions of Section 35G, as held by Hon'ble the Supreme Court in Metal Box India Ltd. v. CCD, Mumbai reported in : 2003(155)ELT13(SC) (SC). Even from the balance sheet as at 31stMarch 2005 which is on record, it is clear that the appellant has ample assets for discharging the governmental dues.
4. The appellant has not made out any prima facie case for granting interim stay of the impugned order. Therefore, the stay of duty amount is refused. We direct the appellant to deposit the amount of deposit within 8 weeks from today, following which the appeal shall stand dismissed. On such deposit being made, there shall be stay against recovery of the penalty imposed on the appellant.
16. Mr. Tarafdar appearing on behalf of the respondent authorities took a preliminary objection to the maintainability of this writ application! on the ground of existence of the alternative remedy of Appeal to the High Court available under the Central Excise Act, 1944.
17. Section 35G of the Central Excise Act, 1944 provides for Appeal to the High Court. Section 35G(1), (3), (4), (5) and (6), relevant to the issue of whether the petitioners have an equally efficacious alternative remedy of Appeal, arc extracted hereinbelow for convenience:
35G. Appeal to High Court.-(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or alter the 1stday of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:
Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.
(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.
(6) The High Court may determine any issue which-
(a) has not been determined by the Appellate Tribunal; or
(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in Sub-section (1).
Section 35L(b) provides as follows:
Appeal to the Supreme Court.-An appeal shall lie to the Supreme Court from-
(a) any judgment of the High Court: delivered-
(i)...
(ii)...
(iii)...
(b) any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.
18. From the aforesaid provisions pertaining to Appeals, it is apparent that all orders passed by the Tribunal arc not appealable to the High Court. An appeal would lie to the Supreme Court against an order of a Tribunal relating to determination of a question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.
19. An appeal lies to the High Court against an order of the Tribunal in appeal, not being an order relating to the determination of a question having relation to the rate of excise duty or to the value of goods for assessment, if the High Court is satisfied that the case involves a substantial question of law.
20. The Tribunal has not determined any question having relation either to the rate of excise duty or to the value of goods for assessment of excise duty. The order of the Tribunal is not appealable to the Supreme Court.
21. Mr. Tarafdar, emphasizing on the use of the phrase 'every order' in Paragraph 35G(1), submitted that an appeal would lie to the High Court from all orders of the Tribunal under Section 35F of the Central Excise Act, 1944.
22. The expression 'every order passed in appeal by the Appellate Tribunal' is qualified by a rider, that is, satisfaction of the High Court that the case involves a substantial question of law.
23. An appeal to the High Court is, therefore, not automatic. The condition precedent for entertaining an appeal is the satisfaction of the High Court of the case involving a substantial question of law.
24. An order under Section 35F of the Central Excise Act, 1944, dispensing with disputed duty and/or penalty either fully, or in part, or refusing to do so is generally based on assessment of facts and may not involve any question of law, far less, any substantial question of law.
25. An appeal may lie to the High Court from an order of the Tribunal waiving pre-deposit of the disputed duty and/or penalty either wholly or in part or refusing to waive pre-deposit, if the order is based on a finding which gives rise to a substantial question of law.
26. It is, however, difficult to accept Mr. Tarafdar's submission that an appeal lies to the High Court from all orders of the Tribunal, except orders determining a question relating to determination of the rate of excise duty, or determination of the value of goods for the purpose of assessment/of excise duty, which are appealable to the Supreme Court.
27. Where an appeal lies only on a question of law, that question must arise for determination from the order under appeal. No question of law, not to speak of substantial question of law, has arisen from the impugned order.
28. The appeal before the Tribunal is from an order of the Commissioner (Appeals) confirming the duty demanded and penalty imposed on the ground of the petitioners being unable to substantiate their claim to deduction of freight and insurance charges and interest on receivables by adducing cogent documentary evidence. The impugned order is based on a prima facie assessment of facts.
29. The jurisdiction of this Court under Article 226 of the Constitution of India is wide. There are no constitutional fetters on the exercise of the extraordinary writ jurisdiction of this Court, where an alternative remedy exists.
30. The jurisdiction of this Court to issue prerogative writs is, however, discretionary. The amplitude of the jurisdiction demands that the jurisdiction be exercised subject to limitations, evolved by the Courts themselves, through judicial pronouncements.
31. Ordinarily the Courts refrain from entertaining a writ petition, when the petitioner has an alternative forum which, without being unduly onerous, provides an equally efficacious remedy.
32. There can, however, be no doubt, that relief under Article 226 of the Constitution of India can be refused on the ground of alternative remedy, only if that alternative remedy is an effective remedy and, as observed above, equally efficacious.
33. The remedy of an Appeal to a Division Bench is certainly an equally efficacious, if not more efficacious remedy, warranting refusal to exercise jurisdiction under Article 226 of the Constitution of India. This Court would, therefore, refuse to entertain a writ petition challenging an order from which an appeal lies as a matter of course.
34. Where, however, the admission of an appeal from an order of a Tribunal is conditional upon' satisfaction of the High Court of the existence of a substantial question of law, and, therefore, fraught with uncertainty, it would not be proper for this Court to refuse to exercise its writ jurisdiction on the sole ground of existence of an alternative remedy of appeal and more so, when it prima facie appears to this Court that the order impugned does not give rise to any question of law that requires determination. This Court ought not to refuse to entertain a writ petition if the availability of the alternative remedy is uncertain.
35. The petitioner had claimed exemption on account of freight and insurance charges. The authorities took the view that the appellant was unable to prove its claim by adequate documentary evidence.
36. CESTAT refused to allow the prayer of the petitioner company for waiver of pre-deposit observing that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, (SICA) had no application in case of an appeal under Section 35F of the Central Excise Act. CESTAT relied on the judgment of the Supreme Court in the case of Metal Box India Ltd. v. C.C.D., Mumbai reported in : 2003(155)ELT18(Cal) (SC).
37. In the case of Metal Box India Ltd.(supra) it appears that the only point argued on behalf of the company was that the company having been referred to the Board of Industrial and Financial Reconstruction (BIFR), the provisions of Section 22 of SICA, would be attracted and the petitioner would not be liable to pre-deposit the disputed duty and penalty.
38. CESTAT held that the petitioner company had failed to make out a prima facie case for waiver of pre-deposit and further held that from the balance sheet it was clear that the appellant had ample assets for discharging the governmental duties.
39. Section 22 of SICA may not be attracted in case of an order directing pre-deposit of disputed duty or penalty an appeal under Section 35 of the Customs Act, 1963 as rightly held by CESTAT, following the judgment of the Supreme Court in the case of Metal Box India Ltd. referred to above.
40. There is no inherent right of appeal from an order by which a party is aggrieved. The right to appeal is conferred by statute. The right to appeal to the CESTAT under Section 35F of the Central Excise Act is subject to pre-deposit of the disputed duty and the disputed penalty.
41. The proviso to Section 35F of the Central Excise Act, however, carves out an exception to the rule of pre-deposit, in case of undue hardship. Where a case of undue hardship is made out the Tribunal might waive the requirement of pre-deposit of the disputed duty and penalty.
42. When statute confers discretion to waive pre-deposit of the . disputed duty and penalty, in case of undue hardship, the Tribunal is bound to exercise its discretion in favour of an appellant, if the facts and circumstances of the case warrant exercise of discretion in favour of the appellant and/or in other words, the appellant makes out a case of undue hardship.
43. It is well-settled by judicial pronouncements, that where an appellant has a gilt edged case or prima facie a very strong case, the requirement of pre-deposit of disputed amount of duty would itself cause undue hardship. The pronouncements proceed on the reasoning that compelling payment of any amount, that is, not payable results in undue hardship.
44. Where the appellant makes out a gilt edged case and/or prima facie a very strong case, the requirement of pre-deposit of the disputed duty and penalty might altogether be waived.
45. In the case of Bongaigaon Refinery & Petrochem Ltd. v. Collector of Central Excise, A, Kolkata reported in : 1994(69)ELT193(Cal) , a learned Single Judge of this Court held that undue hardship 'would cover a case where the appellant had a strong case. The phrase would also cover a situation where there was an arguable case in the appeal. Where there was a strong case the Appellate Authority should dispense with pre-deposit altogether. In the latter case, that is, where the petitioner had an arguable case, the authority would have to safeguard the interest of the revenue.'
46. A gilt edged case would thus call for unconditional waiver. Where the case is arguable, the interest of the revenue might have to be secured by an appropriate order, may be an order directing the appellant to furnish a bank guarantee, or a bond, or an order restraining the appellant from disposing of its assets pending hearing of the appeal. The example are only illustrative.
47. Where a case of acute financial hardship is made out the requirement of pre-deposit would have to be waived, for pre-deposit would in such a case cause undue hardship.
48. In considering 'hardship' the Tribunal should adopt a liberal approach. The consequences of insisting upon deposit of duty and penalty could lead to disastrous consequences, irreversible in the event of success in appeal. On the other hand, if duty were waived the appeal could be heard and disposed of on merits. The assessee would get an opportunity to assail the order impugned in appeal. If the appeal succeeded, the assessee would not be required to make any payment. If the appeal failed the revenue authorities could recover the disputed duty and penalty.
49. Mr. Pranab Kr. Dutta appearing on behalf of the petitioner has very painstakingly taken the Court through the balance sheet, copies whereof have been annexed to the petition. The balance sheets do not reveal sufficient liquid assets for payment of pre-deposit.
50. As pointed out by Mr. Dutta the CESTAT has proceeded on the basis of the value of the fixed assets of the company as on 31stMarch, 2005 which was Rs. 280,60,11,977/-.
51. The CESTAT failed to consider that the company had incurred a loss of Rs. 6,55,50,193/-. It is doubtful whether the value of the fixed assets could be relevant for determination of the question of whether pre-deposit should be waived and that too without considering whether the company was in fact, in a position to dispose of its fixed assets.
52. The balance sheet on which reliance has been placed indicates secured loans of an amount far exceeding the value of the fixed assets of the company. CESTAT overlooked the secured loans in passing the order impugned.
53. Extensive submissions had been advanced by Mr. Dutta to show that the appellant prima facie had a good case on merits. Mr. Dutta relied on a judgment of the Central Excise Gold Appellate Tribunal (CEGAT) reported in , holding that exemption on account of post manufacture expenses such as freight and insurance were liable to be deducted for computation of excise duty. Mr. Dutta argued that the judgment operated as a precedent which the CESTAT was bound to follow.
54. Mr. Dutta relied on a judgment of a Division Bench of this Court in the case of J.N. Chemicals (PVT.) Ltd. v. CEGAT reported in : 1991(53)ELT543(Cal) where this Court held that the Appellant could be considered to have a good prima facie case when he was covered by another decision of the Tribunal and in such case pre-deposit of duty and penalty ought to have been dispensed with by the Tribunal.
55. Mr. Dutta relied on a judgment of the Supreme Court in the case of Government of India v. Madras Rubber Factory Ltd. reported in : 1995(77)ELT433(SC) where the Supreme Court held that post manufacture expenses such as expenses on account of freight and insurance were deductible.
56. Mr. Dutta relied on an order of the Supreme Court in the case of Sriram Fertilizers and Chemicals v. Union of India reported in 1997 (96)ELT 12(SC) where the Supreme Court followed its earlier decision in the case of Government of India v. MRF Ltd. reported in 1995 (77) ELT 33, and held that interest on credit was deductible.
57. The decisions referred to above on the point of post manufacture expenses such as freight and insurance and interest on credit being deductible arc not relevant to this application, since CESTAT has not recorded any finding to the contrary. CESTAT proceeded on the basis of the finding of the Commissioner of want of supporting evidence of payment of freight and insurance charges and payment of interest on credit.
58. In the case of Hindustan Laminators Pvt. Ltd. v. Commissioner of Central Excise, Calcutta reported in : 2002(141)ELT614(Cal) cited by Mr. Dutta, a learned Single Judge of this Court set aside an order of the Tribunal directing pre-deposit of Rs. 10 lakhs on the ground that the documents placed by the company in support of its contention of financial hardship had not properly been dealt with by the Tribunal.
59. My attention was also drawn by Mr. Dutta to an order of the Supreme Court in the case of Vijay Packaging System Ltd. v. Commissioner of Customs and Central Excise (A.P.) reported in : 2000ECR769(SC) where the Supreme Court took the view that the Appeal should be heard without the appellant being required to pay the disputed duty, considering the fact that the Tribunal itself had found that the Appellant had a strong prima facie case and the Appellant was before the Board for Industrial and Financial Rconstruction (BIFR).
60. The aforesaid order of the Supreme Court was passed in tin-particular facts of the case and does not lay down any binding proposition of law. The Supreme Court formed its view that the appeal should be heard without pre-deposit of disputed duty, having regard to the Tribunal's own finding of the Appellant having a prima facie case.
61. Mr. Dutta also relied on an order of the Supreme Court in the case of Mehsana District Milk Pvt Ltd. v. Union of India reported in : 2003(154)ELT347(SC) where the Supreme Court set aside an order of appellate authority directing deposit of an amount of Rs. 30 lakhs by way of pre-deposit holding that the reasoning given in support of the order was wholly unsatisfactory and that the appellate authority had not at all considered the prima facie merits of the case.
62. When discretionary power to waive deposit of the disputed duty and/or penalty is exercised against an assessee, it is mandatory for the Appellate Authority to disclose reasons for the same.
63. In the instant case, there is admittedly no discussion on the prima facie case, CESTAT merely recorded the ground on which the Commissioner (appeals) rejected the appeal, that is, the ground of the petitioner not substantiating statement of freight and insurance with any documentary evidence.
64. It is unfortunate that the CESTAT should have directed deposit of entire disputed duty failing which the appeal would stand dismissed notwithstanding the fact that the company was admittedly a sick industry that had been referred to the BIFR and the reference was still pending. There could have been no question of reference of the company to the BIFR unless its accumulated losses had exceeded its net worth. As observed above, the balance sheet on which reliance has been placed indicates loss of Rs. 6,55,50,193/- during the year ending 31stMarch, 2005.
65. The writ petition is allowed. The impugned order is set aside and quashed. The Tribunal shall reconsider the prayer of the petitioner for waiver of pre-deposit of the disputed duty taking into account all relevant factors, including the financial hardship of the petitioner as well as the prima facie case.
66. In any case, the appeal shall be heard and disposed of expeditiously preferably within 3 weeks from the date of communication of this order.