2025 (6) TMI 1968 - AT - Service Tax

Restoration of appeal - Dismissal of appeal for want of prosecution and necessary assistance which ought to have been provided by the Revenue - action to be taken on appeal for appellant s default when the appellant does not appear for hearing - Section 35C of Central Excise Act 1944 and Section 86(7) of the Finance Act 1994 - HELD THAT - The Hon ble High Court vide its order in 2024 (6) TMI 185 - MADHYA PRADESH HIGH COURT directed the appellant to fulfil the requirement of pre-deposit within 60 days and CESTAT was directed to decide the appeal within a further period of 120 days. It is noted that the Registry vide its note dated 09.07.2024 stated that the instant Appeal ST/54991/2023 was filed on 05.06.2023 and on perusal of the records had noted that the appellant had already paid an amount more than the pre-deposit. Hence no defect memo had been issued by the Central Registry of CESTAT. Vide the order dated 19.08.2024 the Bench had noted the aforesaid facts and also noted that the High Court order does not note that the pre-deposit had already been made. Hence the time limit of 120 days was taken note for fixing the next date as last opportunity on 20.09.2024. The medical certificate submitted by the Director states that he was suffering from Lumbar Spondylitis and was advised three months bed rest from 24.6.2024. Hence the bedrest advised for three months by the Doctor was over on 23.09.2024 whereas it is seen that the case was posted for hearing on 27.09.2024 09.10.2024 28.10.2024 and finally on 05.11.2024 - It cannot be accepted that the Director could not appear on any of the dates post the bed rest period. Restoration of Appeal (ROA) is not a matter of right of the appellant. It is not to be permitted in routine manner and is permitted only in exceptional cases where it is inevitable and there are valid reasons for restoring the appeal. In the instant application the appellant has failed to submit any valid reasons for failing to appear as and when the case was posted for hearing. Adjournments can be sought but for valid reasons only. However no valid or justifiable reason has been submitted by the Ld Counsel for failing to appear on the seven opportunities offered to the appellant by this Tribunal. Hon ble Supreme Court in the case of CIT vs Chennappa Mudaliar 1969 (2) TMI 10 - SUPREME COURT has held that Tribunal cannot dismiss appeals due to absence of appellant is incorrect and the Tribunal should decide the case on merits. In the instant case the Tribunal has decided the case on merits taking into the grounds of appeal from the Appeal Memorandum filed by the appellant. This Tribunal had offered seven (7) opportunities but the appellant failed to appear. It is also noted that as per Rule 21 of CESTAT (Procedure) Rules 1982 CESTAT has powers to pass final order ex-parte if the appellant does not respond to repeated offer for hearings. Appeal dismissed.

Summary

The core legal questions considered by the Tribunal in this matter are:

(1) Whether the appeal dismissed by the Tribunal on the ground of non-appearance of the appellant's Authorized Representative and consequent want of prosecution can be restored.

(2) Whether the Tribunal was justified in deciding the appeal on merits despite non-appearance of the appellant or its Authorized Representative on multiple scheduled hearing dates.

(3) The applicability and interpretation of Rule 20 of the CESTAT (Procedure) Rules, 1982, particularly regarding dismissal of appeals for default and restoration thereof.

(4) The relevance and impact of the Supreme Court's jurisprudence on dismissal of appeals for default and the obligation of the Tribunal to decide appeals on merits.

(5) Whether the appellant demonstrated sufficient cause for non-appearance and failure to prosecute the appeal, warranting restoration.

Issue-wise Detailed Analysis

Issue 1 & 2: Justification of dismissal and decision on merits despite non-appearance

The Tribunal examined the procedural history of the appeal, noting that the appellant's Authorized Representative failed to appear on seven separate occasions despite notices and opportunities. The appellant's counsel contended that the Director's severe illness and lack of communication from the Authorized Representative caused the absence, and that the appellant had a strong case on merits.

The Tribunal referred to the statutory framework, particularly Rule 20 of the CESTAT (Procedure) Rules, 1982, which empowers the Tribunal to either dismiss an appeal for default or decide it on merits when the appellant fails to appear. The proviso to Rule 20 allows restoration if sufficient cause for non-appearance is shown.

The Tribunal also took note of the relevant statutory provisions under Section 35C of the Central Excise Act, 1944 and Section 86(7) of the Finance Act, 1994, which limit the number of adjournments to three, reinforcing the need for procedural discipline.

Despite the illness-related medical certificate indicating bed rest for three months ending 23.09.2024, the appellant failed to appear on subsequent dates (27.09.2024, 09.10.2024, 28.10.2024, and 05.11.2024). The Tribunal found no valid or justifiable reason for continued non-appearance beyond the bed rest period and noted that the daily order sheets were regularly uploaded online, negating any claim of ignorance about hearing dates.

Therefore, the Tribunal concluded that the dismissal was not for want of prosecution per se, but that the appeal was decided on merits based on the material on record, including the grounds of appeal and submissions available.

Issue 3: Interpretation and application of Rule 20 of CESTAT (Procedure) Rules, 1982

The Tribunal emphasized that Rule 20 grants discretion to either dismiss an appeal for default or decide it on merits. The proviso mandates restoration if sufficient cause is shown for non-appearance. However, restoration is not a matter of right and is to be granted only in exceptional cases with valid reasons.

In this case, the Tribunal found that the appellant failed to demonstrate sufficient cause for non-appearance on multiple occasions, especially after the medical bed rest period. Hence, the Tribunal declined restoration.

Issue 4: Supreme Court jurisprudence on dismissal for default and decision on merits

The Tribunal extensively relied on a three-Judge Bench Supreme Court decision which clarified that appellate tribunals are mandated to decide appeals on merits and do not possess power to dismiss appeals solely for default or non-appearance. The Court held that dismissal for default circumvents the statutory obligation to dispose of appeals on merits and is impermissible.

The Tribunal distinguished the present case from those where appeals were dismissed for want of prosecution. Here, the appeal was adjudicated on merits despite the appellant's absence, consistent with the Supreme Court's directive.

The Tribunal also noted that the appellant relied on earlier Supreme Court decisions predating the three-Judge Bench ruling, which were superseded by the later authoritative pronouncement.

Issue 5: Sufficiency of reasons for restoration

The appellant's submissions centered on the Director's illness and lack of communication from the Authorized Representative. The Tribunal accepted the medical certificate for the initial period but found that the appellant failed to appear on multiple subsequent dates after the bed rest period ended.

The Tribunal held that restoration is not to be granted routinely but only in exceptional circumstances where valid reasons exist. The appellant's failure to appear for seven hearings without adequate justification did not meet this threshold.

Accordingly, the Tribunal dismissed the restoration applications.

Significant Holdings

"Restoration of Appeal (ROA) is not a matter of right of the appellant. It is not to be permitted in routine manner, and is permitted only in exceptional cases where it is inevitable and there are valid reasons for restoring the appeal."

"Rule 20 of the CESTAT (Procedure) Rules, 1982 prescribes as follows: 'Where on the day fixed for the hearing of the appeal or on any other day to which such hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or hear and decide it on merits: Provided that where an appeal has been dismissed for default and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing, the Tribunal shall make an order setting aside the dismissal and restore the appeal.'"

"The Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing." (Supreme Court precedent)

"The Tribunal has decided the case on merits taking into the grounds of appeal from the Appeal Memorandum filed by the appellant. This Tribunal had offered seven (7) opportunities but the appellant failed to appear."

"As per Rule 21 of CESTAT (Procedure) Rules, 1982, CESTAT has powers to pass final order ex-parte if the appellant does not respond to repeated offer for hearings."

Final determinations:

• The appeal was rightly decided on merits despite the appellant's non-appearance on multiple occasions.
• The appellant failed to demonstrate sufficient cause for non-appearance to justify restoration of the appeal.
• The Tribunal's exercise of discretion under Rule 20 to decide the appeal on merits and refuse restoration was appropriate.
• Restoration applications were dismissed accordingly.