CESTAT IS NOT REQUIRED TO EXTEND TIME FOR MAKING PRE DEPOSIT WITHOUT REQUEST BEFORE EXPIRY OF TIME GRANTED

[Mr. M. GOVINDARAJAN]

 The provisions of tax laws provide for filing appeal against the order of Adjudicating Authority and to file appeal before the Tribunal against the order of the first appellate authority.  The condition precedent to file appeal is to pre deposit the confirmed duty/tax, interest and penalty imposed. The assesses are given right to file an application praying the appellate authority to dispense with the pre deposit of duty/tax, interest and penalty. He has to satisfy the appellate authority that there is a prima facie case for waiver of pre deposit. In some cases the assessees may be directed to deposit the entire amount or part amount.   If such direction is given the assessee is to comply with the direction within the time stipulated.  Otherwise the appeal is liable to be dismissed.  Or the assessee is to approach the appellate authority with the prayer to extend the time limit.  Without the request of the assessee the extension of time to comply with the direction to pre deposit will not be done by the Tribunal. 

    In 'Hanila Textiles Limited V. Union of India' - (2010 - TMI - 79015 - BOMBAY HIGH COURT) the appellant is a 100% EOU engaged in the manufacture of various yarn products attracting central excise duty.  The appellant submitted an application for permission to sell yard produced by it in DTA to Development Commissioner, SEEPZ which was granted to the extent of Rs.16,88,78,212/- as against Rs.19,29,90,000/-.  The said order was challenged before the High Court which directed the Development Commissioner to grant full entitlement. The Development Commissioner as per the order of the High Court granted permission vide his order dated 09.01.2002.

    But, vide his order dated 04.06.2003 the Development Commissioner reviewed his order dated 09.01.2002 and cancelled the permission.   The said order was challenged by the appellant before the High Court as the review order passed by the Development Commissioner was without issuing show cause notice to the appellant and without affording any opportunity  of being heard in that behalf. 

    The Assistant Commissioner of Central Excise, Mumbai issued a show cause notice dated 25.07.2003 demanding duty in respect of the goods sold by the appellant in terms of the permission.  The said show cause notice is challenged by the appellant in Chamber summons No.241/2003 in Writ Petition No. 1718/2003 and the said case is pending before the High Court.

     However the appellant submitted the written submission to the Commissioner of Central Excise (Adj) on 22.02.2005 resisting the show cause notice dated 25.07.2003.   The Commissioner of Central Excise adjudicated and confirmed the show cause notice equivalent to the aggregate duty under proviso (i) to Sec. 3(1) of the Central Excise Act, 1944 to the extent of Rs.3,73,82,248/-. On appeal before the Tribunal, the Tribunal remanded the matter to the Commissioner of Central Excise for consideration afresh.  On remand the Commissioner of Central Excise confirmed the duty demand of Rs.11.92 crores and penalty against the earlier demand of Rs.3,73,82,848/-.   Aggrieved by the order the appellant filed an appeal before the Tribunal.   The Tribunal directed the appellant to pay Rs.3 crore by way of pre deposit under Section 35F of the Central Excise Act within a period of eight weeks.  The compliance was to be reported on 09.11.2009.

    The order of Tribunal directing to pre deposit Rs. 3 crore is the challenge in the writ petition No.2195/2009. During the pendency of the said petition the appeal was dismissed by the Tribunal vide its order dated 11.06.2010 for non compliance of the order of pre deposit.  Consequently the writ petition No.21009.   During the pendency of the said petition the appeal was dismissed by the Tribunal vide its order dated 11.06.2010 for non compliance of the order of pre deposit. Consequently the writ petition No.2195/2009 came to be dismissed on 21.06.2010 holding it to be infructuous. 

        The Department vide their order dated 06.08.2010, has attached the goods of the appellant.   Against the said order the appellant filed the present appeal challenging the order of the Tribunal dated 11.06.2010, 03.09.2009 together with the attachment order dated 06.08.2010.  The appellant contended the following:

·  The order directing pre-deposit was a subject matter of challenge in writ petition  as such it was obligatory on the part of the Tribunal to wait till the order of this High Court decision question of pre-deposit;

·  Thus the Tribunal was not justified in demanding the appeal for non compliance of the order pre-deposit;

·  The impugned order dismissing appeal be set aside and the appeal be restored to the file of the Tribunal;

·  The order dismissing appeal was in breach of principles of natural justice as such impugned orders are void ab initio.

The Department contended the following:

 

 

·  The Writ Petition No.2195/2009 was filed on 07.11.2009 and the same deliberately kept pending right up to June 2010, i.e., for seven months without seeking any order.No attempt was        made to   get the matter circulated and obtain appropriate orders from the writ court;

·  The Tribunal's order directing pre-deposit was suffered by the appellant on 03.09.2009.   The petition was filed on 07.11.2009.   The order of pre-deposit was to be complied within a period of eight weeks and compliance was to be reported on 09.11.2009;

·   Just two days before the expiry of the period meant for compliance of the order of pre-deposit, appellant filed writ petition;

·   It was deliberately kept pending till June 2010.   No orders were obtained from High Court.   Consequently appeal filed before Tribunal was rightly dismissed by the Tribunal for non compliance of the order of pre-deposit;

·  Had the bona fides of the appellant been clear the appellant would have obtained urgent circulation from the writ court;

·  This is not a fit case for entertaining appeal and grant of relief to the appellant and no substantial question of law is involved in the appeal warranting consideration thereof.

The High Court observed as follows:

·  The undisputed facts are that order of pre-deposit was passed on 03.09.1009 which was to be computed within a period of 8 weeks i.e., on or before 09.11.2009;

·  The writ petition challenging the order of pre-deposit was filed on 07.11.2009 i.e., just two days before the expiry of time granted to comply with the order of pre-deposit;

·  No steps were taken by the appellant to get the petition circulated and obtain appropriate order from the writ court;

·  The petition was kept pending in the registry right up to 15.06.2010;

·  No steps were taken before the Tribunal to get the period of eight weeks extended so as to comply with the order of pre-deposit

                The High Court considering the above framed the question as to whether the Tribunal was justified in dismissing appeal for want of compliance of the order of pre-deposit dated 03.09.2009.   For this purpose the High Court referred to the judgment of Supreme Court in 'Trilokchand Motichand V. H.B. Munshi' - AIR 1970 SC 898 in which the Supreme Court observed - "The party aggrieved must move the Court at the earliest possible time and explain satisfactorily all semblance of delay, I am not indicating any period which may be regarded as the ultimate limit of action for that would be taking upon myself legislative functions.   In England a period of six months has been provided statutorily, but that could be because there is no guaranteed remedy and the matter is one entirely of discretion.   In India I will only say that each case will have to be considered on its own facts.   Where there is appearance of avoidable delay and delay affects the merits of the claim, this could will consider it and in a proper case hold the party disentitled to invoke the extraordinary jurisdiction.

                  The High Court held that in the instant case the appellant appears to have calmly abandoned or at any rate put into cold storage his writ remedy under Article 226 of the Constitution of India.   There is no explanation from the appellant as to what prevented them from getting their petition circulated before the court and obtain appropriate orders.   Therefore it cannot be said that the appellant is not guilty of gross delay in pursuing writ remedy that was open to them in the first place.   The appellant was guilty of keeping the petition pending for seven months and not obtaining appropriate orders from the writ court.   The High Court further held that it was not obligatory on the Tribunal to grant further time for compliance of order of pre-deposit without there being any such request from the appellant before expiry of the time already fixed by it.  The appeal was, thus, rightly dismissed for non compliance of the order of pre-deposit.