TMI Blog2009 (6) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... on day of compliance is contrary to Rule 41 of CESTAT (Procedure) Rules, 1982 and it is illegal - tribunal was having knowledge about filing of petition so it was unjust to pass orders dismissing appeal – appeal is conditional right – right of appeal not automatic – appeal maintainable when substantial question of law involved – no constitution fetter in invoking extraordinary jurisdiction even when alternative remedy exits - Merely stating in the order that order is being passed after hearing the both sides, after perusing the records and the learned members were satisfied and that the main appellants do not have a prima facie case for waiver of predeposit, are not sufficient to justify an order. In my view, there should have been deliberation and formation of opinion which should be evident from the order. Since those are absent, the order impugned cannot be sustained. – petition is allowed - 261 of 2008 - - - Dated:- 23-6-2009 - Soumitra Pal, J. Writ Petition No. 261 of 2008 with W.P. Nos. 1161, 230, 1016, 2428(W) and 4006(W) of 2008 S/Shri P.K. Dutta, N.K. Chowdhury, Shobendu Banerjee, Advocates and Arijit Chakrabarti, for the Petitioner. S/Shri L.K. Chatterjee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the Appellate Tribunal directing predeposit. Besides the common grounds, in the writ petition relating to M/s. Shree Gobinddeo Glass Works Limited the grievance or the issue, in short, is that the Appellate Tribunal while passing the order directing predeposit did not take note of the fact that the petitioner was registered with the BIFR. In M/s. Shree Krishna Limited though the quantum of duty and penalty were more than Rs. 10 lakhs, a learned Single Member of the Appellate Tribunal had dismissed the appeal for non-compliance of the order directing predeposit in violation of the provisions contained in Section 35D of the Central Excise Act and had thus exceeded his jurisdiction. In Indrajit Jash the petitioner has challenged the order passed by the Appellate Tribunal directing predeposit on the ground that it failed to consider the fact that no show cause notice under Section 124 of the Customs Act was served on him in his individual capacity which is evident from the notice of show cause and the adjudication order and thus, the order is void. Further the Appellate Tribunal failed to appreciate that there was no concession and there cannot be any concession on a poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 35B and 35C of the Central Excise Act are pari materia to Sections 129A and 129B respectively of the Customs Act. 8. The question whether the Appellate Tribunal was competent to reject an appeal in the event of failure to deposit duty or penalty under Section 129E pending the appeal, came up for consideration before the Supreme Court in a Civil Appeal in Vijay Prakash D. Mehta v. Collector of Customs decided on 16th August, 1988 reported in 1989 (39) E.L.T. 178 (S.C.) relied on by the learned advocates for the respondents, wherein it was held as under:- "5. The aforesaid Section provides a conditional right of appeal in respect of an appeal against the duty demanded or penalty levied. Although the Section does not expressly provide for rejection of the appeal for non-deposit of duty or penalty, yet it makes it obligatory on the appellant to deposit the duty or penalty, pending the appeal, failing which the Appellate Tribunal is fully competent to reject the appeal. See, in this connection, the observations of this Court in respect of Section 129 prior to substitution of Chapter XV by the Finance Act, 1980 in Navin Chandra Chhotelal v. Central Board of Excise Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but when sub-section (1) of Section 129 makes it obligatory on an appellant to deposit the duty or penalty pending the appeal and if a party does not comply either with the main sub-section or with any order that may be passed under the proviso the appellate authority is fully competent to reject the appeal of non- compliance with the provisions of Section 129(1). That is exactly what the first respondent has done in this case. Accepting the contention of Mr. Trevedi will mean that the appeal will have to be kept on file for ever even when the requirement of Sec. 129(1) has not been complied with. Retention of such an appeal on file will serve no purpose whatsoever because unless Section 129(1) is complied with, the appellate authority cannot proceed to hear an appeal on merits. Therefore, the logical consequence of failure to comply with Section 129(1) is the rejection of appeal on that ground." 10. Therefore the established proposition of law was that an appeal under Section 35F was a conditional right of appeal. Although Section 35F did not expressly provide for rejection of the appeal for non-deposit of duty or penalty, yet it was obligatory on the appellant to deposit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. (1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal. (2) The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central Excise or the other party to the appeal. Provided that an amendment which has the effect of enhancing an assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, where it is possible to do so, decide such application within thirty days from the date of its filing. Explanation. - For the purposes of this section "duty demanded "shall include, - (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under Rule 57CC of Central Excise Rules, 1944; (iv) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004; (v) interest payable under the provisions of this Act or the rules made thereunder." (Emphasis supplied) 15. In this context it is appropriate to refer to a public notice dated 2nd July, 1999 regarding filing of appeal which is as under :- "Defective Appeals - Diary Number (Provisional Appeal Number) to be given in case of defects CEGAT, New Delhi, Public Notice No. 7/99, dated 2-7-1999 It is proposed to issue computerized acknowledgements and defect memos right at the time of receipt. 2. In case of substantial defects and non-compliance with the CEGAT (procedure) Rules noticed at the time of receipt only a Diary Number (provisional appeal number) will be given and the matters will not be listed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents submitted that as evident from Section 35F an appeal would be treated as ready for hearing either when goods are under the control of the Revenue or when the amount of duty or penalty imposed are deposited. However, where goods are not in the control of the authorities, an application for waiver of predeposit is to be made under Rule 28A of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 (for short the 'Rules') and if direction is issued by the Appellate Tribunal for predeposit of duty or penalty and if deposit is made, an appeal would be treated to be ready for hearing. However, in case of its non-payment, an appeal would not be entertained as it would not be treated as ready for hearing. On behalf of the petitioner it was submitted that since in each of the appeals at the time of filing of appeals and applications for stay regular appeal numbers were provided by the Registry of the Appellate Tribunal, appeals were regular appeals. Had there been defects, under circular vide Public notice No. 7/99 dated 2-7-99, only a diary number (provisional appeal number) would have been given and appeals would not have been listed unless the defects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed and unambiguous provisions in 35C(2A). Interpretation should not be with regard to a particular section and the provisions in Chapter VIA including 35C(2A) and 35F must be construed as a whole. Effect is to be given to the intention of the legislature which is to be gathered from the context and the statute has to be given a schematic interpretation. Hence, it is clear that Section 35F and its proviso cannot be read independently and should be read in harmony with Section 35C(2A); otherwise it would render the provisions contained in the newly inserted sub-section (2A) to Section 35C otiose. Therefore, in view of the insertion of sub-section (2A) to Section 35C in the Central Excise Act, the law laid down in Vijay Prakash D. Mehta (supra) and in Navin Chandra Chhotelal (supra) stands impliedly diluted. The judgments in B.D. Steel and Traders v. Union of India decided on 31st November, 1997 and reported in 1998 (103) E.L.T. 218 (Bom.), Usha Udyog v. CEGAT decided on 26th July, 2000 and reported in 2003 (156) E.L.T. 201 (Del.) are per incuriam as it did not consider the law laid down in the judgment in Vijay Prakash D. Mehta (supra) which, in my view, held the field till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in triplicate by the appellant in person or by his duly authorised agent, or sent by registered post to the Registrar or any other officer authorised to receive memoranda of appeals, as the case may be, at the Headquarters of the Bench having jurisdiction to hear the appeal in respect of which the application for stay arises. (b) One copy each of such application shall be served on the authorised representative of the (Commissioner) or, as the case may be, the Administrator simultaneously by the applicant. (2) Every application for stay shall be neatly typed on one side of the paper and shall be in English and the provisions of Rule 5 shall apply to such applications. (3) An application for stay shall be set forth concisely the following: (a) the facts regarding the demand of duty or penalty, the deposit whereof is sought to be stayed; (b) the exact amount of duty or penalty and the amount undisputed therefrom and the amount outstanding; (c) the date of filing of the appeal before the Tribunal and its number, if known; (d) whether the application for stay was made before any authority under the relevant Act or any civil court and, if so, the result thereof (copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h deals with the "Procedure for filing and deposit of stay petitions" - provides that a stay application is liable to be summarily rejected if an application does not conform to the requirements under Rule 28A(1) to (5). Hence, after applications for stay are disposed of, as Rules postulate either an appeal can be dismissed for non-appearance of the petitioner or it has to be decided on merits on the day fixed for hearing of appeal, the order of the Appellate Tribunal directing dismissal of appeals on the day of compliance is clearly contrary to the Rules. Dismissal of appeals on the ground of non-compliance of the directions directing pre-deposit, ignoring Section 35C(2A) and the Rules as noted is also contrary to Rule 41 which empowers the Appellate Tribunal to pass orders to prevent abuse of its process or to secure the ends of justice. Moreover, such an order passed by the Appellate Tribunal dismissing the appeal also infringes on the fundamental rights guaranteed under Article 14 of the Constitution of India. Hence, there is no doubt that the orders passed by the Appellate Tribunal dismissing the appeals for non-compliance of its orders directing predeposit on the respective d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Dwarka Prasad v. Krishna Chandra, AIR 1953 All 600, it was held as under :- "9.........It is quite clear from the facts already stated that the opposite party had information of the proceeding pending in this Court when he made the order dated November 16, 1968. In the circumstances of the case, I have no doubt that the conduct of the opposite party in seeking to proceed with the departmental inquiry in spite of his knowledge of the writ petition pending in this Court was a calculated move to put pressure on the petitioner not to proceed further with the case; it was also meant as a threat that if the petitioner disregarded the warning, he must be prepared to face the consequences of the disciplinary proceeding. That such conduct amounts to a contempt of Court is clear in view of the law stated by the Supreme Court in the said two decisions. 10.........The stream of justice, it is often said, must be allowed to flow free, and any obstruction to its passage has been held to be an act of contempt. 12.............When a proceeding can be called imminent may sometimes be a disputed question and will have to be decided on the facts of a particular case but that, in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. The grievance of the petitioner is that the adjudicating authority had imposed penalty on the writ petitioner without issuing any show cause notice on the petitioner/assessee. Being aggrieved and dissatisfied he had preferred an appeal and an application for stay before the Appellate Tribunal. The Appellate Tribunal on 22nd May, 2008 had passed an order recording that the learned advocate for the appellant had made an offer to predeposit 25% of the penalty imposed without conceding their right to argue. Accepting such offer, directions were passed by the Appellate Tribunal for predeposit of 25% of the penalty imposed on each of the appellants. It was recorded that the balance would remain waived during the pendency of the appeal. According to the petitioner no such concession was made by the learned advocate and thus such recording was wrong and incorrect. Further there cannot be concession on a point of law. Referring to the show cause notice dated 29th December, 2006 and the adjudication order dated 30th November, 2007 it was also argued that the notice to show cause was issued on the company and not on the petitioner in his individual capacity and the Appellate Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, the order directing dismissal of appeal is violative of Article 14 of the Constitution of India. Learned advocate appearing on behalf of the respondent submitted that as the petitioner did not challenge the initial order dated 21st September, 2005, no order may be passed. 27. I find on 29th November, 2007 the Appellate Tribunal while dismissing the appeal on the date of compliance for non-compliance of the order directing predeposit had recorded that "The Assistant Registrar is directed to examine the case records and all such cases where the date of compliance is over, the cases should be listed for immediate hearing and dismissal of appeals". Such order, in my view, is discriminatory and violative of Article 14 as in the case of the petitioner appeal was dismissed on the day of reporting compliance, whereas in the case of other appeals directions were issued for listing for hearing and dismissal. Further since the Appellate Tribunal while passing the order dated 29th November, 2007 did not consider the order dated 4th January, 2007 passed in presence of the Collector, Central Excise, Customs House, Kolkata by the BIFR and as I find the application for modification was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st July 2007 and 19th November, 2007. It was submitted on behalf of the respondent that since the writ petition was moved after the order dated 19th November, 2007 was passed by the Appellate Tribunal, the petitioner is estopped from challenging the orders dated 14th June, 2007 and 31st July, 2007. Moreover, the Appellate Tribunal was justified in passing the order dismissing the appeal since the appellant had failed to deposit in spite of repeated opportunities granted. The grievance of the petitioner is that while passing the order dismissing the appeal, the miscellaneous application filed on 16th November, 2007 was not considered at all. Moreover, the Appellate Tribunal in none of the orders had considered the application for stay on merit. 31. Perusing the orders under challenge I find that nowhere the Appellate Tribunal had considered the stay petition as well as the miscellaneous application on its merit. In fact the orders are cryptic and without reasons. Therefore, the orders dated 14th June, 2007, 31st July, 2007 and 19th November, 2007 under challenge cannot be sustained. W.P. No. 261 of 2008, M/s. Promising Exports Ltd. and another v. Union of India and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal has jumped to a conclusion that no legal infirmity could be found in the order passed by the adjudicating authority. Rather the Appellate Tribunal has appreciated that the authority examined issues threadbare in the interest of justice since the order of adjudication had to be passed ex parte. 36. It is evident that while passing the order the Appellate Tribunal did not consider the additional evidence produced though Section 35C postulates consideration of additional evidence, if necessary. No reason has been cited for non-consideration of such evidence. I find from paragraph 5 of the order impugned that there is no deliberation on the materials on record. In fact there is no formation of "opinion" as postulated in proviso to Section 35F. Unless there is independent consideration, simply quoting the order passed by the adjudicating authority does not make the order passed by the Appellate Tribunal bona fide. Therefore, the order dated 1st February, 2008 cannot be sustained. 37. Now dealing with the fourth issue it is evident from a reading of proviso to Section 35F that the Appellate Tribunal has been granted the discretion to dispense with the deposit, p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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