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2016 (4) TMI 687 - MADRAS HIGH COURT

2016 (4) TMI 687 - MADRAS HIGH COURT - 2016 (42) S.T.R. 668 (Mad.) - Requirement of pre-deposit - Held that:- When the Act or the Rules in question do not specifically prohibit restoration of an appeal, dismissed on the ground of non-deposit of the amount, the Tribunal certainly has the power and jurisdiction to recall its earlier order, if the ends of justice require such a course of action. - When Rule 20 provides for restoration of appeal in case when the appeal is dismissed for default, .....

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right to appeal is a statutory right and pre-deposit requirement under Section 129E of the said Act are only in nature of procedural requirements, but for delay in meeting the pre-deposit requirement, the primary right of appeal cannot be extinguished. - It is apparent that the Tribunal cannot deprive the substantive right of the party to prefer the appeal on the mere ground that there is violation of procedure. Therefore, the order of the Tribunal, dismissing the restoration application an .....

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dent : Mr. A P Srinivas, Standing counsel for customs JUDGMENT ( Judgment of the Court was delivered by S. Vimala, J. ) For non-compliance of the pre-deposit requirement under Section 129E of the Customs Act, 1962, the (CESTAT) Customs, Excise and Service Tax Appellate Tribunal, dismissed the appeal filed by the Assessee, vide Final Order No.40471/2013 dated 22.10.2013. Challenging the same, C.M.A.No.158 of 2016 has been filed. 1.1. The pre-deposit payable was ₹ 65,00,000/-, as against whi .....

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llenge in C.M.A.No.159 of 2016. 1.2. Subsequently, the Appellant paid an amount of ₹ 37,00,000/- on various dates and thereafter, filed an application for restoration of appeal, which was dismissed vide Miscellaneous Order No.41282/2015, dated 14.10.2015, observing that the Tribunal had become functus officio after passing the order. Challenging the same, C.M.A.No.97 of 2016 has been filed. 2. As the common question of law is involved in all the three cases, common judgment is pronounced. .....

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er No.41071/2014 dated 24.06.2014? C.M.A.No.97 of 2016 Whether, in the facts and circumstances of the present case, the Tribunal is correct in dismissing the application for restoration of appeal, vide Miscellaneous Order No.41282/2015 dated 14.10.2015? 4. The contention of the Revenue is that the order passed by the CESTAT is perfectly justified, as the Tribunal had become functus officio, after the passing of the final order and that the Tribunal has no power to restore the appeal, once it is .....

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stage and second stage appeals under Customs, Central Excise and Service Tax were introduced in the Finance Act (No.2), 2014 effective from the date of its enactment i.e. 6 August 2014. 5.2. The Finance Act (No.2), 2014, as amended Section 35F of Central Excise Act, 1944, would include mandatory pre-deposit provisions. As per the said provisions, an appeal against the order passed by the lower authority will not be entertained, unless the appellant has made a pre-deposit of 7.5%, in case of firs .....

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rtue of Section 83 of the Finance Act, 1994. Therefore, the amended provisions of section 35F of the Central Excise Act, 1944 shall also apply to matters relating to Service Tax. 5.4. Prior to 6.8.2014, the pre-deposit of percentage of duty confirmed or penalty imposed for filing appeal before the Commissioner (Appeals) or CESTAT was not mandatory and decision in this regard was to be taken by the Commissioner (Appeals) and CESTAT, on the merits of the case. The Appellate Authority was competent .....

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sit or to waive the predeposit altogether. 5.5. However w.e.f. 06.08.2014, no such discretion is now available with the Commissioner (Appeals) or CESTAT. If the prescribed pre-deposit is not made at the time of filing the appeal, the appeal is liable for rejection. 6. Whether the Tribunal will become functus officio, once the Tribunal passes an order, dismissing the appeal for non-compliance of the condition imposed, is the issue to be considered? 6.1. The meaning of Latin Maxim 'Functus Off .....

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rators cannot agree and choose an umpire they are said to be functus officio - Cye law Dic. 2 Bouv. Ins. Note 1382. As soon as a Registration Officer registered a document presented to him for registration, the function in the performance of which the document was produced before him is over and thereafter he becomes Functus Officio, having no power under Section 38 to impound the document, Kamalchand v. State of M.P., AIR 1966 MP 20, 22 (FB). [Indian Stamp Act (2 of 1899), S.33(1)]. 6.2. A task .....

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. Birmingham Transit Co., 270 Ala. 215, 116, So. 2d 912, 919. 6.3. One who has fulfilled his office or is out of office, an authority who has performed the act authorised, so that the authority is exhausted. 6.4. On the construction of the expression 'functus officio' to the facts of this case, it cannot be said that the Tribunal has become functus officio, once the Tribunal had passed an order, not on merits, not while finally determining the issue and not an order which has merged with .....

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se indirect taxation affects the life of everyone. 7.2. The needs of governance in a police State are limited but those in a welfare State are far more and which is understandable. 7.3. That is an area which requires serious reflection by everyone concerned with the framing of the tax laws and their implementation. It has been said, even in the ancient texts while describing the taxing power of the king, the political sovereign, that a good king is he who draws in the form of taxes from the subj .....

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; 8.1. Honourable Justice J.S.Verma, while delivering the lecture on Constitutional obligation of the Judiciary, said that the tax policy and imposition of tax should be like the Sun drawing vapour from the river, the water resources to return it back manifold to the earth itself. 8.2. When the policy of taxation is expected to be painless, no need to point out that the procedure to be adopted to challenge the imposition of tax should also be painless. There is a duty to obey the law, but Ciero .....

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ubstantive justice cannot be permitted to take the back seat, allowing the procedure to occupy the front seat. 9. The learned counsel for the Assessee would submit that the right to prefer an appeal is a statutory right touching the substantive right of the parties, while the provisions relating to pre-deposit is procedural in nature and that the procedural law is only a handmaid of justice and not the mistress of justice; so contending, the learned counsel for the Assessee would submit that hav .....

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decision reported in 2015-TIOL-187-SC-ST (Larsen & Turbo Ltd. vs. CCE, Vadodara-II), wherein, it has been held that indivisible works contract are not taxable prior to 01.06.2007 and in view of the same, the Service Tax demand confirmed against the Assessee for the period prior to 01.06.2007 is not sustainable. The further contention is that having regard to the merits available in the main case, the Court should have accepted the belated pre-deposit made and should have afforded an opportun .....

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vice tax; similar view has been taken in the case of Josh P.John and others vs. CST - 2014- TIOL-1753-Tri-Bang. The grounds taken on merits and the supporting decisions relied upon give an indication that the Assessee has an arguable case on merits. This is one of the main factors to be considered, while considering an application for restoration. 9.3. It is pointed out by the learned counsel for the appellant / assessee that the decision relied upon, i.e. 2013 297 ELT A15 (SC) (Lindit Exports v .....

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unctus officio and had no jurisdiction to entertain the application preferred for restoration of appeal; the said order was confirmed by the Apex Court. It is to be pointed out that the Delhi Court, in the impugned Judgment held that once the Tribunal's order in dismissing appeal for failure to make pre-deposit is upheld by the High Court, it merges with the order of the High Court and attains finality and thus, the Tribunal becomes functus officio and there is no jurisdiction for restoratio .....

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d by the same High Court, in the case of Handloom only vs. Commissioner of Customs, reported in 2014 307 ELT 106 (Delhi), wherein, it was held that this decision is not an authority that in every case,where the order achieved finality, the Tribunal is bereft of jurisdiction. 9.4. It is contended by the learned counsel for the appellant that restoration of appeal which was dismissed for non-compliance of the stay order by the Tribunal does amount to review and Tribunal has power and jurisdiction .....

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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. (ii) Rule 41 - Orders and directions in certain cases: The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to .....

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t of the amount, the Tribunal certainly has the power and jurisdiction to recall its earlier order, if the ends of justice require such a course of action. It is more so because while dismissing the appeal on the ground of non-deposit of the amount, the Tribunal did not determine any issue or dispute and so there was no question of reviewing the earlier decision in the present case. It is not possible to regard such order of dismissal as a final order." (ii) Scan Computer Consultancy Vs. Un .....

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as directed by the appellate authority, as being a condition for hearing of the appeal on merits. However, that condition cannot be used by the appellate authority for the purposes of denying an appellant the right of adjudication which is otherwise statutorily granted. In a given case, even if no pre-deposit is made, the appeal may not be heard, but having dismissed the appeal for non-compliance of pre-deposit does not permit the appellate authority to refuse to restore the appeal upon complian .....

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at, the similar view has been taken by the Division Bench of Gujarat High Court in the aforesaid three matters, stating therein that in the absence of any provision in the Act or Rules specifically prohibiting restoration of appeal dismissed on the ground of non-deposit of penality, the learned Tribunal has a power and jurisdiction to recall its order, if ends of justice require such course of action." (iv) Venus Electronics and Control Pvt. Ltd. vs. CC, Kandla (2006 (198) ELT 547 (Tri - Mu .....

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on by the learned counsel for the Assessee, it is clear that it is not for the Tribunal to state that the Tribunal has no jurisdiction to hear it, but it has no jurisdiction to refuse to hear it, once the procedural requirement of pre-deposit is complied with. The legal reasoning, in support of that, runs as follows: (a) When the Act or the Rules in question do not specifically prohibit restoration of an appeal, dismissed on the ground of non-deposit of the amount, the Tribunal certainly has the .....

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