Moongipa Roadways Pvt. Ltd. vs Union of India

Issue notice. Mr. Satish Kumar, Sr. Standing Counsel accepts notice on behalf of respondent.

The substantial question of law which arises in these cases is:-

Whether in the circumstances of the case, the appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) u/s 35E of the Central Excise Act could have been dismissed as a consequence of third party''s failure to comply with the terms of pre-deposit?

The brief facts necessary for deciding these appeals are that a show-cause notice was issued on 16-11-2011 including the four appellants as well as one M/s. Sunrise Food Products, New Delhi. The excise authorities had alleged clandestine removal of goods and short-payment of duties. After considering the responses of the present appellants and the said M/s. Sunrise Food Products, the adjudicating authority by order-in-original dated 20-5-2009 confirmed the demand as against M/s. Sunrise Food Products, etc. for the sum in excess of Rs. 34,00,00,000/-; the said concern was also directed to deposit interest and pay penalty. The appellant Vinod Sharma was imposed with penalty of Rs. 5 crores; similarly other appellants Sanjay Aggarwal was imposed penalty of Rs. 2 crores and M/s. Moongipa-one of the appellants was imposed penalty of Rs. 25 lakhs along with Krishna Freight Movers was also imposed penalty of Rs. 25 lakhs. All the appellants as well as the said M/s. Sunrise Food Products approached the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) aggrieved by the order-in-original. They sought suspension of the order-in-original and also waiver of pre-deposit required in terms of the Act. By a common order dated 30-9-2011 the CESTAT directed M/s. Sunrise to deposit Rs. 15 crores within 12 weeks and also stated that subject to compliance with that direction the other appellants'' request for waiver was acceded to. The operative portion of the order reads as under:-

Therefore, at this preliminary stage, we direct the main appellant M/s. Sunrise Food Products to make a deposit of Rs. 15 crores (Rupees Fifteen crores) towards duty demanded within 12 weeks from the date of this order and report compliance by 25-1-2012.

M/s. Sunrise Food Products approached this Court u/s 35G of the Central Excise Act and its appeal was disposed of and limited relief to the extent of facilitating instalment payment through eight weekly instalments was permitted by the Court. However, M/s. Sunrise Food Products failed to comply with the direction and deposit the required amount, as a consequence of which its appeal as well as the appeals filed by the appellants were dismissed. The appellants approached the CESTAT for restoration of the appeal alleging that their individual applications for stay ought to have been considered in view of M/s. Sunrise Food Products default. These were, however, rejected by the impugned order.

The learned counsel urges that even though the previous order of the CESTAT dated 30-9-2011 is categorical that the amount of liability born by M/s. Sunrise Food Product yet the CESTAT has attributed the deposit to the appellants and held that they failed to comply with its directions. It is submitted that the order-in-original itself had nuanced view with regard to differing liability by each of the appellants and requiring them to make up for the default of M/s. Sunrise was, therefore, inferred. Reliance is also placed upon the order of the Bombay High Court in Haresh Suresh Deora Vs. Union of India, .

We have carefully considered the submissions. A facial reading of the order of 30-9-2011 clarifies that it was M/s. Sunrise Food Products that was cast with the primary duty of Rs. 15 crores in order to qualify for waiver. The Tribunal stated that subject to such compliance the present appellants'' applications were granted and they were not required to deposit any amount. However, the Tribunal did not visualize a situation where there was either non-payment which was directed by it or partial payment. Noting this aspect was essential because the default of M/s. Sunrise Food Products would have visited the present appellants with adverse consequences. That eventuality in fact materialized when M/s. Sunrise Food Products did not comply with and deposit the requisite amount. Apparently, it did not deposit any amount at all. The Tribunal at least ought to have heard the appellants and considered their individual circumstances and further ought to have entertained their applications for restoration of the appeals. This is more so in view of the fact that the original order did not cast the liability to the extent of Rs. 15 crores on the appellants either collectively or individually.

In view of the above discussion this Court is of the opinion that the Tribunal should restore the appeals and the applications of the appellants to be decided on merits. The appeals are accordingly allowed. The parties are directed to be present before the Registrar of CESTAT on 30-8-2012 on which date the Registrar will fix the date for hearing and disposal of the appeals in accordance with law.

The appeals are allowed in the above terms. Dasti.