Parsi Dairy Farm vs Asst. Commissioner of Central Excise

This Writ Petition under Article 226 of the Constitution of India challenges the order passed by the Commissioner (Appeals) dated 23rd February, 2006 and that of the Customs, Excise and Service Tax Appellate Tribunal dated 24th August, 2006. By the impugned order dated 22nd/27th August, 2006, the Tribunal held that the dismissal of the petitioner''s appeal as time barred by the first Appellate Authority requires no interference. The Order-in-Original was served on the petitioners on 23rd March, 2005, however, the petitioner approached the lower Appellate Authority on 1st August, 2005. The delay is about 70 days. The Commissioner (Appeals) is empowered to condone the delay of 30 days occurring beyond the statutory period of filing of an appeal meaning thereby the order passed by the Assistant Commissioner, is appealable to the Commissioner (Appeals). However, the appeal has to be filed within a period of sixty days from the date of communication of the order of the Assistant Commissioner/Order-in-Original. If the appeal is not filed within a period of sixty days, the Commissioner (Appeals) can condone the delay of thirty days beyond this stipulated period of sixty days provided he is satisfied that there is a sufficient cause shown by the aggrieved person.

In the present case, the Commissioner found that the appeal has been presented not only beyond the initial period of sixty days from the date of communication of the appeals, but even after the thirty days contemplated by the proviso to sub-section (1) of Section 35 of the Central Excise Act, 1944. In the circumstances, the Commissioner not been empowered to condone the delay, he has rightly dismissed the petitioner''s appeal. It is this view of the Tribunal which is impugned before us.

Ms. Bhambwani appearing on behalf of the petitioner would submit that there is a complete misreading and misapplication of law by the Commissioner and the Tribunal. The Tribunal should have appreciated that the record indicates that an ex parte order has been passed by the Assistant Commissioner, the petitioner had no knowledge of the order and the proceedings and particularly because one of their employees was not attending to the work. The Commissioner was appraised of this difficulty. The Commissioner, therefore, took into account this difficulty, but refused to assist the petitioner. This order is completely erroneous in law and deserves to be set aside.

Alternatively, without prejudice Ms. Bhambwani would submit that this is a writ petition invoking jurisdiction of this Court under Article 226 of the Constitution of India. If the petitioner is able to demonstrate a clear violation of the mandate of Article 265 of the Constitution of India, then, merely because the alternate remedy has not been availed of or availed of unsuccessfully, this Court is not prohibited from granting the relief. The tax has been collected without authority of law and is illegal. This is demonstrated by the fact that on the same allegations another show cause notice was issued by the Department/Revenue. That was contested by the petitioner. The petitioner has succeeded before the Commissioner (Appeals) and order passed by him, copy of which is at page 84 of the paper book dated 26th July, 2006, would demonstrate that there was no authority to levy, assess and recover excise duty. In the circumstances, this Court should entertain the petition and grant the relief even in relation to prior show cause notice and prior demand. That is because the petitioner has demonstrated that the allegations in both show cause notices are identical. The demand is based on the same set of allegations. In the circumstances, this writ petition be allowed.

Ms. Bhambwani places strong reliance upon the judgment of the Hon''ble Supreme Court in the case of The State of Kerala Vs. Haji K. Haji K. Kutty Naha and Others etc., AIR 1969 SC 378 : (1969) 1 SCR 645 .

On the other hand Mr. Rao submits that it is the petitioner who has to be blamed for approaching the authorities belatedly. If the authorities do not have a power to condone the delay in filing of the appeal beyond a specified period, then so long as that power is not challenged or questioned, its exercise is perfectly legal and valid. In the present case, admittedly, the delay was beyond the stipulated period of ninety days. Therefore, the Commissioner had no power to condone it. This finding of fact is neither erroneous nor illegal. It cannot be termed perverse either. Therefore, the Writ Petition has no merit and must be dismissed. Further, the petitioner cannot rely on any subsequent adjudication and based on a distinct show cause notice. Even if some of the allegations are overlapping or common, the subsequent show cause notice and the order passed thereon by the adjudicating authority and the Appellate Authority is not something on which reliance can be placed by the petitioner to claim violation of mandate of Article 265 of the Constitution of India. There is a competency to levy, assess and recover the tax or duty. The exercise of powers while levying, assessing or recovering it may be erroneous but that does not make the levy or the tax illegal or unconstitutional. These two matters cannot be confused. Hence, looked at either way, the writ petition has no merits and must be dismissed.

We have, with the assistance of the counsel appearing for the parties, perused the writ petition and all annexures thereto. The petitioner proceeds to state that the Order-in-Original is dated 21st March, 2005. It was served on the petitioner on 22nd March, 2005. The appeal should have been filed under Section 35 of the Central Excise Act, 1944 to the Commissioner (Appeals) within 60 days from the date of communication of the order, on the show cause-cum-demand notice, namely Order-in-Original. Thus, it should have been filed within 60 days from 23rd March, 2005. The Commissioner could have allowed the appeal to be presented within a further period of 30 days beyond this 60 days, provided he was satisfied that there was sufficient cause which prevented the petitioner from presenting the appeal within time. Section 35(1) together with its proviso reads as under:

"(1) Any person aggrieved by any decision or order passed under this Act by a Central Excise Officer lower in rank than a Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals) [hereafter in this Chapter referred to as the Commissioner (Appeals)] within sixty days from the date of the communication to him of such decision or order:

Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.

(1A) The Commissioner (Appeals) 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."

Once the Appeal to challenge the Order-in-Original dated 23rd March, 2005, was presented on 1st August, 2005, which period is admittedly beyond 90 days, then, the Commissioner had no power to condone the delay.

This Court has dealt with a similar controversy in writ petition No. 1830 of 2013 (M/s. Flemingo (Duty Free Shop) v. The Commissioner of Customs (Appeals), Mumbai Zone-I and Ors.) and Writ Petition (Civil) No. 3419 of 2014 (Sandvik Asia Private Limited v. The Union of India and Ors.), both decided on 24th December, 2014 [2015 (315) E.L.T. 321 (Bom.)]. The Division Bench to which one of us was a party (S.C. Dharmadhikari, J.), dealt with a similar provision appearing in the Customs Act, 1962. Section 128(1) of the Customs Act, 1962, read as under:

"128. Appeal to Commissioner (Appeals).- (1) Any person aggrieved by any decision or order passed under this Act by an officer of Customs lower in rank than a Commissioner of Customs may appeal to the Commissioner (Appeals) within sixty days from the date of communication to him of such decision or order:

Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.

(1A) The Commissioner (Appeals) 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) Every appeal under this section, shall be in such form and shall be verified in such manner as may be specified by the rules made in this behalf."

After analysing the section and other provisions of the Limitation Act, 1963, this Court reached the following conclusion:

"26. Thus, even if we assume for purpose of the present case that Section 5 of the Limitation Act, 1963 can be invoked and applied because of the language of the proviso to sub-section (1) of Section 128 of the Customs Act, 1962, still its application is restricted in the sense that by taking recourse to Section 5 of the Commissioner (Appeals) can allow presentation of the appeal only within further period of 30 days, but not thereafter.

We have referred to a judgment of the Hon''ble Supreme Court recently delivered by a three Judge Bench in the order passed by us in the case M/s. Johnson and Johnson (supra). That decision of the Hon''ble Supreme Court makes detailed reference to several decisions rendered either by two Judge or three Judge Bench of the Hon''ble Supreme Court. The Hon''ble Supreme Court proceeds to hold that when applicability of Section 5 of the Limitation Act is not absolute, but circumscribed or restricted, then, the statutory provision restricting or circumscribing it must be given effect to in the light of clear language of sub-section (2) of Section 29 of the Limitation Act, 1963. In other words, Sections 4 to 24 (inclusive) shall apply only insofar as and to the extent to which they are not excluded by the special or local law. In our case, beyond further period of 30 days and total period of 90 days, there is no further application of Section 5 of the Limitation Act, 1963. The extent to which Section 5 can be applied having been enumerated and set out in Section 128(1) of the Customs Act, 1963, which is a special law, then, for the further delay in filing or presenting the appeal, applicability of Section 5 of the Limitation Act, 1963 is expressly ruled out. The language of Section 128(1), which is a special law, therefore cannot be ignored or bushed aside."

In view thereof and when the admitted position is taken into account, then, the appeal of the petitioner was time barred. An appeal to challenge an order passed and communicated on 23rd March, 2005, being filed by the petitioner on 1st August, 2005, was thus clearly barred by limitation.

The alternate argument of the petitioner need not detain us. Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law. Ms. Bhambwani would not dispute that the tax that is sought to be levied and collected in this case namely the duty of excise is authorized by the Central Excise Act, 1944. The tax is, thus, levied or collected by the authority of law. There is no challenge to the law nor to the competence of the Parliament to legislate and enact it. Therefore, this Article is of no assistance in the present case. The mandate thereof is sought to be pressed into service on the footing that on the same set of allegations another show cause notice came to be issued to the petitioner and which was adjudicated. After the same was adjudicated and the Order-in-Original was passed based on the same, the said order dated 23rd November, 2005 was challenged before the Commissioner (Appeals) Central Excise, Mumbai and the Appellate Authority has allowed the appeal of the petitioner on 26th July, 2006. Therefore, on the same set of allegations but for a subsequent period or duration the petitioner had succeeded in resisting the demand. In the circumstances, the tax purportedly levied, assessed and recovered is contrary to and without authority of law.

We are unable to agree with Ms. Bhambwani that the mandate of Article 265 is violated simply because a show cause notice for the period 1st April, 2003 to 31st March, 2004 resulted in a order adverse to the petitioner, but that order was successfully challenged in appeal. That is a show cause notice which is not subject matter of this writ petition. The order of adjudication passed therein has also not been made subject matter of the writ petition. The writ petition in the present case concerns the show cause notice and which has been issued to the petitioner for the period 1st April, 2003 to 30th September, 2003. That order of the adjudicating authority was challenged before the Commissioner (Appeals). The correctness of the order of the Commissioner (Appeals) dismissing it, as time barred, is in issue before us. That order passed by the Commissioner dated 23rd February, 2006 has been confirmed by the Tribunal. The order of the Commissioner was dealing with an appeal against the order of the Assistant Commissioner, Central Excise dated 23rd March, 2005, a copy of this order is at Annexure-D to the writ petition. That pertains to a show cause notice dated 8th October, 2004. Hence, it is the prior adjudication and the orders in furtherance thereof which are challenged before us. They could not be challenged successfully by the petitioner is the admitted position. The petitioner is trying to get over the period of limitation in law by questioning these orders in a writ petition under Article 226 of the Constitution of India before this Court and relying upon the mandate of Article 265 of the Constitution of Indian in that context. We are of the opinion that by a subsequent exercise which may have been favourable to the petitioner, we cannot term the earlier exercise, as unconstitutional or illegal. More so, when the duty of excise is sought to be recovered based on a show cause-cum-demand notice. If we are to scrutinize the correctness of the impugned Order-in-Original, we have to go into disputed questions of fact. All this is impermissible once the appeals to challenge this order have been dismissed. Thus, the Central Excise duty has been levied, assessed and recovered in terms of the law. That its assessment and recovery in the peculiar facts of the petitioner is questioned and challenged does not mean that the mandate of Article 265 of the Constitution of India, is violated.

As a result of the above discussion, we do not find that any assistance can be derived from the law laid down in the case of State of Kerala (supra), there, a tax was sought to be recovered and under the relevant State law. A group of appeals to the Supreme Court questioned the correctness of the order passed by the High Court of Kerala holding that Kerala Building Tax Act (19 of 1961), is ultra vires, because the legislature has infringed the equality clause of the Constitution. Dealing with such an issue and controversy that the Hon''ble Supreme Court relied on the mandate of Article 265 of the Constitution of India. We do not find that the observations in paragraph 3 of this judgment can assist the petitioner before us. Resultantly, the writ petition has no merit. It is dismissed. Rule is discharged.

At this stage, Ms. Bhambwani submits that in the light of the order passed by this Court on 18th October, 2006, the petitioner having deposited the duty amount of Rs. 4,28,777/- within the time stipulated in this Court''s order, interest and penalty should be waived.

This request is opposed by Mr. Bhosale, urging that the writ petition is now dismissed, therefore all the dues of the Department/Revenue is legally recoverable.

Having heard the counsel on this point, we are of the view that in the facts and circumstances peculiar to this case the direction imposing penalty deserves to be quashed and set aside. There was a clear legal issue and with regard to the power of the Commissioner to condone the delay beyond the stipulated period. Hence, no deliberate or intentional act can be attributed to the petitioner assessee. Further, considering its financial position, this Court had protected the petitioner by grant of interim relief. Therefore, we direct that the interest on duty amount shall be payable from the date of the demand till its deposit in pursuance of the order passed by this Court dated 18th October, 2006. No interest shall be payable from the date of deposit of the duty amount, till the disposal of this writ petition by the order passed today. The direction to pay the penalty amount is also set aside. The writ petition is disposed of in the above terms.