Universal Paper Mills Ltd. vs Commissioner of Central Excise

This appeal is directed against Order Nos. M-660/Kol/2012,/S-1574/Kol/2012,/A-876/Kol/2012, dated 26th November, 2012 passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata, Eastern Zonal Bench, Kolkata, hereinafter referred to as the learned Tribunal, dismissing Miscellaneous Application No. MA-210/12 filed by the appellant/petitioner, M/s. Universal Paper Mills Ltd. in Appeal No. Ex. Ap 319/12 and Stay Petition No. SP 541/12, for condonation of delay of about 898 days in filing the appeal against an ex parte Order-in-Appeal No. 32/Hal/2009, dated 26th August, 2009 passed by the Commissioner of Central Excise (Appeals-I). A show cause notice being C. No. V-Ch. 48(15)217/CE/Haldia/Adjn/2004/6829, dated 30th June, 2004 was issued to the appellant calling upon the appellant to show cause why Rs. 8,06,237/- should not be recovered from the appellant u/s HA(i) of the Central Excise Act, 1944 along with interest u/s 11AB and penalty u/s 11AC of the said Act read with Rule 173Q of the Central Excise Rules, 1944.

In the said show cause notice it was alleged that the appellant had cleared 609.990 M.T. of waste and scrap falling under sub-heading 4702.90, generated in course of manufacture of Paper and Paper Board without submitting proper declaration under Rule 173B of the said Rules, without properly accounting for the goods in the statutory records and without determining and depositing Central Excise duty payable thereon.

The appellant submitted its reply to the said show cause notice, by a letter dated 31st January, 2007, denying the allegations contained in the said show cause notice. The appellant inter alia contended that these goods were classifiable under Chapter 48. In one of the invoices it was wrongly mentioned that the goods were under Chapter sub-heading No. 4702.90.

The appellant prayed that the proceedings sought to be initiated in pursuance of the show cause notice be dropped, the same being barred by limitation and also on merits.

However, an Order-in-Original No. 328/Addl. Commr./CE/Haldia/Adjn/2007, dated 14th February, 2007 was passed by the learned Additional Commissioner of Central Excise, Haldia Commissionerate, Kolkata, confirming the demand under the provisions of Section 11A(i) of the Central Excise Act, 1944 and imposing interest as also penalty of an amount equivalent to duty in terms of Section 11AC read with Rule 173Q of the Central Excise Rules.

Being aggrieved by the aforesaid order of adjudication, the appellant appealed to the Commissioner of Central Excise (Appeals-I) challenging the legality of the order of adjudication.

By an ex parte Order No. 14/Hal/09, dated 28th May, 2009, the learned Commissioner (Appeals-I) directed the appellant to deposit 50 per cent of the entire amount of duty and penalty within two weeks from the date of receipt of the said order and to further report compliance within three weeks therefrom.

The petitioners filed an appeal before the learned Tribunal on July 27, 2009 contending that the ex parte order passed by the learned Commissioner was liable to be set aside on the ground of violation of the principles of natural justice. The impugned order was also attacked as arbitrary. The appellant contended that the direction for deposit of 50% duty and penalty was not maintainable in law.

During the pendency of the appeal before the learned Tribunal, the learned Commissioner (Appeals) passed an ex parte Order-in-Appeal No. 34/HAL/09, dated August 26, 2009 dismissing the appeal for non-compliance of the direction of pre-deposit.

On receiving the order-in-appeal on August 31, 2009, the appellant made a prayer before the learned Commissioner (Appeals) for recalling the order dated August 31, 2009 and for restoring the appeal to its original file since the appeal before the learned Tribunal was pending.

On or about February 22, 2012, the appeal of the petitioners against the order of stay came up for hearing. The learned Tribunal dismissed the said appeal as not maintainable on the same day.

Thereafter the petitioners filed an appeal before the learned Tribunal, Kolkata against the order-in-Appeal No. 32/HAL/09, dated August 26, 2009, dismissing the appeal for non-compliance of the ex parte stay order, mainly on the ground that the order directing the deposit was passed in violation of the principles of natural justice and was otherwise unsustainable in law.

The petitioners also filed a stay application u/s 35F of the Central Excise Act praying for dispensation of pre-deposit on the ground that the learned Commissioner had passed the orders ex parte in gross violation of the principles of natural justice. The appellant contended that the demand was also barred by limitation.

The petitioners also filed an application for condonation of delay of about 895 days in filing the aforesaid appeal. The application for condonation of delay has been dismissed on merits by the judgment and order of the learned Tribunal under appeal.

A perusal of the judgment and order under appeal reveals that the Learned Tribunal has duly considered the submissions advanced on behalf of the respective parties. Perhaps it would not be out of context to record that on May 28, 2009, the Commissioner (Appeals-I), Kolkata passed an ex parte stay order directing 50% pre-deposit against which the appellant filed an appeal on July 27, 2009. The appeal remained pending till February 26, 2012. The appeal was only dismissed on February 26, 2012. In the meanwhile, on August 26, 2009, the Commissioner (Appeals-I) passed a final order dismissing the appeal from the order of adjudication on the ground of non-compliance of the said order dated May 28, 2009.

As observed above, the appeal from the interim order was dismissed on February 26, 2012. The appellant received the order of the learned Tribunal on March 8, 2012. However, the appeal against the Final Order dated August 26, 2009 was filed on June 7, 2012.

The application for condonation of delay filed before the learned Tribunal reveals that there is some explanation for the delay till March 8, 2012 when the order of the learned Tribunal was received by the appellant. According to the appellants, they were given the erroneous legal advice to await the outcome of the appeal from the Interim Order No. 14/HAL/09, dated 28th May, 2009.

From the judgment of the learned Tribunal under appeal, it appears that the learned Tribunal considered that explanation and, inter alia, in effect and substance found the plea of wrong legal advice unacceptable.

May be, if this Court were considering an application for condonation of delay in entertaining an appeal, this Court may have entertained the appeal in the light of the explanation for the delay till March 8, 2012 provided there was some explanation for the subsequent delay.

The question is whether this Court can, in an appeal u/s 35G of the Central Excise Act, interfere with the judgment and order rejecting an application for condonation of delay on merits.

As observed above, the learned Tribunal has on consideration of the explanation for the delay, found the explanation unacceptable in law and in fact. This Court cannot interfere with the finding of the learned Tribunal only because this Court takes a different view, because of the limited scope of an appeal u/s 35G of the 1944 Act.

In support of the submission that this Court might entertain an appeal which involves a substantial question of law, notwithstanding the dismissal by the Tribunal of an application for condonation of delay, Mr. Chakraborty cited the judgment of the Supreme Court in Improvement Trust, Ludhiana Vs. Ujagar Singh and Others, , the orders of the Supreme Court in U.P. State Electricity Board Vs. Commissioner of C. Ex., Allahabad, , in 1999 (85) ECR 832 (SC) and Jay Engineering Works Ltd. Vs. Government of India and Others, and the judgments of the Karnataka and the Gujarat High Courts in Affiliated Computer Services (I) Pvt. Ltd. Vs. Commr. of S. Tax, Bangalore, , UMA Textiles Processors Vs. Union of India, .

A judgment is a precedent for the question of law that is raised and decided. The judgments and/or orders in Improvement Trust, Ludhiana v. Ujagar Singh (supra), U.P. State Electricity Board (supra), Coronation Spinning India Ltd. (supra), Jaya Engineering Works Ltd. (supra), Affiliated Computer Services (I) Pvt. Ltd. (supra) and Uma Textile Processors (supra) do not operate as a precedent on this Court.

In Improvement Trust, Ludhiana v. Ujagar Singh (supra), the Supreme Court found that the delay in filing the first appeal for setting aside the sale was not so huge as to warrant its dismissal on hyper technical ground. The Supreme Court found on facts that the appellant had taken all possible steps to prosecute the matter within time.

In the aforesaid factual background, the Supreme Court held that while considering an application for condonation of delay, no strait jacket formula is prescribed to come to the conclusion if sufficient and good grounds had been made out or not. Each case has to be weighed from its own facts and the circumstances in which the party acts and behaves. From the conduct, behavior and attitude of the appellant, the Supreme Court found that it could not be said that the party had been callous and negligent in prosecuting the matter.

In U.P. State Electricity Board (supra), the Supreme Court passed a six line order, "it appears that the Commissioner (Appeals) decided the appeal ex parte. The appellants preferred an appeal to the Tribunal with a delay of nine months. The Tribunal has, by the impugned judgment, dismissed the appeal on the ground of delay. In our view, this is a fit case which should be heard by the Commissioner (Appeals) on merits. We, thus, set aside the order of the Tribunal as well as of the Commissioner (Appeals) and remit the matter back to the Commissioner (Appeals) to decide on merits. The appeal is disposed of......"

The order has obviously been passed by the Supreme Court in the special facts and circumstances before it and does not lay down any binding proposition of law.

In Coronation Spinning India (Supra), the Supreme Court, in exercise of its power under Article 142, to do complete justice between the parties, condoned delay which was of 86 days only. In Jaya Engineering Works Ltd. (supra), the delay that had not satisfactorily been explained was only of 38 days.

In Affiliated Computer Services (I) Pvt. Ltd. (supra), the delay was only of 42 days and the Court was of the view that the learned Tribunal had taken a narrow view of the matter and the appeal being a substantive right, the assessee should have had opportunity to put forth its case go get relief, if any, in accordance with law. In the particular facts of the case, costs of Rs. 5000/- was imposed. The order is not an authority for the proposition that whenever there is a delay, the delay must be condoned. In Uma Textiles, the Court found on facts that there were cogent reasons for the delay.

The facts of the case are not comparable to the facts and circumstances in which the judgments/orders referred to by Mr. Chakraborty were passed. We are required to deal with a reasoned order of the learned Tribunal taking into consideration all relevant facts. It is reiterated that, had we been entertaining a delayed application, we might have condoned the delay on the grounds given; but our interference is not warranted in view of the limited scope of an appeal u/s 35G of the Central Excise Act.

This order however will not prevent the appellant from availing any other remedy as might be available to it in law. Urgent certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.