Universal Paper Mills Ltd. vs Commr. of Central Excise

The Court: This appeal is directed against the judgment and Order Nos. M-399-400/S-847-848/A-543-544/Kol/2012, dated July 30, 2012 rejecting the application of the appellant for condonation of delay in filing Appeal Nos. Ex.Ap. 361, 362 of 2010 against the Orders-in-Appeal Nos. 58/HAL/09 and 59/HAL/09 both dated October 12, 2009 passed by the Commissioner of Central Excise (Appeals-I), Kolkata. The appellant is apparently engaged in the manufacture of paper and paper board falling under Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 and has a factory at Jhargram, Dist. Paschim Midnapore.

The appellant had its Registered Office at 75C, Park Street, Kolkata -700016. The Registered office has, however, been shifted to 11, Grant Lane, 2nd Floor, Kolkata-700012.

The appellant claims to have filed declaration under Rule 173B of the erstwhile Central Excise Rules, 1944 from time-to-time, classifying their product i.e. Duplex Board in the form of loose sheets and strips under Chapter subheading 4805.00.

Waste and scrap paper board (Brooks) meant for re-pulping within the factory were shown separately as falling under sub-heading 4702.90 which, according to the appellant, was exempted in view of Notification No. 67/95-C.E., dated 16-3-1995.

A show cause notice was issued demanding Central Excise duty to the tune of Rs. 39,52,457/-. The proceedings pursuant to the show cause notice culminated in an Order-in-Original No. 27/CH-48/Commisioner/CE/Cal-II/Adjn/98, dated 29-5-1998 of the Commissioner of Central Excise, Calcutta-II Commissionerate. The proceedings were dropped.

However, another proceeding was issued in respect of goods cleared during the period from August, 1997 to December, 2000 and April, 2001 to June, 2001.

By an Order-in-Original No. 05/Addl.Commr./CE/Haldia/Adjn./ 2007-08, dated May 31, 2007, the demand was confirmed along with interest and penalty of equivalent amount.

The petitioner filed an appeal before the Commissioner (Appeals) of Central Excise, Kolkata, against the aforesaid Order-in-Original dated May 31, 2007. The appellant also made an application for stay before the Commissioner (Appeals) of Central Excise which was heard on diverse dates. By an ex parte order dated June 29, 2009 the appellant was directed to pre-deposit 10% of the entire amount of duty confirmed and penalty imposed.

Against the aforesaid order dated 29th June, 2009 of the Commissioner of Appeals, the petitioner filed an appeal before the learned Tribunal. A stay application was also filed before the Tribunal. However, admittedly, no order of stay was passed.

By an Order-in-Appeal No. 59/HAL/09, dated 12th October, 2009, the learned Commissioner dismissed the appeal for non-compliance of order of pre-deposit. According to the appellant, the appellant derived knowledge of the aforesaid order in the second week of April of 2010. The appellants came to know that the order had formally been received by somebody on behalf of the appellant on October 29, 2009. According to the appellant, the appellant was not able to identify who had received the said order. However, immediately on receiving the aforesaid order, the appellant started taking steps to file an appeal along with a stay application and there was delay of about 117 days in filing the appeal.

It appears that the order was received on October 29, 2009. As such, the last date of limitation was January 29, 2010. The appeal was filed on May 26, 2010. By the judgment and order impugned, the application for condonation of delay in filing the appeal has been rejected and accordingly, the appeal had been dismissed.

The appeal was admitted on the questions of law framed by this Court by its order dated July 22, 2013. One of the questions formulated was whether the learned Tribunal could have, in an application for condonation of delay in filing an appeal, taken note of what transpired between the date of receipt of a copy of the order sought to be appealed against and the last date of limitation. Put differently the question was whether an applicant for condonation of delay was liable to explain what steps were taken between the date of receipt of a copy of the order and the last date of limitation notwithstanding the plethora of decisions of the Hon''ble Supreme Court as well as this Court which require an applicant for condonation of delay to explain why the application could not be filed on the last date of limitation and the cause for the delay from the last date of limitation onwards till the date of filing of the appeal.

From the judgment and order under appeal, it appears that the ground for delay pleaded was that one Mr. Dharam Godha and the shareholders of Godha Group had usurped the factory of the appellant in the beginning of January, 2010 and as such, the office bearers were not in a position to take steps to prefer an appeal. An affidavit was also filed by one Shri Vikaram Dalmia, Director of the appellant.

The Revenue argued that the applicant could not explain the delay between January 29, 2010 and May 26, 2010 by adducing plausible explanation. After hearing the respective parties, the learned Tribunal found that it was evident that some person in the company had received the order on October 29, 2009 and because of usurpation of the office by Mr. Dharam Godha and shareholders of Godha Group in January, 2010, till January 19, 2010, the appellant was not in a position to prefer an appeal within time.

The learned Tribunal found that the applicant had on the one hand, been claiming that they were not aware of the Orders-in-Appeal dated October 12, 2010, though the same was received by somebody belonging to the company on October 29, 2010 and on the other hand they were saying that the said order came to their knowledge only in second week of April, 2010.

The learned Tribunal rejected the application for condonation of delay since it found that neither in the affidavit nor in the application could the appellant explain the steps initiated by the applicant between October 29, 2009 and 1st week of April, 2010.

We are of the view that the learned Tribunal fell in error in rejecting the application for condonation of delay on the ground that there was no explanation of the steps initiated by the applicant between 29th October, 2009 and 1st week of April, 2010. The applicant was required to explain the delay from 29th January, 2010 onwards and not from 29th October, 2009 onwards. The unexplained delay, if any, was between October 29, 2009 and 1st week of April 2010.

The learned Tribunal very rightly found that the delay need not be explained date-wise. The reasons advanced by the applicants for delay should evince bona fides and should be sufficient to warrant condonation of delay in filing the appeal.

The learned Tribunal, however, concluded that the applicants'' approach was neither bona fide nor had they convincingly explained the cause of delay in filing the appeal. The finding of inability to convincingly explain the cause of the delay was based on the earlier finding that there was no explanation of what had transpired between 29th October, 2009 and 29th January, 2010. The learned Tribunal took note of the usurpation of the office of the applicant from early January till 19th January, 2010. Perhaps if the learned Tribunal had applied the correct principles of law and considered the period of delay from 29th January till the 1st week of April, 2010, it might have arrived at a different conclusion.

Having regard to its own finding that the delay need not be explained mechanically but the reasons advanced for the delay should reflect bona fides, perhaps the learned Tribunal would have taken note of the consequences of usurpation of an office and consequential misplacement of records and files, and found the reasons acceptable, had it not considered the conduct of the appellant within the period of limitation.

Had the learned Tribunal been considering a shorter period of delay, the learned Tribunal might have adopted a more lenient approach and looked into the prima facie, merits, if any, of the appeal. The appellants have been contending that a similar appeal had earlier been allowed. It has been submitted that proceedings initiated pursuant to show cause notice demanding Rs. 39,52,457/- was dropped by an Order-in-Original No. 27/CH-48/Commissioner/CE/Cal-ll/Adjn/98, dated 29-5-1998 passed by the Commissioner of Central Excise. The impugned judgment and order cannot be sustained and the same is set aside and quashed for the reasons discussed above. The appeal is disposed of accordingly.

The learned Tribunal is directed to consider the application for condonation of delay afresh in the light of the observations made above expeditiously preferably within two months from the date of communication of this order. Urgent certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.