Vibha Fluid Systems Engineering Pvt. Ltd. vs Union of India

Harsha Devani, J.—By this petition under Articles 226 and 227 of the Constitution of India, the petitioners have called in question the order dated 22nd February, 2010 passed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the Tribunal") whereby the Tribunal has rejected the miscellaneous application filed by the petitioner-company for restoration of its appeal which came to be dismissed for noncompliance of the provisions of Section 35F of the Central Excise Act, 1944 (hereinafter referred to as "the Act"). The facts stated briefly are that by an order-in-original dated 25-7-2003 demand of Rs. 21,73,141/- with penalty of Rs. 5,000/- came to be confirmed against the petitioner-company. Against the said order the petitioner-company filed an appeal with a stay application before the Tribunal. After hearing the learned advocate for the petitioner-company as well as the learned departmental representative, the Tribunal was of the view that the petitioner-company had not made out a prima facie case in its favour for waiver of the entire amount of duty confirmed against it. Accordingly, by an order dated 15th January, 2004 the Tribunal, after taking into consideration the losses incurred by the petitioner-company during the financial year directed them to deposit a sum of Rs. 6,00,000/- within six weeks from 15-1-2004 on compliance of which there would be a waiver of pre-deposit of the remaining amount of duty and entire amount of penalty and recovery thereof would remain stayed during the pendency of the appeal. The matter was to come up for reporting compliance on 10th March, 2004.

When the matter came up for hearing on 10th March, 2004 there was no appearance on behalf of the petitioner-company nor was the order dated 15th January, 2004 complied with. The Tribunal therefore, dismissed the appeal for non-compliance of the provisions of Section 35F of Act.

Being dissatisfied by the order passed by the Tribunal, the petitioner-company approached this Court by way of a writ petition being Special Civil Application No. 11436/2004. By an order dated 10th September, 2004 made in the said writ petition, the petitioner-company was permitted to withdraw the petition with liberty to approach the Tribunal by way of review as it was in a position to deposit Rs. 6 lacs, as ordered earlier by the Tribunal.

After the above order passed by this court, the petitioners did not immediately comply with the order of pre-deposit. However, over a period of time spreading over 5 years, the petitioners deposited certain sums with the authorities till the entire amount as directed by the Tribunal was deposited. Thereafter, the petitioner-company filed a miscellaneous application for restoration of the appeal in view of the fact that they had deposited a sum of Rs. 6,04,315/- in compliance with the condition of pre-deposit as ordered by the Tribunal. Such application appears to have been filed on or about 25th August, 2009. It appears that the said application was fixed for hearing on 22nd February, 2010 on which date the petitioner-company by a communication dated 20th February, 2010 sought for adjournment as they were in the process of engaging a counsel. By the impugned order dated 22nd February, 2010, the Tribunal observed that apart from claiming financial difficulty in raising funds which were required to be deposited in terms of the stay order dated 15th January, 2004, there was no satisfactory ground disclosed even for condonation of delay caused in filing the application. The Tribunal was of the view that application for restoration of appeal beyond the period of limitation cannot be entertained unless it discloses reasonable cause for delay in approaching the Tribunal and, accordingly, rejected the application. Being aggrieved, the petitioners have filed present petition sometime on or about 30th June, 2012, that is, after a period of more than two years from the date when the impugned order came to be passed.

Mr. Paresh Dave, learned counsel for the petitioners submitted that the petitioners had deposited the entire amount as directed by the Tribunal, may be, after some delay, however, in the interest of justice the Tribunal ought to have permitted the petitioner-company to prosecute the appeal. It was submitted that as of now a total sum of Rs. 8,04,315/- stands deposited by the petitioners as against the direction of pre-deposit of Rs. 6 lacs. Under the circumstances, the petitioners having shown their bona fides, the petition deserves to be allowed. It was submitted that merely because the petitioners could not deposit the requisite amount within the stipulated time-limit, they should not be deprived of their statutory right to prefer appeal against the order of the adjudicating authority. In support of his submissions, the learned counsel placed reliance upon the decision of the Supreme Court in case of Kamala Devi (Smt) and Others Vs. Collector of Central Excise, Bangalore and Others, , to submit that even in case of considerable delay in making pre-deposit, appeals dismissed by the Tribunal have been restored. It was urged that in facts of the present case, the petitioner-company was facing genuine financial difficulties and that the conduct of the petitioners in depositing the entire amount as directed by the Tribunal over a period of time, is indicative of the fact that the petitioners had never given up the cause and as such, the petitioners should be permitted to prosecute the appeal on merits.

On the other hand Ms. Sejal Mandavia, learned counsel for the respondent vehemently opposed the appeal stating that there is inordinate delay on the part of the petitioners at all stages, that is, in depositing the amount of pre-deposit, in filing miscellaneous application for restoration before the Tribunal, as well as in presenting the present petition before this court. It was submitted that considering the gross delay in making the pre-deposit together with the fact that there was no reasonable cause for the delay caused in filing the miscellaneous application for restoration, the Tribunal was justified in rejecting the said application.

As can be seen from the facts noted above, initially the appeal preferred by the petitioner-company came to be dismissed by the Tribunal vide order dated 10th March, 2004 for non-compliance of the order of the pre-deposit. Against the said order the petitioner-company filed a writ petition before this Court being Special Civil Application No. 11436 of 2004. By an order dated 10-9-2004, the said petition came to be disposed of in the following terms:

Learned counsel Shri Nagarkar for the petitioner submitted that he has remedy of review under Rule 20, before the Tribunal, therefore) he wants to withdraw this petition with a liberty to approach the learned Tribunal by way of Review as the petitioner is now in a position to deposit Rs. 6 lacs, as ordered earlier by the Tribunal, which he could not deposit in time and, therefore, his Appeal was dismissed by the Tribunal by its impugned order at Annexure A. Permission granted. Disposed of as withdrawn.

From the above order passed by this court it is apparent that the petitioners had way back on 10th September, 2004 stated before this court that they were in a position to deposit the amount of Rs. 6 lacs. However, despite such statement, the amount of Rs. 6 lacs as directed by the Tribunal came to be deposited over a period of five years. Upon the entire amount being deposited, the petitioner filed the application for restoration in August, 2009, that is, after more than five and a half years since the order for making pre-deposit came to be passed. It may be pertinent to note that such application came to be rejected by an order dated 20th February, 2010 however, it was only in June, 2012 that the present petition came to be filed, that is, after a period of more than two years from the date of the impugned order. Furthermore, in the entire memorandum of the petition, there is not even a whisper as to why there was a delay of more than two years in filing the present petition.

Thus, there is delay at two stages. Firstly, in filing the miscellaneous application for restoration of the appeal before the Tribunal, and secondly, in filing the present petition.

Insofar as the delay caused in filing the miscellaneous application for restoration is concerned, a perusal of the averments made therein indicates that all that is stated therein is that the petitioner-company had been suffering from financial difficulties. Such averments fly in the face of the statement made before this court on 10th September, 2004 in the above referred writ petition whereby it was stated that the petitioner-company was then in a position to deposit Rs. 6 lacs. Under the circumstances, the submission that the petitioner was facing financial difficulties and that petitioners had shown their bona fides by depositing the amount towards pre-deposit does not merit acceptance. Moreover, the miscellaneous application has been filed after a delay of more than five years and half years. In respect of such inordinate delay and laches a one sentence explanation, viz., the petitioners were suffering from financial difficulties, can by no stretch of imagination be said to be a reasonable explanation. Though it is true that the right of appeal u/s 35B of the Act is a statutory right, such right is not an absolute right, but is subject to compliance with the provisions of Section 35F of the Act. Moreover, Section 35F of the Act cannot be so interpreted to mean that the same can be complied with at any point of time and as and when the same is complied with the appeal should be heard on merits. In the present case, apart from the fact that the amount directed to be paid by way of pre-deposit was not paid within the time stipulated by the Tribunal, no application for extension of time was ever moved before the Tribunal. The petitioners took their own time in paying the amount of pre-deposit and then filed the application for restoration. Under the circumstances, no infirmity can be found in the impugned order of the Tribunal in rejecting the restoration application.

Besides, as noticed earlier, even the present petition has been filed after a period of two years from the date of the impugned order without any explanation worth the name coming forth in the petition. In the meanwhile, a period of more than eight years have elapsed since the dismissal of the appeal. In the opinion of this court, a period of two years in challenging the order of the Tribunal cannot be said to be a normal delay, which can be brushed aside without any reasonable explanation coming forth. Therefore, on this ground also, the petition deserves to be dismissed. For the foregoing reasons, the petition fails and is, accordingly, dismissed. Notice is discharged with no order as to costs.