2013 (6) TMI 58 - HC - Central Excise

Stay - whether the Tribunal fell into error in holding that the failure to deposit an amount directed automatically resulted in adverse condition as far as appellants are concerned, disentitling them to make their contentions on merits? - held that - without first dealing with the merits of the individual appellant s case for stay, the Tribunal ought not to have mechanically assumed default and dismissed the appeal. - This Court in previous order 2013 (5) TMI 700 - DELHI HIGH COURT and the connected matters dealt with the case other than the present one i.e. Ravi Singhal, Supreme Road Transport Pvt. Ltd. and Supreme Trading Co. and observed that this approach of the Tribunal is indefensible. Matter restored before CESTAT for rehearing.

Summary

Issues Involved:
1. Substantial question of law regarding failure to deposit directed amount.
2. Tribunal's observation of default due to non-compliance with deposit order.
3. Applicability of default assumption to other appellants.
4. Tribunal's approach in dismissing appeal without considering merits.
5. Comparison with previous judgments on similar cases.

Issue 1: Substantial question of law regarding failure to deposit directed amount:
The petitioner challenged the Tribunal's order, arguing that the Tribunal erred in considering failure to deposit the directed amount as automatically disentitling them to make contentions on merits. The Tribunal had directed M/s. K.P. Pouches (P) Ltd. to deposit a specific amount, which was not complied with, leading to the Tribunal's observation of wilful violation. The petitioner contended that the Tribunal's assumption of default without considering the merits of the case was erroneous and lacked proper application of mind.

Issue 2: Tribunal's observation of default due to non-compliance with deposit order:
The Tribunal's order dated 2-11-2011 directed M/s. K.P. Pouches (P) Ltd. to deposit a significant sum within a specified period. When this direction was not followed, the Tribunal deemed the appellant guilty of wilful violation of the Central Excise Act. However, the petitioner argued that the Tribunal's order did not clearly state that non-compliance by one appellant would automatically apply to other aggrieved parties, questioning the basis for assuming default.

Issue 3: Applicability of default assumption to other appellants:
The petitioner contended that the Tribunal's assumption of default by the present appellant and other aggrieved parties due to the non-compliance of M/s. K.P. Pouches (P) Ltd. was unjustified. The petitioner highlighted the lack of indication in the Tribunal's order that default by one party would lead to the same treatment for others. Moreover, the petitioner emphasized that the Tribunal should have assessed each appellant's case individually before assuming default.

Issue 4: Tribunal's approach in dismissing appeal without considering merits:
The Court found merit in the argument that the Tribunal should not have mechanically assumed default without evaluating the merits of each appellant's case for a stay. Referring to a previous order in a different case, the Court criticized the Tribunal's approach as indefensible. The Court held that the Tribunal's decision to dismiss the appeal without proper consideration of the merits was erroneous and directed the present appellant to appear for a hearing regarding the waiver of pre-deposit.

Issue 5: Comparison with previous judgments on similar cases:
The Court compared the present case with previous judgments involving similar issues and found that the Tribunal's approach was inconsistent and indefensible. Citing specific cases disposed of earlier, the Court set aside the Tribunal's order and directed the present appellant to be granted a waiver of pre-deposit. The Court emphasized the need for a fair assessment of each appellant's case before making assumptions of default.

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