2013 (6) TMI 117 - HC - Central Excise

Automatic dismissal of appeal - Tribunal dismissed the appeal for non compliance of stay order by another party - whether non deposit of pre-deposit would lead to automatic dismissal of appeal - held that - The Tribunal while adjudicating the stay application of the petitioner had waived the condition of pre-deposit fully. However, M/s. VAL has been directed to deposit Rs. 2.5 crores as a pre-condition for hearing the appeal. In such a situation, the Tribunal was not justified in holding that failure to deposit Rs. 2.5 crores by M/s. VAL would automatically result in dismissal of appeal of the petitioner. Law fastens liability on the defaulter and it is the defaulter who can be penalized for its own act unless otherwise expressly provided under any statutory authority. The respondents have failed to show any provision of law or statutory authority whereby the non-deposit of amount by M/s. VAL would entail automatic dismissal of appeal of the petitioner when the condition of the pre-deposit in the case of the petitioner has been waived completely. Tribunal was not right in ordering that the appeal of the petitioner shall stand automatically dismissed in case the amount by M/s. VAL as directed by the Tribunal is not deposited.

Summary

Issues involved:
Challenge to stay order by Customs, Excise and Service Tax Tribunal regarding non-deposit of amount leading to automatic dismissal of appeals.

Comprehensive Analysis:

Issue 1: Stay Order Challenge
The petitioner challenged the stay order dated 9-2-2012 by the Customs, Excise and Service Tax Tribunal, New Delhi, which directed that failure to deposit Rs. 2.5 crores by M/s. VAL would result in automatic dismissal of appeals without further hearing. The petitioner argued that penalizing parties who did not commit the default was against legal principles.

Issue 2: Legal Basis
The Tribunal had waived the pre-deposit condition for the petitioner but directed M/s. VAL to deposit Rs. 2.5 crores. The High Court held that the Tribunal's decision to dismiss the petitioner's appeal automatically if M/s. VAL failed to deposit the amount was legally unsustainable. The Court emphasized that liability and penalties should be imposed on the defaulter, not on others, unless specified by law.

Issue 3: Lack of Legal Justification
Respondent No. 1 supported the Tribunal's order without providing a legal basis. The High Court found that there was no statutory authority or legal provision justifying the automatic dismissal of the petitioner's appeal due to M/s. VAL's non-deposit, especially when the pre-deposit condition for the petitioner had been fully waived.

Judgment
The High Court allowed the petitions, modifying the stay order to ensure that the appeals filed by the petitioners would be heard on merits regardless of M/s. VAL's deposit. The Court concluded that the Tribunal's decision to dismiss the petitioner's appeal automatically was unjustified, and the appeals would proceed as the pre-deposit condition for the petitioners had been waived.