2014 (5) TMI 251 - HC - Central Excise

Restoration of appeal - ex-parte order of tribunal dismissing the appeal - service of notice of hearing - principle of natural justice - whether the order is cryptic & perfunctory order? - Whether demand on the basis of mere entry in balance sheet can be raised? - Held that - The Tribunal had adjudicated the issue exparte as counsel for the appellant had failed to appear inspite of the fact that an application was filed giving plausible explanation for non-appearance on 30.7.2012. The Tribunal had refused to recall its earlier order dated 30.7.2012 vide which the lis between the parties was decided on merits. The fact that Rule 21 does not expressly state that an order on an appeal heard and disposed of ex-parte can be set aside on sufficient cause for the absence or the respondent being shown does not mean that CEGAT has on power to do so. Rule 41 gives CEGAT wide powers to make such orders or give such directions as might be necessary or expedient to give effect or in relation to its order or to prevent abuse of its process or, most importantly, to secure the ends of justice. The records show that the notice had been sent to the respondent but the same had been returned back with the remarks that there is nobody in the factory implying that the factory is closed. The endorsement by the postal authority that there is nobody in the factory cannot tantamount to the refusal of the appellant nor that can be read as factory is closed as has been read by the Tribunal. The Tribunal committed error in rejecting the application of the appellant. Admittedly, the order was passed without hearing the appellant, hence we are satisfied that there was sufficient cause for recall of the order dated 3.2.2011 - matter remitted before the tribunal for fresh decision - decided in favor of assessee.

Summary

Issues:
1. Application under Section 151 of the Code of Civil Procedure for placing on record affidavit.
2. Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Tribunal.
3. Violation of principles of natural justice in passing the impugned order.
4. Failure of the Tribunal to consider merits of the case.
5. Demand raised on the basis of mere entry in balance sheet.
6. Failure of the Tribunal to consider actual facts and figures.

Issue 1:
An application was filed under Section 151 of the Code of Civil Procedure for placing on record an affidavit. The affidavit filed was taken on record subject to all just exceptions, and the application was disposed of accordingly.

Issue 2:
The appeal was preferred under Section 35G of the Central Excise Act, 1944 against the order of the Tribunal. The appellant had claimed substantial questions of law regarding violation of natural justice, failure to consider merits of the case, basis of demand raised, and failure to consider actual facts and figures. The facts necessary for adjudication of the appeal were presented, involving the assessee's business of manufacturing Aluminum and Zinc Die Cast Components and availing Cenvat Credit. The Tribunal had dismissed the appeal exparte, leading to subsequent application for restoration of the appeal.

Issue 3:
The appellant contended that non-appearance before the Tribunal was unintentional due to an error in noting the date. Legal precedents were cited to argue that the Tribunal had the power to set aside an exparte order in case of sufficient cause for non-appearance. The Tribunal's refusal to recall the earlier order was challenged based on principles of natural justice.

Issue 4:
The Tribunal's power to set aside an ex-parte order was discussed in light of Rule 20 and Rule 21 of the CEGAT (Procedure) Rules. The judgment highlighted the necessity to secure the ends of justice, emphasizing that an ex-parte order should be set aside if the respondent was unable to appear for a valid reason.

Issue 5:
The judgment referenced a case where an order was passed without hearing the appellant due to an incorrect notice endorsement. The Tribunal's error in rejecting the application for recall was noted, emphasizing the importance of ensuring proper service and hearing before making a decision.

Issue 6:
The explanation provided by the appellant's counsel regarding the unintentional non-appearance was deemed plausible. The judgment allowed the appeal, setting aside the Tribunal's orders and remitting the matter for a fresh decision on merits in accordance with the law. The principle of not penalizing a litigant for a genuine error of their counsel was underscored.

This detailed analysis of the judgment covers the issues involved and the legal arguments presented, ultimately leading to the decision to allow the appeal and remit the matter for fresh adjudication.