2014 (5) TMI 605 - HC - Central Excise

Condonation of delay - Held that - The facts culled down from the affidavit filed in support of the petition would go to show that the final order was passed by the CESTAT as early as on 14-6-2007. The said order was directly despatched to the office of the Chief Commissioner who admittedly received it on 27-6-2007. The appeal should have been filed within a period of 180 days from 27-6-2007 i.e. on 27-12-2007. But such an appeal was filed only on 4-2-2008. The delay between 27-12-2007 and 4-2-2008 is sought to be explained on the ground that the true copy of the order of the CESTAT has not been forwarded to the Commissionerate directly. However there is no explanation as to why the appeal could not be preferred within the period of limitation when admittedly the copy of the order which was directly sent to the Chief Commissioner s office and which was received on 27-6-2007. Even if the said explanation is accepted there is no explanation for the subsequent periods. - Condonation denied. Demand - Intention to evade - Penalty - Held that - The imposition of penalty is neither automatic nor could be mechanical as for such order imposing penalty the basic requirement of suppression wilful misappropriation or fraud must be shown. The CESTAT factually found that there has been no suppression wilful misappropriation or fraud on the part of the first respondent-assessee. This being a factual finding not concerning with any law much less substantial question of law - Decided against Revenue.

Summary

Issues Involved:
1. Condonation of delay in filing the Civil Miscellaneous Appeal.
2. Legitimacy of penalties imposed under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules.
3. Evaluation of the CESTAT's findings on suppression, wilful misappropriation, or fraud.

Detailed Analysis:

1. Condonation of Delay in Filing the Civil Miscellaneous Appeal:

The petition was filed by the Commissioner of Central Excise, Chennai-IV Commissionerate, to condone a delay of 1590 days in filing the Civil Miscellaneous Appeal. The delay was attributed to several administrative lapses, including the misplacement of original case papers by the previous standing counsel, and the subsequent failure to re-present the papers. The petitioner argued that the delay was neither wilful nor wanton and was beyond their control.

The court scrutinized the explanations provided and found them unsatisfactory. The Chief Commissioner received the CESTAT order on 27-6-2007, but the appeal was filed only on 4-2-2008, beyond the 180-day limitation period. The court noted the lack of specific dates and detailed explanations for the delay, deeming the explanations vague and unacceptable. Citing the Supreme Court's decision in Postmaster General v. Living Media India Ltd., the court emphasized that the law of limitation binds everyone, including the government, and cannot be condoned mechanically. Consequently, the court dismissed the petition for condonation of delay.

2. Legitimacy of Penalties Imposed Under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules:

The Commissioner of Central Excise had imposed penalties under Section 11AC and Rule 173Q, which were later set aside by the CESTAT. The penalties were initially imposed due to alleged suppression and wilful evasion of duty by the assessee. However, the CESTAT found that the non-payment of duty was due to a system failure in the computer program, which was not updated to reflect clearances made to the assessee's unit at Chittoor. The CESTAT concluded that there was no conscious intention to evade duty, and thus, no suppression, wilful misappropriation, or fraud was involved.

3. Evaluation of the CESTAT's Findings on Suppression, Wilful Misappropriation, or Fraud:

The CESTAT's findings were based on the fact that the clearances without payment of duty were due to a system failure and not intentional evasion. The CESTAT directed the assessee to pay the unpaid balance of duty, which was complied with. The court noted that the imposition of penalties under Section 11AC requires evidence of suppression, wilful misappropriation, or fraud, which the CESTAT found lacking. Since the CESTAT's findings were factual and did not involve any substantial question of law, the court found no grounds to interfere with the CESTAT's decision.

Conclusion:

The court dismissed the petition for condonation of delay due to unsatisfactory explanations for the 1590-day delay. It also upheld the CESTAT's decision to set aside the penalties imposed under Section 11AC and Rule 173Q, as there was no evidence of suppression, wilful misappropriation, or fraud. Consequently, the Civil Miscellaneous Appeal was rejected at the SR stage itself.