2015 (8) TMI 787 - HC - Central Excise

Condonation of delay - Power of Commissioner to condone delay beyond the period of 60days - Tribunal also dismissed the appeal as barred by limitation - Violation of Art. 265 - Held that - by a subsequent exercise which may have been favourable to the petitioner, we cannot term the earlier exercise, as unconstitutional or illegal. More so, when the duty of excise is sought to be recovered based on a show cause-cum-demand notice. If we are to scrutinize the correctness of the impugned Order-in-Original, we have to go into disputed questions of fact. All this is impermissible once the appeals to challenge this order have been dismissed. Thus, the Central Excise duty has been levied, assessed and recovered in terms of the law. That its assessment and recovery in the peculiar facts of the petitioner is questioned and challenged does not mean that the mandate of Article 265 of the Constitution of India, is violated. In the facts and circumstances peculiar to this case the direction imposing penalty deserves to be quashed and set aside. There was a clear legal issue and with regard to the power of the Commissioner to condone the delay beyond the stipulated period. Hence, no deliberate or intentional act can be attributed to the petitioner assessee. Further, considering its financial position, this Court had protected the petitioner by grant of interim relief. Therefore, we direct that the interest on duty amount shall be payable from the date of the demand till its deposit in pursuance of the order passed by this Court dated 18th October, 2006. No interest shall be payable from the date of deposit of the duty amount, till the disposal of this writ petition by the order passed - Penalty imposed if also set aside - Decided partly in favour of assessee.

Issues Involved:

1. Whether the Commissioner (Appeals) and the Tribunal correctly dismissed the appeal as time-barred.
2. Whether the petitioner's appeal should be entertained under Article 226 of the Constitution of India due to alleged violation of Article 265.
3. Whether the penalty and interest imposed should be waived considering the circumstances.

Issue-wise Detailed Analysis:

1. Dismissal of Appeal as Time-barred:

The Tribunal upheld the dismissal of the petitioner's appeal as time-barred by the Commissioner (Appeals). The Order-in-Original was served on the petitioner on 23rd March 2005, and the appeal was filed on 1st August 2005, resulting in a delay of about 70 days. Under Section 35 of the Central Excise Act, 1944, an appeal must be filed within 60 days from the date of communication of the order, with a possible condonation of delay up to 30 days if sufficient cause is shown. The appeal was filed beyond this 90-day period, and thus, the Commissioner had no power to condone the delay. The Court referenced similar provisions under the Customs Act, 1962, and previous judgments, concluding that the statutory provision restricting the condonation period must be given effect.

2. Article 226 and Alleged Violation of Article 265:

The petitioner argued that the tax was collected without authority of law, invoking Article 226 of the Constitution of India. The petitioner cited a previous favorable decision on similar allegations to support this claim. However, the Court noted that the tax levied was authorized by the Central Excise Act, 1944, and there was no challenge to the law or the Parliament's competence to enact it. The Court distinguished between the legality of the tax and the correctness of its assessment and recovery. The Court concluded that the earlier favorable decision did not render the prior exercise unconstitutional or illegal, and the mandate of Article 265 was not violated.

3. Waiver of Penalty and Interest:

The petitioner requested the waiver of penalty and interest, arguing that the appeal was dismissed due to a legal issue regarding the Commissioner's power to condone the delay. The Court acknowledged the peculiar circumstances and the interim relief granted earlier. It quashed the penalty, stating that no deliberate or intentional act could be attributed to the petitioner. The Court directed that interest on the duty amount be payable only from the date of the demand until its deposit in compliance with the Court's order dated 18th October 2006, and no interest was payable from the date of deposit until the disposal of the writ petition.

Conclusion:

The writ petition was dismissed on the grounds that the appeal was time-barred, and the mandate of Article 265 was not violated. However, the Court provided relief by quashing the penalty and limiting the interest payable, considering the peculiar facts and circumstances of the case.

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