2017 (9) TMI 1702 - HC - Central Excise

Pre-deposit - Doctrine of Merger - Recall of order - appeal rejected on account of non compliance of the directions for deposit of the amount contemplated under Section 35F of the Act - Whether the CESTAT was justified in rejecting the recall application by declining to recall the order dated 10.01.2006 and to adjudicate the appeal on merits despite the appellant having deposited the entire amount of duty of ₹ 56,06,662/- in view of section 35F of the Central Excise Act, 1944? Held that - Section 35F of the Act provides that the person desirous of appealing against the order imposing duty or penalty has to deposit with the Adjudicating Authority the duty demanded or the penalty imposed. However, where in any particular case, the Appellate Tribunal is of the opinion that the deposit of duty demanded or the penalty levied would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose to safeguard the interests of the revenue. It is not possible to accept the submission of learned Senior Counsel for the appellant that the order dismissing the Appeal should be recalled and the Appeal should be heard on merits since M/s Sameer Ispat has now deposited the entire amount of duty. The order passed by the Division Bench in SAMEER ISPAT VERSUS COMMISSIONER OF CENTRAL EXCISE 2015 (1) TMI 713 - ALLAHABAD HIGH COURT filed by M/s Sameer Ispat has attained finality. If the Appeal could not be heard after the deposit of amount of ₹ 5 lacs, there is no good reason as to why it should be heard after deposit of certain additional amount. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Justification of the CESTAT in rejecting the recall application.
2. Application of the doctrine of merger by the CESTAT.
3. Impact of pending rehabilitation package on the appeal under Section 35G of the Central Excise Act, 1944.

Detailed Analysis:

1. Justification of the CESTAT in Rejecting the Recall Application:
The appellant, M/s Sameer Ispat, filed an appeal under Section 35G of the Central Excise Act, 1944, challenging the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 27 March 2015. The CESTAT had rejected the appellant's application to recall an earlier order dated 10 January 2006, which dismissed the appeal due to non-compliance with the pre-deposit requirement under Section 35F of the Act. The appellant had initially failed to deposit the required amount of ?5 lakhs as directed by the High Court, leading to the dismissal of their appeal. Despite subsequent attempts to deposit the amount and seek restoration, the CESTAT maintained its stance, emphasizing that the appellant had not complied with the conditions set by the High Court within the stipulated time. The Tribunal underscored that entertaining the application for restoration would contravene judicial discipline and the principles of judicial hierarchy.

2. Application of the Doctrine of Merger by the CESTAT:
The CESTAT applied the doctrine of merger, stating that the High Court's order modifying the pre-deposit amount to ?5 lakhs had merged with its own order, thereby nullifying the Tribunal's initial order. The Tribunal cited the case of Kisaan Gramoudyog Sansthan vs. CCE, Kanpur, asserting that once an order is appealed, it loses its finality in favor of the higher court's order. The Tribunal concluded that since the High Court's conditional order was not complied with by the appellant, the Tribunal had no jurisdiction to entertain the restoration application. This doctrine implies that the lower authority's order becomes ineffective once a higher authority has issued a ruling on the matter.

3. Impact of Pending Rehabilitation Package on the Appeal:
The appellant argued that the appeal under Section 35G should not be dismissed as the Rehabilitation Committee was considering a rehabilitation package for the appellant, with the Customs & Excise Department participating in the proceedings. However, the court found no substantial question of law in this argument, noting that the appellant had failed to comply with the pre-deposit conditions set by the High Court. The court emphasized that the appellant's failure to deposit the required amount within the stipulated time led to the dismissal of their appeal, and subsequent deposits could not alter this outcome. The court dismissed the appeal, stating that the appellant had exhausted all available remedies and that no new grounds justified a different decision.

Conclusion:
The High Court dismissed the appeal, affirming the CESTAT's decision to reject the recall application. The court upheld the application of the doctrine of merger and found no substantial question of law regarding the pending rehabilitation package. The appellant's failure to comply with the High Court's pre-deposit conditions within the specified time was the primary reason for the dismissal of their appeal.