2019 (2) TMI 1785 - HC - Central Excise

Maintainability of appeal - whether Tribunal is correct in law to dispose the Appeal as file closed, when there is no provision under Section 35-C (1) of Central Excise Act, 1944 to close the appeal for statistical purposes without going into merits? - the appeal is disposed as file closed based on the issue pending before the larger bench of the Tribunal which is not the only issue involved in the present case. HELD THAT - We are surprised with the reasons assigned by the Tribunal to close the proceedings. In fact, in terms of Section 35-C (1) of the Act, the Appellate Tribunal may, after giving parties to the appeal an opportunity of being heard, pass such orders confirming, modifying or annulling the decision or order appealed against. The Tribunal may also refer the case back to the authority which passed such decision or order with such directions, as the Appellate Tribunal may think fit, for fresh adjudication or decision, after taking additional evidence, if necessary. The Tribunal noted that the matter was referred to the Larger Bench of the Tribunal. Therefore, one of the two options that could have been exercised by the Tribunal is to keep the matter pending before the Tribunal till a decision is arrived at by the Larger Bench. The second option is to remand the matter for de nova consideration to the adjudicating authority and direct the adjudicating authority to await the decision of the Larger Bench. Unfortunately, the Tribunal did not exercise any of these two options. Therefore, we would be well justified in interfering with the order passed by the Tribunal. The order passed by the Tribunal has to be set aside and is, accordingly, set aside and the matter is remanded to the Tribunal with a direction to the Tribunal to await the decision, which is now pending before the High Court at Ahmedabad in the case of Housing and Urban Development Corporation Ltd. 2012 (7) TMI 1072 - GUJARAT HIGH COURT and the substantial questions of law are answered in favour of the Revenue.

Summary

Issues:
Appeal closure without merits examination under Section 35-C (1) of Central Excise Act, 1944; Disposal of appeal based on a single issue pending before the larger bench of the Tribunal.

Analysis:
The appeals were filed by the Revenue against the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. The Revenue raised two substantial questions of law related to the closure of the appeal without examining the merits and the disposal of the appeal based on a single issue pending before the larger bench of the Tribunal. The Tribunal did not decide on the correctness of the orders passed by the adjudicating authority but closed the case citing that the issue was pending before the Larger Bench at Ahmedabad. However, the High Court found the Tribunal's reasons for closure surprising, as Section 35-C (1) of the Act allows for confirmation, modification, or annulment of the decision appealed against, with the option to refer the case back for fresh adjudication. The High Court noted that the Tribunal could have kept the matter pending or remanded it for reconsideration, as seen in a similar case where matters were remanded to the Tribunal.

The High Court emphasized that the Tribunal failed to exercise its options and should have awaited the decision of the Larger Bench or directed the adjudicating authority accordingly. A Division Bench of the Court had previously allowed appeals filed by the Revenue in a similar case and remanded the matters to the Tribunal. The appellant's counsel mentioned an order by the Larger Bench of the Tribunal at Ahmedabad, stating that the issue was pending before the High Court at Ahmedabad and could not be decided without the final verdict. Based on this, the Tribunal disposed of the reference, allowing the appellants to return after the final verdict from the High Court. Therefore, the issue now awaits a decision by the High Court at Ahmedabad in a related case.

Consequently, the High Court set aside the Tribunal's order and remanded the matter back to the Tribunal with a direction to await the decision pending before the High Court at Ahmedabad. The substantial questions of law were answered in favor of the Revenue, and no costs were awarded in this matter.