2019 (11) TMI 1523 - HC - Central Excise

Principles of natural justice - appellant submitted that the impugned order has been passed without affording any effective hearing to the appellant - whether the Tribunal was justified in adjudicating the appeal on merits in the absence of the counsel or the appellant on the date of hearing? - HELD THAT - On conjoint reading of sub-rule (1) of Rule 17 and the Explanation appended thereto it is clear that the aforesaid provision enables the Appellate Court to adjourn the case to some future date but it does not empower the Appellate Court to adjudicate the appeal on merits or it can pass such other order as it thinks proper in the circumstances of the case. There is nothing in the Rule which provides that when the appellant does not appear and the respondent appears the appeal shall be disposed of ex parte. If that were the intention of the Legislature a clear mandate to the said effect would have been incorporated in the Rule. The intent of the Legislature in enacting this provision is that under Rule 17 the appeal should not be dismissed on merits in the absence of the appellant but it may be dismissed in default so that the appellant may avail of the remedy provided under Rule 19. Inasmuch as when an appeal is dismissed under Rule 17 the appellant is entitled to apply to the Appellate Court for re admission of the same under Rule 19 of Order XLI of the Code where the appellant will have an opportunity to prove that he was prevented by any sufficient cause from appearing when the appeal was called on for hearing and if the Court is satisfied re-admission of the appeal shall be permissible. It is noticed that the appellant did not appear on the date of hearing despite notice. However once the Appellate Tribunal found that the show cause notice was issued proposing to impose penalty under Rule 15 of the Cenvat Credit Rules 2004 whereas the penalty under Section 11AC of the Act was attracted and consequently imposed penalty under Rule 26 of the 2002 Rules the appellant ought to have been heard before passing the impugned order. In this view of the matter the impugned order is not sustainable in the eye of law. The substantial question is answered in favour of the appellant - matter is remanded to the Appellate Tribunal to decide the appeal on merits afresh after hearing the counsel for the parties in accordance with law - Appeal allowed.

Issues:
1. Appeal challenging order of Customs, Excise & Service Tax Appellate Tribunal
2. Questions of law raised by the appellant
3. Appellate Tribunal's justification for penalty imposition
4. Adjudication of appeal in absence of appellant or counsel
5. Interpretation of Code of Civil Procedure rules
6. Supreme Court precedent on dismissal of appeal for default
7. Contradiction in impugned order with Supreme Court judgment
8. Decision and remand of the matter to Appellate Tribunal

Analysis:

1. The case involves an appeal challenging the order of the Customs, Excise & Service Tax Appellate Tribunal, filed under Section 35G of the Central Excise Act, 1944. The appellant contested an order passed by the Commissioner (Appeals), Central Excise, which was dismissed by the Tribunal.

2. The appellant raised several questions of law, including whether the Tribunal appreciated the merits of the case, justified the penalty imposition, and heard the appellant effectively. The crux of the matter was whether the Tribunal erred in adjudicating the appeal on merits in the absence of the appellant or their counsel.

3. The appellant argued that the impugned order lacked effective hearing and proper consideration of evidence. They contended that the penalty imposition under Rule 26 of the Central Excise Rules, 2002, was unjustified, as it was not proposed in the show cause notice.

4. The central issue was whether the Tribunal was justified in adjudicating the appeal in the absence of the appellant or their counsel. The argument drew from the Code of Civil Procedure, highlighting the rules on dismissal of appeal for default and the necessity of a fair hearing.

5. The Court analyzed the relevant provisions of the Code of Civil Procedure, emphasizing that the appeal should not be dismissed on merits in the absence of the appellant. The appellant could seek re-admission of the appeal under Rule 19 if prevented by sufficient cause from appearing.

6. Referring to the Supreme Court precedent in a similar matter, the Court clarified that if the appellant does not appear, the appeal should be dismissed for default without delving into the merits of the case.

7. The Court found the impugned order contradictory to the Supreme Court's ruling, noting that the appellant was not heard before the penalty imposition under Rule 26. Consequently, the order was deemed unsustainable in law.

8. The Court allowed the appeal, setting aside the impugned order and remanding the matter to the Appellate Tribunal for a fresh decision on merits after hearing both parties' counsel in accordance with the law. The judgment did not express any opinion on the case's merits, concluding the disposal of the appeal accordingly.

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