2017 (8) TMI 1223 - HC - Central Excise

Jurisdiction - impleadment in an appeal under Section 35G of the Central Excise Act - Whether the Commissioner of Central Excise, Delhi-I had territorial jurisdiction to issue a show cause notice to M/s. Florida Electrical Industries Limited? - Held that - the submission of the applicant with respect to them not being impleaded cannot be accepted. Not only were they impleaded in the memo of parties but also served with notice. The appeal is clearly directed against a common order so far as it concerns all the seven matters that were decided by the CESTAT - there can be no doubt in the context of the right to appeal premised upon statutory provision, the mandate of the statute is to be followed. However, in the facts of the present case, the Court discerns no infirmity fatal or otherwise to say that the judgment finally disposing of the appeal in any manner prejudices the assessees/respondents, all of whom had notice and knowledge of the proceedings. Whether on the facts and circumstances of the case, the Customs, Excise and Service Tax Appellate Tribunal was right in law, in concluding that duty demand against M/s. Modern Industrial Enterprises could not be confirmed since it was not possible to arrive at the value of clearances separately between M/s. Florida Electrical Industries Limited and M/s. Modern Industrial Enterprises? - Held that - the second question of law formulated by this Court clearly shows that the Court was aware and conscious of the fact that two entities, i.e., M/s Modern Industrial Enterprises and M/s Florida Electrical Industries Ltd. were involved. The Court s findings that the CESTAT should have analyzed the materials before it, which had been taken into account by the Commissioner in this regard in order to carry out the exercise of segregation, precisely addresses this issue. Here too, the Court does not discern any prejudice because the respondents who are parties/appellants before the CESTAT were before the Court and most of them were represented. Application for impleadment in an appeal dismissed - decided against applicant.

Summary

Issues:
- Impleadment in an appeal under Section 35G of the Central Excise Act
- Jurisdiction of the Commissioner of Central Excise, Delhi-I to issue a show cause notice
- Ability to segregate duty demand between two entities
- Impleadment of parties in the appeal
- Requirement of impleadment in a properly laid out appeal
- Concerns regarding penalty for non-imposition
- Locus standi in the context of the right to appeal
- Analysis of materials by CESTAT

Impleadment in Section 35G Appeal:
The applicant sought impleadment in an appeal under Section 35G of the Central Excise Act, which was disposed of by the Court. The appeal was preferred by the Revenue aggrieved by an order of the CESTAT. The applicant contended that it was not impleaded as a party in the main appeal and requested clarification of the judgment's effect. The Court had pronounced upon the question of jurisdiction and the controversy regarding the duty demand against two entities. The Court required CESTAT to re-examine the matter. The applicant argued that the appeal was not preferred in accordance with Section 35G as it was not impleaded, emphasizing the necessity of impleading each party in such appeals.

Jurisdiction and Segregation of Duty Demand:
The Court held in favor of the Revenue, stating that the Tribunal's approach regarding the duty demand against two entities could not be supported. The Commissioner had relied on materials that should have been analyzed by CESTAT. The Court required CESTAT to re-examine the matter based on its observations. The applicant contended that the judgment adversely affected them as they were not impleaded initially. However, the Court found that the applicant was impleaded in the memo of parties and served with notice, and the appeal was directed against a common order involving all seven matters decided by CESTAT.

Impleadment and Appeal Procedure:
The Court emphasized the need for strict adherence to the procedure prescribed by law for appeals. It was argued that if an appellant is aggrieved by a common order and seeks a judgment against all parties, they must be impleaded in the appeal. The issue of penalty was highlighted, indicating that it would affect individual assessees/parties in addition to the corporate entities involved.

Locus Standi and Analysis by CESTAT:
The Court found no infirmity in the judgment that could prejudice the respondents, as all parties had notice and knowledge of the proceedings. It was concluded that there was no merit in the applications, and they were dismissed. The Court addressed the concerns raised regarding the segregation of materials by CESTAT and found no prejudice as the relevant parties were present and represented during the proceedings.

This detailed analysis of the judgment covers the various issues involved, including impleadment in the appeal, jurisdictional questions, segregation of duty demand, appeal procedure requirements, concerns about penalty imposition, locus standi, and the analysis conducted by CESTAT.