2017 (10) TMI 81 - HC - Central Excise

Additional ground incorporated in appeal - Whether the Customs, Excise and Service Tax Appellate Tribunal could have gone into the merits of the additional grounds sought to be incorporated in Appeal, while deciding the application made by the appellant under Rule 10 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982? - Sub-Rule (1) of Rule 8 of the said Rules - Held that - On conjoint reading of SubRule (1) of Rule 8 and Rule 10, it is apparent that hearing before the Appellate Tribunal need not be confined to the grounds of Appeal set forth in the Memorandum of Appeal filed in accordance with Rule 8. Only embargo on the power of the Tribunal in considering the grounds which are not raised in the Memorandum of Appeal is that the parties to the Appeal should be put to notice that a particular ground which is not specifically set out in the Memorandum of Appeal will be considered by the Appellate Tribunal on merits. The issue whether the additional grounds sought to be urged had any merit could not have been gone into while deciding the application made containing limited prayer as aforesaid. The issue to be decided while considering the said application was whether the appellant should be allowed to urge additional grounds set out in the application at the time of final hearing of the Appeal. The merits of the additional grounds could have been considered at the time of final hearing. Hence, even the order passed on the said application will have to be set aside and the said application will have to be allowed. Appeal allowed in part.

Summary

Issues:
Whether the Customs, Excise and Service Tax Appellate Tribunal could consider additional grounds in an appeal under Rule 10 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982.

Analysis:

1. The appellant filed an appeal before the Appellate Tribunal against an order confirming a demand for service tax and penalty. The appellant sought to add grounds in the pending appeal through an application under Rule 10 of the said Rules. The Tribunal rejected the application, leading to the question of whether the Tribunal could go into the merits of the additional grounds sought to be incorporated in the appeal.

2. The Tribunal's decision was challenged, arguing that the rejection of the application under Rule 10 was improper as it was belatedly made. The appellant contended that the Tribunal should not have delved into the merits of the additional grounds while deciding the application with a limited prayer. The respondent supported the Tribunal's decision.

3. The High Court analyzed Rule 8 and Rule 10 of the said Rules. It was observed that the Tribunal is not confined to the grounds set forth in the Memorandum of Appeal while deciding the appeal. However, parties must be given notice if additional grounds not in the Memorandum will be considered. The appellant's application was to ensure the respondent was aware of the additional grounds to be raised during the final hearing.

4. The Court held that the Tribunal's view that the application was belated was erroneous. Even after the hearing commences, an appellant can request consideration of new grounds. The Tribunal should grant adequate opportunity to the parties affected before considering such grounds, as per the proviso to Rule 10. The application under Rule 10 should generally be allowed unless it is malafide or an abuse of process.

5. The Court emphasized that the Tribunal erred in delving into the merits of the additional grounds while deciding the limited prayer application. The decision on whether the additional grounds had merit should have been deferred to the final hearing. Therefore, the impugned order was set aside, and the application was allowed. The Appeal was restored to the Tribunal for fresh consideration in accordance with the law.

6. The Court concluded by partly allowing the Appeal and issuing specific orders to quash the impugned order, allow the application, keep all contentions open, and restore the Appeal to the Tribunal for a fresh hearing.

This detailed analysis of the judgment highlights the key legal principles and the Court's reasoning behind its decision regarding the issues raised in the case.