2018 (12) TMI 248 - HC - Central Excise

Restoration of appeal - appeal was dismissed for want of COD clearance - Held that - An obligation was placed on every Court and Tribunal where such a dispute is raised, to demand a clearance from the COD and in case it has not been so pleaded and in the absence of the clearance, not to proceed with the case - Later on, a clarification was also issued on 7.1.1994 which abundantly clear that requirement of obtaining clearance from COD was not treated as bar to the lodgment of an appeal or petition either by the Union of India or Public Sector Undertakings before any Court or Tribunal so as to save limitation. The only consequence of not obtaining clearance from COD was that the proceedings were not to be proceeded with. That means a proceeding was required to be kept as it is without progress till the clearance was given. There was nothing in the aforesaid two directions to empower the Tribunal to dismiss the appeal for want of COD clearance - it was not at all permissible by the Tribunal to dismiss appellant s appeal filed in year 2006 against the order passed by the jurisdictional Commissioner only for want of clearance from COD. Even when there was no COD clearance granted, the Tribunal had no jurisdiction and authority under the law to dismiss the appeal for want of COD and then to require the parties to apply restoration upon obtaining clearance. The only permissible course of action was to keep the appeals pending without further proceedings, awaiting submission of COD clearance which was required to be granted once the attempts to resolve the dispute failed. The learned Tribunal has dismissed the applications for restoration on the ground that the applications for restoration were filed after a long delay. The Tribunal was not correct in doing so. Present is not a case where the appeals were dismissed for want of prosecution or for want of mandatory pre-deposit. It is also not a case where the appellant did not file any appeal and the appeal itself was filed after a long delay. Once it is held that the Tribunal had no jurisdiction to dismiss the appeal on the ground of want of clearance from COD, it was the duty of the Tribunal to restore the appeals to undo the injustice caused to the appellant who is entitled to hearing of appeal on its own merits, having suffered demand of crores of rupees as excise duty in denial of its claim of cenvat credit - appeals filed by the appellant before the Tribunal shall stand restored to its original number for being heard on its on merits and in accordance with law - appeal allowed.

Issues Involved:
1. Levy of excise duty along with interest and penalty.
2. Denial of benefit of CENVAT credit.
3. Requirement of clearance from the Committee on Disputes (COD).
4. Dismissal of appeals by the Tribunal for want of COD clearance.
5. Restoration of appeals post the Supreme Court's judgment in Electronics Corporation of India Ltd. vs. Union of India.
6. Delay in filing restoration applications.

Issue-wise Detailed Analysis:

1. Levy of Excise Duty along with Interest and Penalty:
The appellant, SAIL-BSP, a Government of India enterprise, was engaged in manufacturing iron and steel products and availed credit on duty paid on inputs and capital goods used for manufacturing the final product. The Revenue initiated recovery proceedings, issuing demand notices, which led to the passing of original orders by the jurisdictional Commissioner. The appellant filed three different appeals for three different assessment periods.

2. Denial of Benefit of CENVAT Credit:
The appeals were filed because the appellant was denied the benefit of CENVAT credit. This denial was challenged, but the appeals were dismissed by the Tribunal due to the absence of COD clearance, as required by guidelines issued by the Supreme Court in the case of Oil & Natural Gas Commission vs. Collector of Central Excise.

3. Requirement of Clearance from the Committee on Disputes (COD):
The requirement for COD clearance was established by the Supreme Court to ensure that disputes between Government departments and Public Sector Undertakings (PSUs) were resolved through a high-level committee before being litigated in court. This requirement was in place to avoid unnecessary litigation and wastage of public resources.

4. Dismissal of Appeals by the Tribunal for Want of COD Clearance:
The Tribunal dismissed the appellant's appeals due to the lack of COD clearance, with the liberty to apply for restoration upon obtaining the necessary clearance. This dismissal was based on the Supreme Court's guidelines, which mandated COD clearance before proceeding with litigation.

5. Restoration of Appeals Post the Supreme Court's Judgment in Electronics Corporation of India Ltd. vs. Union of India:
The Supreme Court, in Electronics Corporation of India Ltd. vs. Union of India, recalled its earlier directions regarding the necessity of COD clearance. This judgment made it unnecessary for aggrieved parties to obtain COD clearance before availing statutory remedies of appeal. Consequently, the appellant filed restoration applications for the dismissed appeals. The Tribunal, however, rejected these restoration applications, leading to the current appeals.

6. Delay in Filing Restoration Applications:
The Tribunal dismissed the restoration applications on the grounds of delay. The appellant argued that the delay was due to the initial requirement of COD clearance, which was later nullified by the Supreme Court's judgment. The appellant contended that the Tribunal's approach was erroneous in law, as the dismissal of the appeals was not for want of prosecution or mandatory pre-deposit but solely for the lack of COD clearance.

Court's Analysis and Conclusion:
The Court analyzed the legal position regarding COD clearance and concluded that the Tribunal had no jurisdiction to dismiss the appeals solely for want of COD clearance. The Supreme Court's directions in ONGC's case did not empower the Tribunal to dismiss appeals; the only permissible course was to keep the appeals pending until COD clearance was obtained. The Court held that the Tribunal's dismissal of the appeals was outside the scope of its jurisdiction and resulted in a miscarriage of justice.

The Court emphasized that the Tribunal should have restored the appeals to their original numbers and decided them on their merits, given the Supreme Court's subsequent judgment in Electronics Corporation of India Ltd. The Court found that the Tribunal's dismissal of the restoration applications on the grounds of delay was incorrect and led to injustice.

Judgment:
The Court allowed the appeals, set aside the Tribunal's impugned order, and directed that the appeals filed by the appellant before the Tribunal be restored to their original numbers for hearing on their merits and in accordance with the law.

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