2023 (12) TMI 173 - HC - Central Excise

Restoration of appeal - non payment of necessary pre-deposit under the provisions of Section 35 of the Central Excise Act, 1954 - HELD THAT - The applicants-Directors themselves were filing the applications for restoration of the appeals which had already been dismissed by the Tribunal after noticing the non-compliance of the order not only of the Tribunal but also the order of this Court dated 10.10.2013 (Annexure A-6) whereby only Rs. 6 crores was to be deposited. As noticed above, the Apex Court had reduced the amount further to Rs. 4 crores and the appeal was only to be restored subject to the said deposits. The said amounts had never been deposited. The Directors could not hide behind the legal shield that the company had been directed to pay the amount and they were the persons who were agitating before this Court and the Apex Court that the company was functioning through them. The Tribunal in such circumstances has over-stepped its jurisdiction by allowing the application for condonation of delay and restoration of the appeals and thereafter proceeded ahead with the matter for the reasons best known to it. We do not wish to comment on the orders passed by the Tribunal in the present facts and circumstances. The question of law must be answered in favour of the Revenue that the Tribunal had no jurisdiction and would have become functus-officio once the amounts had never been deposited inspite of the directions in the SLPs dated 21.08.2015. The applications filed at the belated stage by the Directors themselves in the year 2018 for condoning the delay on 10.08.2018 was apparently time-barred and there was no sufficient cause to condone the delay also which had been done by the Tribunal. Appeal allowed.

Summary

Issues:
The judgment involves the consideration of whether the Customs, Excise and Service Tax Appellate Tribunal (CESAT) erred in restoring the appeal of the respondent without payment of necessary pre-deposit, despite previous dismissal for non-compliance with pre-deposit requirements.

Details:
1. The appeals were directed against orders passed by CESAT, restoring the appeals of the Director of the Company without the required pre-deposit, which was later waived off and the appeals were allowed on merits.

2. The main question of law revolved around whether CESAT erred in restoring the appeal without the necessary pre-deposit, considering the history of exemption from pre-deposit, subsequent non-compliance, and dismissal of the appeal.

3. A demand notice was issued to M/s Pelican Tobacco Co. Ltd., imposing penalties and confirming recovery of Central Excise duties. The order also included the imposition of penalties on the company and its directors, including recovery of interest and specific penalties on individuals.

4. The Directors, along with the company, filed appeals and stay applications, leading to various orders regarding the deposit of duty components and subsequent dismissal of appeals due to non-compliance with deposit requirements.

5. Despite subsequent attempts to reduce the deposit amount and restore the appeals, the required amounts were never deposited, leading to the dismissal of the appeals and rejection of review petitions.

6. Applications for restoration of appeals were filed before CESAT, asserting no specific order against the Directors and seeking restoration based on misconceived grounds.

7. CESAT, in an order dated 24.10.2018, recalled the earlier dismissal of appeals, citing the company's responsibility for the pre-deposit, which was deemed unjustified based on the facts on record.

8. The Tribunal's decision to allow the restoration and subsequent consideration of the case on merits was challenged, highlighting the Directors' previous knowledge of the pre-deposit requirements and dismissal of their appeals.

9. The Directors' repeated attempts for restoration, despite non-compliance with deposit orders, were seen as an attempt to misuse legal processes, leading to the Tribunal overstepping its jurisdiction.

10. The judgment ultimately favored the Revenue, concluding that the Tribunal should have become functus-officio once the required deposits were not made, and the Directors' belated applications for restoration lacked sufficient cause for condonation of delay.

11. The appeals were allowed in favor of the Revenue, without imposing costs on the respondents due to their inconsistent legal representation throughout the proceedings.