2021 (1) TMI 1323 - HC - Central Excise

Appeal dismissed solely on the ground of not being able to keep alive the Bank Guarantee - a long period of almost 11 years had already elapsed, from the date of the Hon ble High Court s Order, for no fault of the appellant - HELD THAT - The appellant had kept the bank guarantee alive from the year 2010 to 2016. However, the appeal was not taken up for disposal in terms of the directions issued by the learned Writ Court and it is stated that the appeal was listed for haring after a period of almost 11 years. In the interregnum the financials of the appellant company had grossly dwindled and since there was an uncertainty as to when the appeal will be taken up for hearing, it appears that the appellant did not renew the bank guarantee beyond 2016. When the appeal was taken up after 11 years by the learned Tribunal, the same has been dismissed by the impugned order solely on the ground that the appellant did not comply with the order passed by the learned Writ Court directing furnishing of a bank guarantee and keep the same to be alive. To be noted that in the writ petition there were twin directions given by the learned Writ Court and the second of which was directing the learned Tribunal to dispose of the writ petition within a period of six months. This direction has not been complied with. The order passed by the learned Writ Court was in the nature of an interim order till the appeal is heard and disposed of so as to give a protection to the appellant from recovery of the balance amount of service tax. Therefore, the appeal ought to be decided on merits and in accordance with law and cannot be dismissed on the grounds stated by the learned Tribunal. The appeal is allowed and the order passed by the learned Tribunal is set aside and the appeal and the cross-appeal are restored to the file of the learned Tribunal to be heard and decided on merits and in accordance with law.

Summary

Issues:
Appeal challenging order of Central Excise and Service Tax Appellate Tribunal under Finance Act, 1984 and Central Excise Act, 1944.

Analysis:
The appellant filed an appeal challenging an order by the Commissioner of CGST and CX, Kolkata North Commissionerate, with the Tribunal in 2009. The Tribunal directed the appellant to pre-deposit Rs. 2 crores for stay of recovery during the appeal. The appellant filed a writ petition, directing to furnish a bank guarantee and dispose of the appeal within six months. The appellant maintained the bank guarantee till 2016, but the appeal was not heard for almost 11 years. When finally taken up, the Tribunal dismissed the appeal for not renewing the bank guarantee beyond 2016, despite the interim nature of the Writ Court's order. The Court held that the appeal should be decided on merits and law, not dismissed on procedural grounds. Thus, the appeal was allowed, setting aside the Tribunal's order, and restoring the appeal for a fresh hearing on merits.

This judgment involves the interpretation of orders passed by the Tribunal and the Writ Court, focusing on the compliance with directions regarding the bank guarantee and timely disposal of the appeal. The Court emphasized that the purpose of the interim order was to protect the appellant from recovery during the appeal process. The failure to comply with the directions within the specified time frame did not warrant dismissal of the appeal, as it should be decided based on merits and legal considerations. The Court highlighted the importance of upholding procedural fairness while ensuring substantive justice in adjudicating the appeal.

The key issue addressed in this judgment is the proper interpretation and application of the directions issued by the Writ Court regarding the bank guarantee and the disposal of the appeal within a specified time frame. The Court emphasized that the primary objective of the directions was to provide interim relief to the appellant and ensure a fair hearing on the merits of the case. The failure to renew the bank guarantee beyond 2016, due to the prolonged delay in hearing the appeal, should not have led to the dismissal of the appeal. The Court underscored the need to balance procedural requirements with the fundamental principles of justice to prevent unjust outcomes based solely on technicalities.

In conclusion, the Court's decision to allow the appeal and set aside the Tribunal's order reflects a commitment to ensuring a fair and just resolution based on the merits of the case. By emphasizing the importance of considering substantive legal issues over procedural lapses, the judgment upholds the principles of justice and fairness in the adjudication of appeals challenging administrative decisions under the relevant statutes.