1986 (4) TMI 178 - AT - Central Excise

Issues Involved:
1. Maintainability of the appeal under Section 35B of the Central Excises and Salt Act.
2. Classification of items "bolts and nuts" under the Central Excise Tariff.
3. Time-bar on the demand for duty.
4. Financial position of the applicants and the stay application.

Detailed Analysis:

1. Maintainability of the Appeal under Section 35B:

The primary issue was whether an appeal lies to the Tribunal under Section 35B against an order passed by the Collector (Appeals) under Section 35E(4) of the Central Excises and Salt Act. The Tribunal noted that Section 35B empowers it to hear appeals against orders passed by the Collector (Appeals) under Section 35A. However, in this case, the order by the Collector (Appeals) was pursuant to an application under Section 35E(4), which is to be heard "as if such application were an appeal made against the decision or order of the adjudicating authority."

The Tribunal concluded that the legal fiction created by Section 35E(4) extends beyond the disposal of the application by the Collector (Appeals) and includes further appeals to the Tribunal. This interpretation was supported by judicial precedents emphasizing that all stages of a legal proceeding, including appeals, are connected by intrinsic unity and should be regarded as one legal proceeding. The Tribunal also noted that denying the right of appeal would create an anomalous situation where orders under Section 35E would be final, unlike other orders under Chapter VIA, which allow for further appeals.

2. Classification of Items "Bolts and Nuts":

The Deputy Collector initially classified four items under Item 68 C.E.T. and one item, "stand stud," under T.I.52, with the demand for duty on the latter being time-barred. The Collector (Appeals) later reclassified the four items under T.I.52, overturning the Deputy Collector's order. The applicants contested this reclassification and sought relief from the Tribunal.

3. Time-bar on the Demand for Duty:

The applicants argued that the demand for duty on all items was time-barred, similar to the "stand stud" item. The Deputy Collector had held the demand for the "stand stud" item to be time-barred but did not make a specific observation regarding the time-bar for the other four items. The Tribunal noted that this claim required verification and was not evident from the record.

4. Financial Position of the Applicants and the Stay Application:

The applicants filed a stay application against the demand for Rs. 22,123.59, citing their financial position. They presented their audit report showing a gross profit of Rs. 14 lakhs and a net profit of Rs. 1.25 lakhs, with an accumulated loss of Rs. 75,000/-. The respondent argued that the applicants had a sales turnover of over Rs. 1 crore and sufficient current assets, including a cash and bank balance of Rs. 1.32 lakhs, indicating their ability to deposit the demanded amount.

The Tribunal found merit in the respondent's submissions, noting that the applicants were financially capable of depositing the amount. Consequently, the stay application was rejected, and the applicants were directed to deposit the amount within six weeks, failing which the appeal would be liable for rejection under Section 35F.

Separate Judgment by Syiem, Member:

Syiem, Member, dissented from the majority view, arguing that the right of appeal must be explicitly provided by law. He emphasized that the words in Section 35E(4) refer to the application being heard as an appeal, not that the order passed under Section 35E is itself appealable. He noted that Section 35B exhaustively lists the decisions/orders that can be appealed to the Tribunal, and an order under Section 35E is not included. Therefore, he concluded that the appeal should be rejected for lack of maintainability.

Conclusion:

The majority held that the appeal was maintainable under Section 35B, while the dissenting opinion argued otherwise. The stay application was rejected, and the applicants were directed to deposit the demanded amount within six weeks.

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