2015 (7) TMI 385 - HC - Central Excise

Failure to comply with the order of pre-deposit - tribunal dismissed the appeal - Whether the Tribunal was justified in law in passing its order dated 14.10.2013 decline the appeals on merits for the reason the action stated in para 3 of its s order - Held that - The tribunal has to be specifically vested with the power to dismiss the appeal for want of prosecution. We are inclined to apply the law laid down by the Hon ble Supreme Court of India 2014 (11) TMI 531 - SUPREME COURT to the present case as well. However, we find that no litigant much less placed on par with the appellant before us has the absolute right to insist on the appeal being heard even when he does not comply with the conditions imposed on him while granting him discretionary and equitable relief of interim stay of recovery of taxes. The conditions that have been imposed by the tribunal while granting such a discretionary and equitable relief have never been questioned by the appellant and rather he has accepted the same. He therefore, cannot be permitted to wriggle out of the same and by relying on the present state of law as emerging from the judgment of the Hon ble Supreme Court of India. The consequences of a breach of such a conditional order was also not an issue before the Hon ble Supreme Court in the above judgment. The law laid down in the above decision cannot be stretched and applied to a situation where the conditional order is not complied with and still the appeal must be decided on merits. That was a case where the appellant and for no fault of his, was visited with a dismissal of his appeal for want of prosecution. He lost a valuable right of appeal and adjudication of the same on merits. Such is not the case before us. The appellant approached the tribunal on two occasions. Prior thereto, he approached the Commissioner (Appeals) and applied for discretionary and equitable reliefs. There was a conditional stay. He did not comply with that condition as well. Rather he did not comply with the conditions imposed by the tribunal as well. - Decided against assessee.

Issues Involved:
1. Whether the Tribunal was justified in dismissing the appeal for want of prosecution.
2. Whether the Tribunal should have heard the appeal on merits despite non-compliance with the conditions imposed during the grant of stay.
3. Application of the Supreme Court's judgment in BALAJI STEEL REROLLING MILLS VS. COMMISSIONER OF C.EXCISE AND CUSTOMS.
4. Restoration of appeal and compliance with conditions imposed by the Tribunal.

Detailed Analysis:

Issue 1: Dismissal for Want of Prosecution
The primary issue was whether the Tribunal was justified in dismissing the appeal for want of prosecution. The appellant argued that the Tribunal had no power to dismiss a statutory appeal for want of prosecution, emphasizing that the Tribunal was obliged to hear the appeal on merits regardless of the appellant's failure to comply with the conditions imposed during the grant of stay. The appellant relied on the Supreme Court's judgment in BALAJI STEEL REROLLING MILLS, which held that the Tribunal does not have the power to dismiss an appeal for default or want of prosecution if the appellant is not present when the appeal is taken up for hearing.

Issue 2: Hearing on Merits Despite Non-compliance
The appellant contended that even though the appellant did not comply with the conditions imposed by the Tribunal while granting stay, the Tribunal should have heard the appeal on merits. The appellant's counsel argued that the right to have the appeal heard on merits is vested in the assessee. The Tribunal had dismissed the appeal for non-compliance with the conditions imposed during the grant of stay and for non-prosecution.

Issue 3: Application of Supreme Court Judgment
The Supreme Court's judgment in BALAJI STEEL REROLLING MILLS was pivotal. The Supreme Court had analyzed Section 35C of the Central Excise Act, 1944, which mandates that the Tribunal must pass orders on the appeal confirming, modifying, or annulling the decision or order appealed against and does not grant the Tribunal the power to dismiss the appeal for want of prosecution. The Supreme Court held that the Tribunal must decide the appeal on merits even if the appellant or its counsel is not present when the appeal is taken up for hearing.

Issue 4: Restoration of Appeal and Compliance with Conditions
The appellant had applied for the restoration of the appeal, invoking the inherent powers of the Tribunal. The Tribunal, however, observed that the appellant had neither complied with the conditions imposed while granting stay nor appeared and argued the appeal on earlier occasions. The Tribunal dismissed the restoration application, stating it was not a fit case for exercising discretionary powers. The High Court, while agreeing with the Supreme Court's judgment, emphasized that the appellant must comply with the conditions imposed by the Tribunal while granting interim relief. The High Court ordered the restoration of the appeal on the condition that the appellant deposits Rs. 7,00,000 within two months and produces proof thereof. Failure to comply would result in the dismissal of the appeal standing.

Conclusion:
The High Court concluded that while the Tribunal must hear the appeal on merits as per the Supreme Court's judgment, the appellant must comply with the conditions imposed during the grant of stay. The appeal was restored on the condition of depositing Rs. 7,00,000 within two months, failing which the dismissal of the appeal would stand. The High Court did not express any opinion on the merits of the appeals and made no order as to costs.

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