2015 (9) TMI 626 - HC - Central Excise

Power of Tribunal to set aside ex parte order - whether the Customs Excise & Service Tax Appellate Tribunal, is empowered while exercising power under the Central Excise Act, 1944 to set aside an ex-parte order - Held that - A perusal of order allowing the appeal against the appellant reveals that counsel for the appellant was not present. The Tribunal instead of passing an order initiating ex-parte proceedings, chose to forthwith decide the appeal and set aside the order passed in favour of the appellant. While appreciating the endeavour of the Tribunal to dispose of appeals expeditiously, it needs to be emphasised that interest of justice should not be jeopardised and that Courts and Tribunals are respected for their ability to adjudicate matters on merits. A perusal of the application for recalling the ex-parte order reveals that adequate explanation was furnished for failure of the counsel to put in appearance. This apart, negligence on the part of a counsel should not visit a party with consequences that involve monetary liability. We are, therefore, satisfied that the impugned orders are contrary to law. - Decided in favour of assessee.

Summary

Issues:
1. Whether the Tribunal is empowered to set aside an ex-parte order under the Central Excise Act, 1944?

Analysis:
The judgment pertains to two appeals, CEA-72-2014 and CEA-73-2014, concerning the same parties and a common legal question. The central issue revolves around the power of the Customs Excise & Service Tax Appellate Tribunal (the 'Tribunal') to set aside an ex-parte order under the Central Excise Act, 1944. The appellant had received a show cause notice related to cenvat credit, leading to subsequent orders by the assessing authority and the Commissioner (Appeals). The Tribunal then issued an ex-parte order, which the appellant sought to recall. The Tribunal dismissed the application, considering it a review request rather than a recall. The appellant argued that the Tribunal misunderstood the nature of the application, asserting that the power to recall an ex-parte order is distinct from the power of review. The respondent, however, contended that the Tribunal's decision was appropriate as an ex-parte order essentially involves a review process.

The High Court analyzed the Tribunal's actions and the parties' arguments. It emphasized that the power to recall an ex-parte order is inherent to ensure justice, distinct from the power of review. The Court noted that the Tribunal misinterpreted its authority, treating the recall application as a review request. It underscored that the power to recall an ex-parte order aims to correct errors and uphold justice, not to review the merits of a case. The Court highlighted that the Tribunal should prioritize justice over expedited disposal of cases, ensuring parties' rights are protected. The Court found that the appellant had provided a valid explanation for the absence of their counsel, indicating negligence on the counsel's part should not unfairly impact the party. Consequently, the Court allowed the appeals, set aside the Tribunal's orders, and remitted the matter for fresh adjudication by the Tribunal within a specified timeframe after the parties' appearance.

In conclusion, the judgment clarifies the distinction between the power to recall an ex-parte order and the power of review held by the Tribunal under the Central Excise Act, 1944. It underscores the importance of upholding justice and ensuring parties' rights are safeguarded even in cases of procedural errors. The decision emphasizes that the Tribunal's authority to recall an ex-parte order is crucial to rectify injustices and maintain fairness in legal proceedings.