2018 (10) TMI 23 - HC - Central Excise

Restoration of appeal - Appeal was dismissed for non-appearance - both the Official Liquidator as well as the appellant herein were not represented by counsel - company under winding up proceedings - Whether the impugned order of the Tribunal is bad in law for departing from the following principles (i) by virtue of Article 141 of The Constitution of India, the issue must be decided strictly in accordance with law laid down by the Supreme Court, it being the last word on the subject? and (ii) if, there is no decision of the Supreme Court on the issue, then the effort must be to decide the issue by any decision of the High Court of our country, if holding the field? Held that - The Tribunal had not adverted to any of the contentions raised by the appellant in the application for restoration dated 09.10.2017. In the said application, the appellant pointed out certain reasons, which, according to him, were sufficient cause for not being able to appear before the Tribunal on 02.8.2017. Apart from that, he relied upon the decisions of the Hon ble Supreme Court and of the Gujarat High Court to state that the appeal could not have been dismissed for default and should have been decided on merits in the light of the fact that Rule 20 of the 1982 Rules has been held to be ultra vires. The appellant also pointed out that the Tribunal has sufficient power to restore the appeal in terms of Rule 41 of the 1982 Rules. None of these grounds has been dealt with by the Tribunal. Rather, the Tribunal has not even referred to the same in the impugned order. In the decision in Viral Laminates (P) Ltd. 1998 (4) TMI 136 - HIGH COURT OF GUJARAT AT AHMEDABAD , the challenge was to Rule 20 of the Customs, Excise and Gold (Control) Appellate Tribunal Rules, 1982, which enables the Tribunal to dismiss the appeal for default of appearance, as being ultra vires the provisions of Section 35C(1) of the Act and Section 129B(1) of the Customs Act, 1962. The Division Bench of the Gujarat High Court held that having regard to the scheme of the Act as well as the Customs Act, 1962, there was no manner of doubt that the appeal filed before the Appellate Tribunal has got to be disposed of on merits and not for default of appearance of the appellant. It is not clear as to whether notice was served in the office of the Official Liquidator nor there was any proof of service produced. In any event, the impugned order, being an order without jurisdiction deserves to be set aside. The impugned order dated 12.2.2018 is set aside and the matter is remanded to the Tribunal for a fresh consideration with a direction to restore the appeal filed by the appellant - appeal restored.

Summary

Issues:
Appeal against order of Customs, Excise and Service Tax Appellate Tribunal for restoration of appeal dismissed for default - Whether Tribunal erred in dismissing appeal without considering grounds raised - Whether Tribunal had jurisdiction to dismiss appeal for non-appearance - Whether Tribunal should have restored appeal for fresh consideration.

Analysis:
1. The appeal was filed by the Director of a private limited company under liquidation against the order of the Customs, Excise and Service Tax Appellate Tribunal, which dismissed the application for restoration of the appeal filed by the appellant due to default in appearance.

2. The substantial question of law admitted for consideration was whether the Tribunal's order was bad in law for not strictly following legal principles set by the Supreme Court and High Courts when deciding the issue.

3. The original order confirmed a demand of central excise duty against the company under liquidation along with penalties, including a penalty imposed on the appellant as the Commercial Director of the company.

4. The Tribunal had passed interim orders between 2014 and 2017, including directing the Official Liquidator to file a statement of affairs. The appeals were dismissed for default when both the Official Liquidator and the appellant were not represented during a hearing.

5. The appellant filed an application for restoration citing ill-health and genuine reasons for non-appearance, emphasizing the Tribunal's power to restore appeals under relevant rules.

6. The Tribunal, however, dismissed the application stating lack of diligence on the appellant's part and no representation for the Official Liquidator or the co-noticee.

7. The High Court noted that the Tribunal did not consider the appellant's contentions in the restoration application, which included legal precedents supporting restoration of appeals dismissed for default.

8. Referring to the decisions in Viral Laminates (P) Ltd. and Balaji Steel Re-Rolling Mills, the High Court emphasized that appeals should be decided on merits and not dismissed for non-appearance, especially when sufficient cause is shown.

9. The High Court found the Tribunal's order unsustainable in law as it failed to address the grounds raised by the appellant and set aside the impugned order, remanding the matter to the Tribunal for fresh consideration.

10. The High Court directed restoration of both the appellant's appeal and the company's appeal under liquidation, emphasizing the importance of hearing substantial appeals and ensuring notice to the Official Liquidator for the company.

11. The judgments referred to highlighted the necessity of deciding appeals on merits and not dismissing them for non-appearance, especially in cases where genuine reasons are provided, as in the appellant's situation.