2019 (5) TMI 1288 - HC - Central Excise

Was the CESTAT justified in declining to extend the benefit of the order passed by the Settlement Commission to the present Appellant? - HELD THAT - The Court is of the view that the mere fact that the Settlement Commission permitted the Department to proceed against the co-noticees in accordance with law did not mean that the co-noticees could not rely on the said order to argue, on the basis of the judgment of this Court in M/S. LESAG HBB (I) LTD. OTHER VERSUS COMMR. OF CENTRAL EXCISE DELHI OTHER 2016 (11) TMI 681 - DELHI HIGH COURT that the proceedings against them ought to have been dropped under the KVS scheme Was the CESTAT obliged to deal with the appeal on merits notwithstanding the preliminary objection raised by the Department on issue above? - HELD THAT - Once the CESTAT accepted the plea of the Department that the benefit of the order of the Settlement Commission should not be extended to the Appellant, the logical sequitur was that the appeal had to be then considered on merits. The Court fails to understand how the CESTAT could observe that nothing further remained to be decided in the appeals in view of the order of the Settlement Commission. Both the issues require reconsideration by the CESTAT - appeal allowed by way of remand.

Summary

Issues:
1. Delay in filing the appeal and re-filing the appeal.
2. Challenge to the final order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT).
3. Interpretation of the Settlement Commission's order and its applicability to co-noticees.
4. Consideration of the appeal on merits by the CESTAT.

Delay in Filing the Appeal:
The High Court allowed the exemption for the delay of 82 days in filing the appeal and 26 days in re-filing the appeal, subject to all just exceptions.

Challenge to CESTAT's Final Order:
The appeal challenged the final order of the CESTAT dated 5th June, 2018, which dismissed Customs Appeal Nos. C/361-363/2010 (SM) and the subsequent order dated 21st February, 2019, seeking recall of the earlier order. The Appellant, a Director of a company engaged in manufacturing and sale of edible oils, contested penalties imposed by the Commissioner of Central Excise, arguing for immunity based on the Settlement Commission's order. The CESTAT held that co-noticees, including the Appellant, could not claim immunity under the Settlement Commission's order meant for specific entities only. The appeals were dismissed, leading to subsequent applications for recall.

Interpretation of Settlement Commission's Order:
The Court analyzed whether the CESTAT was justified in denying the benefit of the Settlement Commission's order to the Appellant. It found that the CESTAT did not discuss the significance of relevant judgments, indicating a need for reconsideration. The Court emphasized that the CESTAT should have considered the appeal on merits even after addressing the preliminary objection raised by the Department regarding the Settlement Commission's order.

Consideration of Appeal on Merits:
The Court observed that the CESTAT's failure to discuss the merits of the appeal in the order dated 5th June, 2018, led to confusion. It concluded that the CESTAT should have proceeded to consider the appeal on its merits after addressing the preliminary objection. Consequently, the Court set aside the CESTAT's orders and restored the appeal for fresh consideration, emphasizing an independent decision on merits without influence from previous orders.

In conclusion, the High Court set aside the CESTAT's orders, directing a fresh consideration of the appeal without being influenced by previous decisions. The Court highlighted the need for a thorough review of the Settlement Commission's order and emphasized the importance of considering appeals on their merits, independent of preliminary objections.