2021 (3) TMI 568 - HC - Central Excise

Rejection of restoration application - recall of order would amount to review - rejection on the ground that recall of the earlier order would result in review of its order and that the Tribunal is not vested with such power under the statute - HELD THAT - It appears from the record that the appeal in question was listed for hearing for the first time before the learned Tribunal on 08.09.2017. The hearing was, thereafter, adjourned to 13.10.2017. In the meantime, the petitioner made an application before the learned Tribunal on 09.10.2017 requesting to postpone the hearing of the appeal to 03.11.2017 on the ground that the petitioner wanted to rely upon certain documents. However, it appears that no orders were passed by the learned Tribunal on the said application dated 09.10.2017 preferred by the petitioner, much less any reasons rejecting the said application. In other words, the application dated 09.10.2017 preferred by the petitioner has remained undecided. The petitioner had a sufficient cause for seeking postponement of the hearing from 13.10.2017. In our opinion, the said request for adjournment made by the petitioner was reasonable. But, the fact remains that the learned Tribunal has not passed any order either allowing or rejecting the application seeking adjournment and has also proceeded to decide the appeal ex-parte on merits while keeping its hand-off from the adjournment application. The Code of Civil Procedure does recognize the right of the appellant-petitioner to get his appeal decided on merits. In the present case, it is an admitted fact that the appeal preferred by the petitioner has been decided ex-parte and an application seeking adjournment of the hearing of appeal had been filed by the petitioner much prior to the next date of listing of the appeal, which has remained undecided. By filing the restoration application, the petitioner had sought for recall of the order passed in appeal by contending that all facts relevant for the proper adjudication of the case had not been placed on record of the appeal. However, the said application also came to be rejected by the learned Tribunal by holding that the issue involved has been decided on merits and that the recall of the order and its substitution with a different view, would result into review of its own order, which power is not vested with the Tribunal under the statute. In the present case, on the date so fixed for hearing, i.e. on 13.10.2017, the learned Tribunal ought not to have decided the appeal itself on merits in the absence of the petitioner or its representative, particularly, when the petitioner had already submitted an application seeking adjournment much prior to the date so fixed for hearing disclosing the cause for remaining absent - the impugned orders passed by the learned Tribunal could not be sustained in the eyes of law and they deserve to be quashed and set aside. Petition allowed.

Summary

Issues Involved:
1. Validity of the orders passed by the Customs, Excise, and Service Tax Appellate Tribunal.
2. Alleged violation of principles of natural justice by the Tribunal.
3. Applicability of the limitation period under Section 11B of the Central Excise Act, 1944.
4. Tribunal's power to recall its own orders.

Detailed Analysis:

1. Validity of the Orders Passed by the Tribunal:
The petitioner sought the issuance of a Writ of Mandamus to quash the orders passed by the Tribunal, specifically Final Order No. 13327/2017 and Order No. M/10366/2018, on grounds that they were unjust, improper, and violative of natural justice principles. The petitioner argued that the Tribunal erred in rejecting the application for restoration by not appreciating the facts and submissions, and wrongly considering that recalling the order would amount to a review of its earlier order.

2. Alleged Violation of Principles of Natural Justice by the Tribunal:
The petitioner contended that the Tribunal's decision to proceed ex-parte without considering the adjournment application dated 09.10.2017 violated the principles of natural justice. The petitioner had requested a postponement to rely on certain documents, but the Tribunal neither passed any order on this application nor acknowledged it, leading to an ex-parte decision on 13.10.2017. The court found this approach erroneous and contrary to the settled principle of law, emphasizing that the Tribunal should have considered the adjournment request before deciding the appeal on merits.

3. Applicability of the Limitation Period Under Section 11B of the Central Excise Act, 1944:
The petitioner argued that the amount paid during the investigation was a "pre-deposit" under Section 35F of the Act, not "duty," and thus not subject to the limitation period under Section 11B. The Tribunal, however, rejected the refund claim as time-barred. The court noted that the Tribunal had misinterpreted the provisions, referencing the Apex Court's decision in Mafatlal Industries v. Union of India, which clarified that amounts deposited during adjudication or investigation are considered deposits under protest, not duty, and thus not subject to unjust enrichment principles.

4. Tribunal's Power to Recall its Own Orders:
The Tribunal rejected the restoration application on the grounds that recalling the order would result in a review, which it claimed it lacked the power to do. The court disagreed, citing the Supreme Court's decision in J.K. Synthetics Ltd. v. Collector of Central Excise, which affirmed that tribunals have the inherent power to recall ex-parte orders if sufficient cause for non-appearance is shown. The court emphasized that the Tribunal should have considered whether the petitioner had a sufficient cause for seeking adjournment and, if so, should have set aside the ex-parte order and restored the appeal for fresh adjudication.

Conclusion:
The court quashed and set aside the impugned orders passed by the Tribunal, restored the Central Excise Appeal No. 11173 of 2014 to the Tribunal's file, and directed the Tribunal to adhere to the principles of natural justice and decide the appeal on merits expeditiously. The petition was allowed, and the request for a stay of the order was rejected.