M/S KUNDLI SPONGE IRON LIMITED vs. THE UNION OF INIDA

THE UNION OF INIDA, REPRESENTED BY ITS SECRETARY MINISTRY OF FINANCE NORTH BLOCK, NEW DELHI

THE MINISTRY OF FINANCE GOVERNMENT OF INDIA REP BY ITS SECRETARY MF (DR) NEW DELHI-110011.

THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX C R BUILDINGS, NO.71, CLUB ROAD, BELGAUM-590005 ... RESPONDENTS (BY SRI. S N RAJENDRA, CGC FOR R1-R3)

On the other hand the learned AR submitted that vide Order dated 02.02.2016, the CESTAT after considering the submissions in the memo of appeal and also going through the impugned order came to the conclusion that there is no prima facie case in favour of the appellants to allow the stay petition unconditionally. The Bench accordingly directed the appellant to deposit 50% of the duty confirmed against them and all other applicants were directed to deposit 50% of the penalty imposed upon them. The appellants were to send the compliance report before 13.04.2016. Perusal of the records shows that they have not complied with the

The learned counsel explaining the facts and circumstances leading to the appeal before the CESTAT, submits that the original order dated 15.04.2013 is preceded by a show-cause notice to the petitioner/ its

The petitioner therefore, filed the appeal before the CESTAT. One of the chief grounds urged in the appeal is that the third respondent ought to have extended an opportunity to the petitioner to cross- examine the officers who allegedly conducted search and seizure proceedings on the aforesaid two dates, and the third respondent’s failure to extend such

The petitioner bona fide engaged a learned counsel to prosecute the appeal. The appeal was filed on 15.07.2013. The appeal was listed before the CESTAT on 02.02.2016 for consideration of the interim application for stay of proceedings. The petitioner bona fide believed that the learned counsel on record would appear and argue in support of the application. However, none appeared on behalf of the petitioner and consequentially, the CESTAT passed orders on 02.02.2016 directing the petitioner and its directors to deposit 50% of the demand and penalty respectively within a period of eight weeks with a further direction that the compliance must be reported on 13.04.2016.

The petitioner on being informed about the interim order dated 02.02.2016, requested its learned counsel to make necessary application. Accordingly, an

The learned counsel for the petitioner canvasses two-fold submissions in support of the petition. Firstly, the CESTAT ought to have extended another opportunity for the petitioner to make submissions in support of the application filed for recall

The learned counsel submits that the provisions of Section 129-B of the Customs Act enjoins the CESTAT to decide on appeal only on merits for either modification or confirmation or annulling of the impugned order, or for a remand. Though Rule 20 of the CESTAT (Procedure) Rules 1982 stipulates that an appeal could be dismissed for default, the statutory provisions of Section 129-B of the Customs Act would prevail over the aforesaid rule. As such, the CESTAT could not have dismissed the petitioner’s appeal. The learned counsel in support of this proposition relies

The learned counsel for the respondents submits that the petitioner is not bona fide in relying upon the counsel’s absence for dismissal of the appeal on merits as well as rejection of the application for recall of the order dated 02.02.2016. The authorities initiated proceedings against the petitioner, and its Directors, way back in the year 2007. The original proceedings before the third respondent were commenced in the year 2011, and such proceedings were pending over a period of two years. The petitioner was not diligent, and the petitioner’s lack of diligence is also seen in the manner in which the proceedings are conducted before the CESTAT. The CESTAT’s dismissal of the petitioner’s application and the appeal would be justified. However, the learned counsel is not in a position to controvert

The Hon’ble Supreme Court in the aforesaid decision referring to its earlier decision in the Commissioner of Income Tax, Vs. S. Chenniappa Mudaliar, Madurai2 has declared as follows:-

In the present case, the appeal is dismissed on the ground that the petitioner did not deposit 50% of the demand in terms of the order dated 02.02.2016. It must also be mentioned that the directors of the petitioner’s company also did not deposit 50% of the penalty imposed on them, and further it must also be mentioned that there is no dispute that none appeared for the petitioner on 18.10.2016 when the appeal was listed for orders on an application filed for recall of the order dated 02.02.2016. The CESTAT’s order is not an order of modification or confirmation or annulling, or an order of remanding. The CESTAT’s order is not in consonance with the provisions of section 129-B of the Customs Act, and would be impermissible in the light of the decision by the Hon’ble Supreme Court.

Therefore, the impugned orders will have to be set aside and the appeal restored for fresh disposal as contemplated under Section 129-B of the Customs Act leaving it open to the parties to urge their respective grounds before the CESTAT. Further, given the facts and circumstances of the case, it would also be just and reasonable to restore the petitioner’s application for recall of the interim order dated 02.02.2016. In the light of the submissions of the learned counsel for the parties that the dispute is pending adjudication for over 12 years, it would be appropriate to request the CESTAT to expedite final disposal of the appeal on merits. Hence, the following: ORDER a) The writ petition is partly allowed and the CESTAT’s impugned order of the dated 18.10.2016 in Appeal No. Nos.E/27220/2013-DB, E/27221/ 2013-DB, E/27222/2013-DB, E/27223/2013-DB,