Madras High Court
M/S.Venus Rubbers vs The Addl. Commissioner Of Central ... on 25 July, 2014
Bench: R.Sudhakar, G.M.Akbar Ali
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 25.07.2014 CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKAR AND THE HONOURABLE MR. JUSTICE G.M.AKBAR ALI C.M.A. NO. 703 OF 2014 AND M.P. NO. 1 OF 2014 M/s.Venus Rubbers 331/1, Thandagam Road Kalappanaickenpalayam Pirivu Kanuvai Post Coimbatore 641 108. .. Appellant - Vs - The Addl. Commissioner of Central Excise 6/7 A.T.D. Street, Race Course Road Coimbatore 641 018. .. Respondent Appeal filed against the order dated 22.11.13, passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai, made in Final Order No.40596/2013. For Appellant : Mr. Mohd. Shafiq For Respondents : Mr. A.P.Srinivas JUDGMENT
(DELIVERED BY R.SUDHAKAR, J.) This civil miscellaneous appeal is filed against the order dated 22.11.13, passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai, made in Final Order No.40596/2013.
2. The following substantial questions of law arise for consideration in this civil miscellaneous appeal :-
i) Whether the Tribunal was right in dismissing the appeal filed by the assessee holding that the Commissioner (Appeals) has no power to review the order of pre-deposit.
ii) Whether the Tribunal was justified in dismissing the appeal filed holding that the Appellate Commissioner's order dismissing the appeal for non-compliance of the order in terms of Section 35-F without considering the merits of the assessee's case on the issue of pre-deposit is right.
3. The brief facts necessary for the disposal of this appeal are as under :-
The appellant/assessee is a manufacturer of articles of rubber, falling under the Central Excise Tariff Heading 40. In respect of the goods of the assessee, there was a service tax demand for the period May, 2006 to March, 2010 by the Assessing Authority. The Additional Commissioner of Central Excise, Coimbatore, issued a show cause notice dated 18.1.11 demanding a sum of Rs.32,09,148/= (Rupees Thirty Two Lakhs Nine Thousand One Hundred and Forty Eight only) for the above stated period under the heading of 'maintenance or repair services' in terms of proviso to Section 73 (1) of the Finance Act, 1994 together with interest and penalty. The adjudicating authority confirmed the demand of Rs.32,09,148/= (Rupees Thirty Two Lakhs Nine Thousand One Hundred and Forty Eight only) under Section 73 (2) of the Finance Act, 1994 r/w Proviso to Section 73 (1) of the said Act; interest under Section 75; penalty under Section 77 (1) (a) and further penalty of Rs.5,000/= (Rupees Five Thousand only) under Section 77 (2) of the said Act and penalty of Rs.32,09,148/= (Rupees Thirty Two Lakhs Nine Thousand One Hundred and Forty Eight only) under Section 78 of the Finance Act, 1994. Against the said order, the assessee filed an appeal before the Commissioner of Central Excise (Appeals) together with an application for waiver of pre-deposit. The Commissioner (Appeals), vide order dated 24.2.12 directed the appellant to deposit 50% of the amount demanded and furnish proof of the deposit on 28.3.12. The said order also contained a clause that failure to deposit the said amount would render the appeal liable for rejection for non-compliance as provided under Section 35-F of the Central Excise Act.
4. The appellant, vide letter dated 19.3.12, made a request to the Appellate Commissioner to reconsider the order dated 24.2.12. The Appellate Commissioner took up the said request letter dated 19.3.12 as a review application and proceeded to dispose of the appeal in the following manner, vide order dated 21.5.12 :-
(i) The assessee had no case on merits ;
(ii) There is no power to review/reconsider the order directing pre-deposit ; and
(iii) The assessee had not complied with the direction of the Appellate Commissioner in his order dated 24.2.12 and, therefore, the appeal is liable to be rejected summarily for non-compliance.
5. Aggrieved by the above said order of the Appellate Commissioner, the assessee approached the Appellate Tribunal contending that -
(i) The Appellate Commissioner ought to have reviewed the order of waiver of pre-deposit on prima facie case;
(ii) The appeal ought not have been disposed of on merits when review application is pending ; and
(iii) Rejection of the appeal for non-compliance is bad in view of the prima facie case was made out for waiver of pre-deposit.
6. The Tribunal addressed those issues held that the Commissioner (Appeals) ought not have recorded all analysis and conclusion on merits of the appeal and, therefore, to that extent, the order of the Commissioner (Appeals) is bad. However, insofar as the failure to pre-deposit is concerned, the Appellate Tribunal upheld the order holding that for non-compliance, the Commissioner (Appeals) was justified in dismissing the appeal. The Tribunal also held that the Commissioner (Appeals) did not have the power to review the order of pre-deposit. Aggrieved against the said order of the Tribunal, the appellant has preferred this appeal on the substantial questions of law as above.
7. Heard the learned counsel appearing for the appellant and the learned standing counsel appearing for the respondent.
8. On the first question of law raised by the appellant as to whether the Commissioner (Appeals) has the power to review his own order of pre-deposit, we find that there is no provision of law under the Central Excise Act, which gives power to the Commissioner (Appeals) to review his order. But such a power is available to the Tribunal under Section 35-C (2) of the Act to rectify any mistake apparent on the record. Therefore, we find that the Tribunal was justified in rejecting the plea of the appellant that the Commissioner (Appeals) ought to have reviewed the order. When there is no power under the statute, the Commissioner (Appeals) has no authority to entertain the application for review of the order. Accordingly, the first substantial question of law is answered against the assessee.
9. Insofar as the Tribunal dismissing the appeal holding that the Commissioner (Appeals) was justified in rejecting the appeal for non-compliance without endeavouring to look into the issue of prima facie case, balance of convenience, irreparable loss and financial hardship, we find that the very same Tribunal in M/s.GirnarTransformers Pvt. Ltd. - Vs CCE, Kanpur (2014-VIL-33-CESTAT-DEL-ST), has formulated certain principles with regard to the issue of waiver of pre-deposit and the scope and ambit of the power of the Appellate Commissioner vis-a-vis the Tribunal for considering waiver of pre-deposit.
10. In Commissioner of Central Excise, Guntur Vs Sri Chaitanya Educational Committee (2011 (22) STR 135 (AP)) the issue has been crystallized in the following manner :-
14. From the judicial decisions analyzed as above, the following principles would emerge which have to be kept in mind while considering the applications for stay or for dispensing with the requirement of pre-deposit under Section 35F of the Central Excise Act, or under Section 129E of the Customs Act, or other similar provisions.
(1) The applications for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand;
(2) Three aspects to be focused while dealing with the applications for dispensing of pre-deposit are : (a) prima facie case, (b) balance of convenience and (c) irreparable loss;
(3) Interim orders ought not to be granted merely because a prima facie case has been shown;
(4) The balance of convenience must be clearly in favour of making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the interest of public revenue;
(5) While dealing with the applications twin requirements of consideration i.e., consideration of undue hardship and imposition of conditions to safeguard the interests of revenue have to be kept in view;
(6) When the Tribunal decides to grant full or partial stay, it has to impose such conditions as may be necessary to safeguard the interests of the revenue. This is an imperative requirement; and (7) An appellate Tribunal, being a creature of the statute, cannot ignore the statutory guidance while exercising general powers or expressly conferred incidental powers.
11. The Tribunal has also considered the above decision in CCE, Guntur case (supra) in para 30 of its order in Girnar Transformer's case (supra) in the following manner :-
30. While no uniform, or a wholly coherent norm could be culled out from the several decisions adverted to (supra), we are able to identify the following principles from the precedents, to the extent relevant and material for the purposes of the issues arising in the present case. The following principles, in our considered view emerge :-
(a) While considering an application for waiver of pre-deposit, the appellate commissioner is required to avoid a mechanical and ritualistic approach. A waiver of pre-deposit application must be disposed of applying the principles set out in the judgments of the Allahabad High Court in ITC Vs Commissioner (Appeals) Meetur (2005 (184) ELT c47 (All.)) and the A.P. High Court in CCE, Guntur Vs Sri Chaitanya Educational Committee (2011 (22) STR 135 (A.P.)). A summary of the principles governing the exercise of discretion in this area is set out in paragraph 14 of the judgment of the A.P. High Court;
(b) The Commissioner (Appeals) has the power, authority and jurisdiction to entertain an application for rectification or modification of an order of pre-deposit/stay passed by that authority. While no power is specifically conferred on the Commissioner (Appeals) either under Sections 35 or 35A of the 1944, Act to review his own decision; and though the provisions of Section 35C (2) of this Act confer the power (to rectify any mistake apparent on the record) only on this Tribunal, the Commissioner (Appeals) may entertain an application for rectification/modification of a pre-deposit order, but only for rectification of an error on the face of the record;
(c) The appellate Commissioner could avoid an invitation/plea for rectification by a careful, good faith and critical analysis of the prima-facie merits of the case and other relevant parameters, while disposing of an application for pre-deposit. Adjudicatory discipline mandates that the appellate Commissioner must follow established judicial norms by unreservedly following decisions of the Supreme Court, the High Courts and of this Tribunal, wherever such decisions operate and are brought to his notice, instead of proceeding on an independent analysis of the applicable legal provisions and persisting in applying such interpretation though it be at variance with interpretations by the Supreme Court, the High Tribunal, as the case may be; and
(d) An appeal to this Tribunal is maintainable against an order of the Commissioner (Appeals) dismissing an appeal for failure of pre-deposit.
(e) In view of the decision of the Punjab and Haryana High Court in Surya Pharmaceutical Ltd. (supra), since an order of pre-deposit passed by the appellate Commissioner, in exercise of direction under Section 35F of the 1944 Act amounts to an order passed under the generality of the appellate jurisdiction under Section 35, an appeal lies to this Tribunal against such order as well, apart from an appeal against the final order dismissing an appeal for failure of pre-deposit;
(f) While considering an appeal preferred against a final order passed, rejecting an appeal for failure of pre-deposit, the Tribunal is authorized to consider the correctness/appropriateness of an earlier order (of pre-deposit) passed by the appellate Commissioner, the non-compliance whereof resulted in dismissal of the appeal by that authority;
(g) While disposing of an appeal against a final order of the appellate Commissioner, (dismissing an appeal for failure of pre-deposit), the Tribunal shall not adjudicate upon the merits of the appeal. If the order of pre-deposit passed by the Commissioner (Appeals), in the given facts and circumstances is erroneous, the Tribunal is required to set aside the order of the appellate authority and remit the matter to the appellate Commissioner for denovo consideration, after passing an appropriate order as to pre-deposit.
12. We find that in para-30 (g) of the abovesaid decision, the Tribunal has clearly held that in an appeal against the final order of the Appellate Commissioner (dismissing the appeal for failure to pre-deposit), the Tribunal will not adjudicate upon the merits of the appeal, but if the order of pre-deposit passed by the Commissioner (Appeals) in the given facts and circumstances of the case is erroneous, the Tribunal is required to set aside the order of the Appellate Authority and remand the matter to the Appellate Commissioner for de novo consideration after passing an appropriate order as to pre-deposit. We find that this exercise has not been done by the Tribunal in the present case and it has summarily upheld that the rejection of the appeal for failure or pre-deposit is impeccable and, therefore, we have no hesitation to hold that the Tribunal should have considered the pre-deposit issue perforce and to that extent the order has been rightly put to test by the appellant before this Court. Learned standing counsel for the Department, when pointed out about the error in the order, also fairly submits that the Tribunal should have considered the issue of pre-deposit on merits instead of confirming the order of the Commissioner (Appeals) as impeccable without setting out how it is above standards. In the light of the discussion as made above, the 2nd substantial question of law is answered in favour of the assessee.
13. In the result, the appeal is allowed and the matter is remitted back to the Appellate Tribunal to consider the issue of pre-deposit in the light of the position as discussed above. Consequently, connected miscellaneous petition is closed. However, there shall be no order as to costs.
(R.S.J.) (G.M.A.J.)
25.07.2014
Index : Yes/No
Internet : Yes/No
GLN
To
1. Customs, Excise and Service
Tax Appellate Tribunal
South Zonal Bench
Shastri Bhavan Annexe, 1st Floor
26, Haddows Road, Chennai 600 006.
2. The Addl. Commissioner of Central Excise
6/7 A.T.D. Street, Race Course Road
Coimbatore 641 018.
R.SUDHAKAR, J.
AND
G.M.AKBAR ALI, J.
GLN
C.M.A. NO. 703 OF 2014
25.07.2014