Customs, Excise and Gold Tribunal - Delhi
Mahindra Sintered Products Ltd. vs Collector Of Central Excise on 13 December, 1991
Equivalent citations: 1992(58)ELT353(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. At the outset the learned DR raised two preliminary objections when we took up the appeal for hearing. His first objection relates to the raising of an additional ground in the form of a letter of 5th October, 1988 by Dr. B.K. Agarwal of the Department of Metallurgical Engineering. IIT, Bombay who has given his opinion as an Author and Expert wherein he has stated categorically that the appellants' products cannot be considered as thin-walled bearings and that the documents from the book entitled "Engineering Materials and Metallurgy" which has been relied upon by the Department does not contain any discussion or passages which arc relevant for deciding whether the bearings manufactured by the appellants are thin-walled bearings or not. The objection is that the additional ground has not been raised in a separate application which is a requirement of Rule 23 and as a result the Department loses its opportunity to rebut the ground which has been raised directly in the appeal memo. The learned DR submits that if a ground is raised in the appeal memo it might lead to difficulty in detection and might lead to it being considered by the Bench in the final order without the Bench having granted permission to raise the additional ground. His second objection is that the present appeal has been filed on the classification issue and there is no separate appeal against quantification. According to him after the Assistant Collector passed his order, the quantification was done by means of a letter dated 28-7-1987 which is to be treated as a separate order. He would contend that the High Court's direction of 22-8-1988 directing the Collector to consider the correct quantification in addition to consideration of the application for stay filed before him is to be deemed as separate appeal before the lower appellate authority on quantification.
2. Replying to the objections raised by the Department Shri Korde, learned Counsel submits that filing of a separate application is not a mandatory requirement of Rule 23 and Rule 23(4) provides for a situation where even the Tribunal can call for fresh documents suo motu. He further submits that it is not correct to state that the additional ground cannot be detected as the ground has been raised in the grounds of appeal and the Department would still have an opportunity to rebut the request for raising additional ground and the Tribunal would still have to consider the matter and either grant or refuse permission to raise the additional ground or grounds as the case may be. Replying to the second objection, Shri Korde submits that the quantification is only consequential to the decision on classification by the Assistant Collector and it is not to be treated as a separate order against which an appeal has to be filed and further the Bombay High Court has directed the Collector to consider quantification also at the time of hearing the application for stay on the classification appeal. So there is no need for a separate appeal on quantification. The Collector gave notice of hearing for both the stay application and the main appeal and the assessees were heard on both and the final order was passed confirming the classification upheld by the Assistant Collector and also confirming the demand which was quantified by the Assistant Collector pursuant to his order on classification. According to him, therefore, only one appeal is required to be filed against the order of the Collector (Appeals) which has decided both the issues.
3. We have heard both sides and carefully considered their submissions.
4. Under Sub-section 1 of Section 35D of the Central Excises and Salt Act, this Tribunal has been empowered to regulate its own procedure and in exercise of its powers it has framed its own Rules known as "The Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982". Rule 8 provides as follows :
"8. Contents of a memorandum of appeal: Every memorandum of appeal shall set forth, concisely and under distinct heads, the grounds of appeal and such grounds shall be numbered consecutively and shall be typed in double space on one side of the paper."
This Rule is similar to Rule 1(2) of Order XLI of the CPC 1908 which provides as follows :
"Contents of memorandum: 2 The memorandum shall set forth, concisely and under distinct heads the grounds of objection to the decree appealed from without any argument or narrative, and such grounds shall be numbered consecutively".
Rules 10 of the CEGAT (Procedure) Rules provides as follows :
"10... Grounds which may be taken in appeal:
The appellant shall not except by leave of the Tribunal, urge or be heard in support of any grounds not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules:
Provided that the Tribunal shall not rest its decision on any other grounds unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground".
This Rule is in pari materia with Rule 2 of Order XLI of CPC which runs thus:
"Rule 2: The appellant shall not except by leave of the Court, urge or be heard in support of any ground of objection not set forth in the memorandum of appeal, but the Appellate Court, in deciding the appeal, shall not be confined to the grounds of objection set forth in the memorandum of appeal or taken by leave of the Court under this rule :
Provided that the Court shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of contesting the case on that ground."
From the Scheme of Rules 8 & 10 of the CEGAT (Procedure) Rules, it would be clear that an appellant is prohibited from raising a new case/plea not set up in the proceedings below and to make the situation clear. Rule 10 provides that an applicant may urge a new ground not set up in the memorandum of appeal with leave of the Court and the Court may grant permission if the interests of justice so require.
5. In the instant case admittedly the appellants have not sought any permission from the Tribunal to set up a new case in the memorandum of appeal on their own. The learned Counsel's contention that they have raised the additional ground in the memorandum of appeal cannot be a ground and, therefore, their prayer for permission to adduce additional evidence under Rule 23 of the CEGAT (Procedure) Rules has to be examined in the light of the provisions of the said Rule, as has been held by this Tribunal in the case of Gaurav Paper Mills v. Collector of Central Excise reported in 1989 (46) ELT 522.
6. Rule 23 provides as follows:
"23. Production of additional evidence:
1. The parties to the appeal shall not be entitled to produce any additional evidence, either oral or documentary, before the Tribunal, but the Tribunal is of opinion that any documents should be produced or any witness should be examined or any affidavit should be filed to enable it to pass orders or for any sufficient cause, or if adjudicating authority or the appellate or revisional authority has decided the case without giving sufficient opportunity to any party to adduce evidence on the points specified by them or not specified by them, the Tribunal may, for reasons to be recorded, allow such documents to be produced or witnesses to be examined or affidavits to be filed of such evidence to be adduced.
2. The production of any document or the examination of any witness or the adducing of any evidence under Sub-rule (1) may be done either before the Tribunal or before such departmental authority as the Tribunal may direct.
3. Where any direction has been made by the Tribunal to produce any documents or to examine any witness or to adduce any evidence before any departmental authority, the authority shall comply with the directions of the Tribunal and after such compliance send the documents, the record of the deposition of the witnesses or the record of evidence adduced, to the Tribunal.
4. The Tribunal may, of its own motion, call for any documents or summon any witnesses on points of issue, if it considers necessary to meet ends of justice."
7. The practice in the Tribunal has been that wherever any party wishes to adduce additional evidence it is done by means of an application under Rule 23 whereby the other side is provided with an opportunity either to accept or to object to the additional evidence. The reason of necessity for a separate application, therefore, becomes obvious. If the additional evidence is sought to be brought in the memorandum of appeal itself then the first opportunity that the other side would get to meet this ground and for the Tribunal to consider whether the permission should be granted or not, would be obviously at the time of hearing of the main appeal. The Tribunal has to hear both sides before passing any order under Rule 23. For practical reasons if the additional evidence is sought to be adduced at the stage of hearing of the appeal, it would result in the appeal being adjourned to enable the other side to counter the submissions made by the applicants regarding adducing of the additional evidence. This would mean that the appeal would have to be made part-heard and hearing would take place in a piece-meal fashion. However, when such incorporation is not objected to or whenever prayer for additional grounds is made either orally or in writing at the time of hearing of the appeal and is not objected to, the position is different and if the Bench is satisfied prima facie about its relevance/justification, it may allow the same in the interest of justice. In the instant case the other side has objected. For the reasons set out above, we are of the opinion that a separate application is called for under Rule 23. The objection of the DR on this issue is upheld.
8. The objection relating to filing of a separate appeal against quantification has no force. The quantification is a consequence of the classification upheld by the Assistant Collector. The basic issue is that of Classification and once classification under a particular heading is proposed to be upheld the demand for duty if any due automatically arises as a result. It is pertinent to note that in this case after the Assistant Collector's order was passed the appellants preferred an appeal to the Collector (Appeals) and also filed an application for stay of operation of the Assistant Collector's order. Pending this, the quantification was done. The appellants filed a writ of manda mus in the Bombay High Court for directions to withdraw the notice of demand dated 28-7-1987 and the High Court passed the following order :
Heard Mr. Korde.
Mr. R.V. Desai for the Union of India states that till the application for stay is decided by the Appellate authority, the impugned order will not be enforced. The appellate authority will also consider, at the time of deciding the stay application, whether the amount demanded is correctly calculated.
The Petition is accordingly disposed of"
The effect of this order is that the quantification of demand merges with the classification issue. In addition the Tribunal while passing stay order No. 141/89-B1 dated 18-7-1989 in the classification appeal took into account the quantification and then dispensed with the predeposit of the duty amount of Rs. 1.64 crores on the condition of the appellants depositing Rs. 25 lakhs within 12 weeks from the date of the stay order.
9. In the peculiar circumstances of this case, it cannot be said that a separate appeal against the quantification is required in the eye of law. The preliminary objection in this regard is overruled.
10. The preliminary objections are disposed of in the above terms.