Neha Cosmetics vs Commissioner Of Central Excise
2006 Latest Caselaw 2160 Del

JUDGMENT

1. This appeal by the assessed under Section 35G of the Central Excise Act, 1944 ('Act') is directed against the order dated 15.7.2003 in E/ROA/63/03- NB(A) in Appeal No. E/374/90 NB (A) passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi.

2. By the said impugned order dated 15.7.2003 the CESTAT rejected an application filed by the appellant seeking restoration of its appeal No. E/374/90 which had been dismissed for default on 22.7.1997 on account of non- appearance of the appellant.

3. In its application for restoration of the said appeal filed nearly six years later in May, 2003, the appellant contended that the notice of hearing of the appeal was not received by it. The unit was lying closed since 1991. The place where the advocate for the appellant was residing, as shown in the records of the CESTAT, was lying vacant for the past six to seven years. It was accordingly contended that the appellant did not know of the dismissal of its appeal by order dated 22.7.1997 till the receipt of a letter dated 2.4.2003 from the office of the Superintendent of Central Excise, Range 33, Nehru Place [addressed to the sole proprietor of the appellant and delivered at his residential address] seeking to recover a sum of Rs. 4,10,089/- under the provision of Section 142(1)(c)(2) of the Customs Act, 1962 (as applicable to central excise matters).

4. By the impugned order dated 15.7.2003 the Tribunal held as follows:

From a perusal of the records, we find that the order was dispatched on 30.7.1997 by registered post. There is no record of the order being returned undelivered to the addressee. The delay in filing this petition is too long. In the circumstances, we are not inclined to allow this application. It is dismissed.

5. By an order dated 10.8.2004, during the hearing of this appeal, this Court directed the appellant to deposit the amount demanded by the Revenue within a period of four weeks. It appears that the appellant deposited the said sum of Rs. 4,10,089/- with the Central Excise Commissionerate on 29.9.2004 Thereafter by an order dated 5.10.2004 this Hon'ble Court granted time to the respondent to file an affidavit with regard to the opportunity of hearing afforded to the appellant as well as the service of the order dated 22.7.1997 on the appellant.

6. On 29.10.2004 the respondent filed an affidavit including photo copies of the covering letter dated 30.7.1997 addressed by the Assistant Registrar (A), CESTAT to the appellant by ?Registered A.D.?, enclosing a copy of the order dated 22.7.1997. It is stated in this affidavit that the appeal to this Court under Section 35G of the Act would lie only ?if the High Court is satisfied that the case involves a substantial question of law.? It is submitted that the appellant's contention, based on Section 37C of the Act, that the order of the CESTAT had to be mandatorily served on the appellant, was misconceived inasmuch as the procedure governing the CESTAT was contained in Section 35D of the Act read with Rule 35 of the CEGAT (Procedure) Rules, 1982.

7. On 9.2.2005 Dr. Anil Baveja, the sole proprietor of the appellant died. The application being CM.No. 9166 of 2005 for bringing his legal representatives on the record was allowed on 17.8.2005.

8. On 18.1.2006, the respondent was directed to keep ready for perusal by the Court, the relevant records relating to the dispatch to the appellant of the certified copy of the final order dated 22.7.1997 passed by the CESTAT. On 25.11.2006 the respondent filed a photocopy of the covering letter dated 30.7.1997 with which the CESTAT's order dated 22.7.1997 was sent to the appellant. The dispatch date stamp on the said letter reads as 5.8.1997.

9. Mr. Midha, learned Counsel for the appellant submits that the order dated 22.7.1997 of the CESTAT was never received by the appellant. Even the documents now filed by the respondent do not show that the order dated 22.7.1997 of the CESTAT was in fact served on the appellant. This according to him was a mandatory requirement in terms of Section 37C of the Act. He, accordingly, submits that the CESTAT ought not to have declined to condone the delay in filing the restoration application and restore the appeal for hearing on merits.

10. In reply, Mr. Sachin Dutta, learned Counsel for the Respondent submits that record of the CESTAT does show that the order was dispatched by ?Registered AD? on 5.8.1997. In terms of Rule 35 this was sufficient compliance as far as the CESTAT is concerned. He further candidly states that although the order with the covering letter was sent by the registered AD, there is neither a postal receipt nor an Acknowledgment Due (AD) card signed by the appellant available on the record. He reiterated the submissions made in the counter affidavit that the present appeal gives rise no substantial question of law since the Section 37C of the Act does not apply at all. Accordingly, he submits that the appeal ought to be dismissed.

11. We may first deal with the preliminary objection raised by the respondent that the present appeal does not involve any substantial question of law. For this purpose we may refer to Section 35D, 35G and Section 37C of the Act which reads as under:

35D Procedure of Appellate Tribunal -

(1) The provisions of Sub-sections (1), (2), (5) and (6) of Section 129C of the Customs Act 1962 (52 of 1962), shall apply to the Appellate Tribunal in the discharge of its functions under this Act as they apply to it in the discharge of its functions under the Customs Act, 1962 (52 of 1962).

(3) The The President or any other member of the Appellate Tribunal authorized in this behalf by the President may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member where -

(a) in any disputed case, other than a case where the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or

(b) the amount of fine or penalty involved, does not exceed.

35 G Appeal to High Court - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.

(2) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be -

(a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party;

(b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party;

(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.

(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:

Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it,if it is satisfied that the case involves such question.

(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.

(6) ...

(7) ...

37C Service of decisions, orders, summons, etc. - (1) Any decision or order passed or any summons or notice issued under this Act or the rules made there under, shall be served, -

(a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorized agent, if any;

(b) if the decision,order, summons or notice cannot be served in the manner provided in Clause (a), by affixing a copy thereof, to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in Clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.

(2) Every decision or order passed or any summons or notice issued under this Act or the rules made there under, shall be deemed to have been served on the date on which the decision, order, summons or notice is tendered or delivered by post or a copy thereof is affixed in the manner provided in Sub-section (1).

12. The contention of the respondent is that Section 37C would come into play only where order was passed by the authorities under the Act and not where the orders are passed by the CESTAT. The procedure of the CESTAT is governed by Section 35D read with Rule 35 of the CEGAT (Procedure) Rules, 1982 which reads as under:

Rule 35 Communication of orders to parties:

Any other passed in an appeal or on an application shall be communicated to the appellant or the applicant and to the respondent either in person or by registered post.

In other words, it is submitted that Rule 35 only requires a copy of the order of the CESTAT to be sent by registered post and is not a mandatory requirement that such order should also be served on the addressee as required by Section 37C.

13. These contentions, in our view, give rise to a substantial question of law, viz., whether the expression `decisions' and words `service of decisions' in Section 37C applies to decisions handed down by the CESTAT in appeal? We therefore negative the preliminary objection raised and proceed to answer the substantial question of law that arises for consideration.

14. We are unable to agree with the submissions of the respondent. The wording of Section 37C does not exclude the orders passed by the CESTAT in appeal. The word ?service of decisions? occurring in the title of the Section and the word ?decisions? occurring throughout under Section 35C is, in our view, intended to govern the decisions handed down by the CESTAT as well. It is true that Rule 35D deals with the procedure to be followed by CESTAT, and the Rules of procedure have also been framed separately. However, Rule 35 of those rules are only supplementary to the statutory provisions. The Rules cannot supplant the statutory requirement under Section 37C which requires that the decisions passed under the Act, which in our view includes those passed by the CESTAT, shall be served on the parties in the manner indicated in that provision. Under Section 37C(2) of the Act, which is similar to Section 27 of the General Clauses Act, 1897 service of the decision is `deemed' on the date that such decision is ?tendered or delivered by post?. This implies that the initial burden of proof of tender or delivery of such decision by post as required under Sub-section (2) of Section 37C read with Section 27 of the General Clauses Act, 1897 is on the authority dispatching such notice. The sender will have to show that such notice was in fact sent by ?Registered Post? to the addressee. It is only then that deeming fiction spelt out in Sub-section (2) of Section 37C read with Section 27 of the General Clauses Act, 1897 would stand attracted. The burden thereafter would be on the addressee to show that such notice was not in fact served.

15. We, therefore, hold that the provisions of Section 37C of the Act requiring the service of the decisions passed under the Act, would also apply to the decisions handed down by the CESTAT. This interpretation harmonises Rule 35 of the CEGAT (Procedure) Rules, 1982 with Section 37C. While Section 37C deals with the aspect of service of the decision/order, Rule 35 deals with its dispatch. Both Section 37C and Rule 35 will, therefore, have to be complied with.

16. Turning to the facts and circumstances of the case, we find that apart from filing photocopies of the covering letter enclosing the order dated 22.7.1997 of the CESTAT bearing a date stamp of 5.8.1997, there is no postal receipt produced on the record to show that such a letter was in fact sent by the registered post to the addressee, or that any acknowledgment due card was received from the addressee bearing the addressee's signature. Since there is no proof of even the tender or delivery of the letter enclosing a copy of the order to the addressee by post, the deeming fiction in Sub-section (2) of Section 37C read with Section 27 of the General Clauses Act, 1897 is not attracted in the present case. In other words, the respondents have not discharged the initial burden of showing that the order dated 22.7.1997 was in fact sent by the registered post to the appellant as contended by them. In our view, the Tribunal erred in examining whether there was any record ?of the order being returned undelivered to the addressee?. The Tribunal ought to have first examined whether in fact the order was tendered or delivered by post to the addressee as required by the law.

17. We, accordingly, set aside the impugned order dated 15.7.2003 passed by the CESTAT. To avoid any further delay in deciding the appeal, and considering the fact that the appellant has, pursuant to the order of this Court, deposited the entire amount of duty and penalty demanded, we restore the Appeal No. E/374/90 NB(A) to the file of the CESTAT. The parties will now appear before the CESTAT on 2.1.2007 and the CESTAT may pass appropriate orders for fixing a date of hearing of the appeal.

18. The appeal is accordingly allowed with the above directions. There will be no order as to costs. The Registry is directed to send a certified copy of this order to the Registrar, CESTAT within a period of two weeks from today.