M/S Citizen Metalloys Ltd vs Union Of India
2021 Latest Caselaw 3955 Guj

            C/SCA/19261/2018                                CAV JUDGMENT




                 IN THEHIGHCOURTOF GUJARATAT AHMEDABAD

                  R/SPECIALCIVILAPPLICATIONNO. 19261of 2018


FORAPPROVALANDSIGNATURE:

HONOURABLEMS. JUSTICESONIAGOKANI

and

HONOURABLEMS. JUSTICEGITAGOPI

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1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

============================================================================== M/SCITIZENMETALLOYSLTD Versus UNIONOF INDIA& 2 other(s) ============================================================================== Appearance:

MRPARESHV SHETH(3998)for the Petitioner(s)No. 1 MRPY DIVYESHVAR(2482)for the Respondent(s)No. 2,3,4

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CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MS. JUSTICE GITA GOPI

Date: 09/03/2021 CAVJUDGMENT

( PER : HONOURABLE MS. JUSTICE GITA GOPI)

1. By way of this petition preferred under Article 226 of the Constitution of India, the petitioner has prayed for the issuance of the Writ of Mandamus or any order in the nature of Mandamus, quashing and setting aside the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (for short, "the Tribunal") in (i) Final Order No.13327/2017 (In Central Excise Appeal No.11173 of 2014-SM) dated 13.10.2017 as also the order (ii) in Order No.M/10366/2018 dated 04.05.2018 issued on 21.05.2018; on the ground that the said orders are unjust, improper and violative of the principles of natural justice. The petitioner has also challenged the above orders on the ground that the learned Tribunal was not justified in rejecting the application for restoration, without appreciating the facts of the case as also the submissions made by the petitioner while considering that recalling of the order would amount to review of its earlier order. A ground has also been raised that the learned Tribunal has not considered the principle laid down in the cases of (i) J.K. Synthetics Ltd. v. Collector, 1996 (86) ELT 472 (S.C.) (ii) Viral Laminates Pvt. Ltd. v. Union of India, 1998 (100) ELT 335 (Guj.) and (iii) Shivam Casting v. Union of India, 2017 (351) ELT 131 (Guj.).

2. The petitioner herein is engaged in the business of manufacture of brass / copper articles classifiable under Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985. It is the case of the petitioner that on 10.02.2006 the Officers of the Directorate General of Central Excise Intelligence (DGCEI) visited the factory premises of the petitioner and impounded certain documents. It was alleged that the petitioner had clandestinely cleared excisable goods and accordingly, was asked to deposit the Central Excise Duty to the tune of Rs.5,94,953/- leviable on

the articles of copper valued at Rs.36,45,545/- under Section 11A of the Central Excise Act, 1944 (for short, "the Act") by invoking the extended period of five years as per proviso to sub-Section (1) of Section 11A of the Act. During the course of investigation, the petitioner had paid the amount of Duty so demanded and was, thus, asked to tender its explanation as to why the amount of Duty so paid should not be appropriated against the total Duty demanded.

3. The Additional Commissioner, Central Excise, Ahmedabad-III passed the Order-in-Original No.11/ADC (SC)/2010 dated 02.08.2010 confirming the Demand raised by the respondent-Department and thereby, directed that the amount paid by the petitioner be appropriated against the demand raised by the Department. The petitioner was also ordered to pay Interest at the rate prescribed under the provisions of Section 11AB of the Act as also Penalty on the amount so demanded under Section 11AC of the Act read with Rule 25 of the Central Excise Rules, 2002 on the conditions stated in the order. The petitioner was also directed to pay Rs.1,00,000/- as Penalty under Rule 26 of the said Rules. The said order dated 02.08.2010 was confirmed by the Commissioner (Appeal-III), Central Excise, Ahmedabad, by order dated 29.10.2010 issued on 03.11.2010 passed in Order-in-Appeal No.175 to 176/2010.

4. Aggrieved by the said order of the Commissioner (Appeals), the petitioner filed an appeal before the Tribunal in Appeal No.E/1741 & 1742/2010. After considering the facts of the case and certain judgments, the learned Tribunal came to the conclusion that the allegations levelled in the Demand-cum-Show Cause Notice were not sustainable and accordingly, allowed the appeal with consequential relief by judgment and order dated 26.09.2011. Pursuance to the judgment and order dated

26.09.2011 passed by the Tribunal, the petitioner made application dated 12.02.2013 to the respondent-Department praying for refund of the amount of Rs.7,46,864/- deposited by the petitioner.

5. It is the say of the petitioner that the Tribunal had granted unconditional consequential relief in favour of the petitioner and further the said judgment and order of the Tribunal had also not been challenged by the Department. Therefore, it cannot be said that refund claim had been filed beyond the period of limitation as prescribed under Section 11B of the Act. In the proceedings initiated before the Assistant Commissioner, Central Excise pursuant to the refund claim filed by the petitioner, the ground was raised that the limitation prescribed under the Act would be applicable to the Duty paid and that in the present case since the amount paid could not be treated as "duty", as it was as "pre- deposit" in terms of the provisions of Section 35F of the Act, limitation would not be applicable. However, the Assistant Commissioner, Central Excise did not consider the above aspect of the case and issued the show- cause Notice dated 29.04.2013, by which it called upon the petitioner to show cause as to why the refund claim should not be rejected on the ground of limitation as provided under Section 11B of the Act, as the same was filed beyond the period of One Year from the date of the judgment and order of the Tribunal. In response to such notice, the petitioner filed his reply dated 20.05.2013. However, by order dated 09.07.2013 passed by the Deputy Commissioner, Central Excise, the refund claim made by the petitioner came to be rejected on the ground of limitation.

6. Aggrieved by the order passed by the Deputy Commissioner, Central Excise dated 09.07.2013, the petitioner preferred an appeal before

the Commissioner (Appeals) in Order-in-Appeal No. AHM-EXCUS- 003-APP-365-13-14. The said appeal came to be disposed of by order dated 27.02.2014. The relevant observations are reproduced hereunder :-

"5.5 .... It is evident from the provisions of Section 11B that it governs refund of duty and interest from the relevant date and not penalty. Considering the provisions of Section 11B (supra), I find that the amount of penalty paid by the applicant is refundable. Since refund of penalty is not covered under Section 11B, the condition of filing of refund claim within one year from the relevant date is not applicable for refund of penalty.

5.6 In view of the above, I allow the refund of penalty and reject the appeal for refund of duty and interest, claimed by the appellant, being hit by limitation of time. The appeal is disposed off in above terms."

7. Being aggrieved by the order dated 27.02.2014 passed by the Commissioner (Appeal), the petitioner preferred an appeal being Final Order No.A/13327/2017 (In Central Excise Appeal No.11173 of 2014- SM) before the learned Tribunal. The learned Tribunal fixed the personal hearing of the appeal on 13.10.2017. It is the say of the petitioner that since the petitioner wanted to rely upon certain documents, it preferred application dated 09.10.2017 before the learned Tribunal requesting to postpone the hearing. However, without passing any order on such application, the learned Tribunal proceeded to decide the appeal ex-parte on merits and rejected the same by judgment and order dated 13.10.2017 on the ground that the refund claim filed by the petitioner was barred by limitation.

8. Being aggrieved by the judgment and order dated 13.10.2017 as it had been passed on merits without affording any opportunity of hearing

to the petitioner, the petitioner preferred an application being No. E/ROA/10804/2017 seeking restoration of Final Order No.A/13327/2017 (Central Excise Appeal No.11173 of 2014-SM). The petitioner prayed for recall of the order dated 13.10.2017 and hearing afresh on the ground that relevant facts of the case had not been brought on record of the learned Tribunal by the respondent-Department; still, however, the learned Tribunal rejected the application for restoration by order dated 04.05.2018 on the ground that recall of the order would result into review of its earlier order, which power, the learned Tribunal is not vested with under the provisions of the Act.

9. Mr. Paresh Sheth, learned advocate for the petitioner, reiterated the facts of the case and referred to the relevant observations made by the authorities concerned in the impugned order. It was submitted that there is an absolute misinterpretation of the provisions of the Act by the authorities below as also by the learned Tribunal. Pre-deposit of the amount of duty does not amount to acceptance and payment of duty thereof and therefore, such payment would not be hit by the rigors of limitation, as provided under Section 11B of the Act. It was submitted that right from the decision rendered by the Apex Court in the case of Mafatlal Industries v. Union of India, 1997 (89) ELT 247 (S.C.), which was followed in several other cases and also in Union of India v. Suvidhe Ltd., 1997 (94) ELT 159 (SC), it has been held that in case any amount is deposited during the pendency of adjudication proceedings or investigation, then such amount would be in the nature of deposit under protest and therefore, the principles of unjust enrichment would not apply.

9.1 It was submitted by learned advocate Mr. Sheth that the petitioner

wanted to rely upon certain documents in support of his case on record of the learned Tribunal and therefore, had moved an application before the learned Tribunal on 09.10.2017 seeking postponement of the hearing but, unfortunately, the learned Tribunal neither acceded to the request made by the applicant-petitioner in such application nor passed any order on such application. In fact, the learned Tribunal proceeded with the hearing of the appeal ex-parte on 13.10.2017 and also went on to render its final judgment and order on merits on the very same day. It was further submitted that sufficient cause was shown by the applicant-petitioner well in advance for non-appearance before the learned Tribunal on the date fixed for hearing; in spite of that the learned Tribunal proceeded with the matter and rendered its decision on merits, which is clearly violative of the principles of natural justice. The petitioner had made an application for restoration of the Appeal with a request to recall its earlier order and thereafter, to decide the appeal afresh on merits. As is clear from the order dated 04.05.2018 passed by the learned Tribunal, the applicant- petitioner had also drawn attention of the learned Tribunal to the decision rendered by the Division Bench of this Court in the case of Shivam Casting v. Union of India (supra) to apprise the learned Tribunal about its power to recall its earlier order.

9.2 The learned advocate also drew our attention to Circular No.275/37/2K-CX.8A dated 02.01.2002 of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise & Customs, New Delhi regarding Refund / Return of deposits made under Section 35F of the Act and Section 129E of the Customs Act, 1962 to submit that by way of the said Circular, the Government of India has clarified that refund applications under Section 11B(1) of the Act or under section 27(1) of the Customs Act, 1962 need not be insisted upon

by the Department and that a simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant / Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose. It was, accordingly, prayed that the present petition may be allowed by setting aside the impugned orders passed by the learned Tribunal and by restraining the respondent-Department from taking any action pursuant to the impugned orders passed by the learned Tribunal.

10. Mr. Parth Divyeshwar, learned Central Government Standing Counsel appearing for the respondents, submitted that the respondent authorities as also the learned Tribunal have rightly held that the claim of the petitioner was time barred and therefore, could not be entertained. He submitted that no explanation has come forth from the petitioner regarding the delay in filing the refund application. By referring to the unreported decision rendered by the Coordinate Bench of this Court in the case of Ajni Interiors v. Union of India and others in Special Civil Application No.10435 of 2018 dated 04.09.2019, it was submitted that the law on the issue is settled and it has also been affirmed by the Hon'ble Supreme Court in Special Leave Petition (Civil) Diary No(s).3952 of 2020 on 20.02.2020.

11. Having heard the learned counsel for the parties, it is evident that the learned Tribunal has rejected Application No. E/ROA/10804/2017 filed by the petitioner for restoration of Central Excise Appeal No.11173 of 2014 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. 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.

12. The petitioner has produced copy of the application dated 09.10.2017 along with the memo of petition. A bare reading of the said application reveals that adjournment was sought for on the ground that the petitioner wanted to rely upon certain documents, which would be necessary for the adjudication of the appeal. The record reveals that the appeal had come up for hearing before the learned Tribunal for the first time on 08.09.2017, on which date, it was adjourned to 13.10.2017. Before the next date, the applicant-petitioner had moved application dated 09.10.2017 requesting to postpone the hearing to 03.11.2017 for the purpose of relying upon certain documents in support of its case. It is a matter of fact that the appeal in question was listed on Board of the learned Tribunal on only one occasion, i.e. on 08.09.2017, before the same was decided ex-parte on merits on 13.10.2017. Looking to the reason given in the application, we find that 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.

13. Considering the facts of the case and in the context of the provisions of the Code of Civil Procedure, 1908, it would be relevant to refer to a decision of the Apex Court in the case of Ghanshyam Dass Gupta v. Makhan Lal, (2012) 8 SCC 745 and more particularly, on the observations made in paragraph-8, which reads thus:-

"Prior to 1976, conflicting views were expressed by different High Courts in the country as to the purport and meaning of sub-rule (1) of Rule 17 of Order 41 CPC. Some High Courts had taken the view that it was open to the appellate court to consider the appeal on merits, even though there was no appearance on behalf of the appellant at the time of hearing. Some High Courts had taken the view that the High Court cannot decide the matter on merits, but could only dismiss the appeal for appellant's default. Conflicting views raised by the various High Courts gave rise to more litigation. The Legislature, therefore, in its wisdom, felt that it should clarify the position beyond doubt. Consequently, Explanation to sub-rule (1) of Rule 17 of Order 41 CPC was added by Act 104 of 1976, making it explicit that nothing in sub- rule (1) of Rule 17 of Order 41 CPC should be construed as empowering the appellate court to dismiss the appeal on merits where the appellant remained absent or left un-represented on the day fixed for hearing the appeal. The reason for introduction of such an explanation is due to the fact that it gives an opportunity to the appellant to convince the appellate court that there was sufficient cause for non-appearance. Such an opportunity is lost, if the courts decide the appeal on merits in absence of the counsel for the appellant."

14. As can be seen from the above decision, 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 our considered opinion, the view taken by the learned Tribunal is erroneous and contrary to the settled principle of law.

15. In the case of Shivam Casting v. Union of India (supra), similar issue arose for consideration before the Coordinate Bench of this Court and the Bench held that when an earlier order was not an order passed on merits and the Tribunal had proceeded on the basis of incorrect findings of fact, it was not justified in not entertaining the application made by the assessee for recall of its earlier order and for restoration of its appeal.

16. In the case of J.K. Synthetics Ltd. v. Collector of Central Excise (supra), the Hon'ble Supreme Court has elaborately dealt with the issue. It was held that while considering an application seeking recall of the ex- parte order passed on merits, the authority concerned has to examine whether the applicant has pointed out sufficient cause for remaining absent when the order was passed and if it is established to the satisfaction of the authority that sufficient cause did exist, then such ex-

parte order has to be set aside and the matter has to be restored on file for its adjudication afresh on merits. The Hon'ble Apex Court expressed its view in the following terms:-

"Rule 21 of CEGAT (Procedure) Rules, 1982 does not expressly state that an order on an appeal heard and disposed of ex parte can be set aside on sufficient cause for the absence of the respondent being shown does not mean that CEGAT has no power to do so. If, in a given case, it is established that the respondent was unable to appear before it for no fault of his own, the ends of justice would clearly require that the ex parte order against him should be set aside. Not to do so on the ground of lack of power would be manifest injustice. Quite apart from the inherent power that every tribunal and court constituted to do justice has in this respect, CEGAT is clothed with express power under Rule 41 to make such order as is necessary to secure the ends of justice. CEGAT has, therefore, the power to set aside an order passed ex parte against the respondent before it if it is found that the respondent had, for sufficient cause, been unable to appear. The power to proceed ex parte carried with it the power to enquire whether or not there was sufficient cause for the absence of a party at the hearing. On the facts of the present case, we think it proper to allow the appellants' application to CEGAT for setting aside the ex parte order against it ourselves. [71 ITR 815 SC and 1981 (2) SCR 341 followed]."

17. Considering the facts of the case and the principle laid down by the Apex Court in the case of J.K. Synthetics Ltd. v. Collector of Central Excise (supra), which has been followed by the Coordinate Bench of this Court in Shivam Casting (supra), we are of the opinion that the learned Tribunal ought to have considered the application preferred by the petitioner on 09.10.2017 seeking adjournment of hearing which was scheduled on 13.10.2017, before deciding the appeal on merits ex-parte. Instead of deciding the application seeking adjournment preferred by the petitioner, either by granting or rejecting the same, the learned Tribunal

simply sat over the same and kept the application undecided for reasons best known to it. The pendency of the application seeking adjournment on Board of the learned Tribunal left the petitioner with no other option but, to wait for an outcome on such application. Had it been so that the application seeking adjournment was decided on or before 13.10.2017, which is the date on which the judgment and order in appeal was delivered, the petitioner could have availed of necessary recourse under the law. The indecision by the learned Tribunal left the petitioner remedy- less, as the petitioner remained unaware as to whether adjournment has been granted or not.

18. Further, the very premise on which the learned Tribunal has refused to entertain the application seeking recall of its earlier order is erroneous. In J.K. Synthetics Ltd. v. Collector of Central Excise (supra), while dealing with a restoration application seeking recall of an ex-parte order passed on merits, the Apex Court made the following observations:-

"7. It is for CEGAT to consider in every such case whether the respondent who applies for recall of the ex parte order against him had sufficient cause for remaining absent where it was passed and, if it is established to the satisfaction of CEGAT that there was sufficient cause, CEGAT must set aside the ex parte order, restore the appeal to its file and hear it afresh on merits."

18.1 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. In view of the above, we are of the opinion that 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.

19. For the foregoing reasons, the petition is allowed. The impugned order dated 04.05.2018 passed by the Tribunal in Application No. E/ROA/10804/2017 (Order No. M/10366/2018) as also the judgment and order dated 13.10.2017 passed by the Tribunal in Final Order No.A/13327/2017 (In Central Excise Appeal No.11173 of 2014) are quashed and set aside. The appeal being Central Excise Appeal No.11173 of 2014 is restored to the file of the learned Tribunal and at the first instance, the said appeal is ordered to be listed on Board of the learned Tribunal on 22nd March, 2021 for further hearing. It is expected from the learned Tribunal that while deciding the appeal, it shall adhere to the principles of natural justice and shall, thereafter, decide the appeal on merits in accordance with law and as expeditiously as possible. With the above observations and directions, the petition stands disposed of. No costs.

( SONIA GOKANI, J )

( GITA GOPI, J )

FURTHER ORDER

After the order was pronounced, Mr. Parth Divyeshvar, learned Central Government Standing Counsel appearing for the respondents, requested for stay of this order for a period of four weeks. However, in view of the order passed in this matter, the request for stay of the order is

not acceded to and is, accordingly, rejected.

( SONIA GOKANI, J )

( GITA GOPI, J )

PRAVIN KARUNAN