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M/s. Garg Ispat Udyog Ltd M/s. J.D. Gupta, Managing Director v/s Commissioner of Central Excise, Jaipur

    Excise Stay Application Nos.2066-2067 of 2010, Excise Appeal Nos.2165-2166 of 2010
    Decided On, 16 March 2012
    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi
    By, THE HONOURABLE MRS. JUSTICE ARCHANA WADHWA
    By, MEMBER (JUDICIAL) & THE HONOURABLE MR JUSTICE MATHEW JOHN
    By, MEMBER (TECHNICAL)
    For the Appellant: J.P. Kaushik, Advocate. For the Respondent: Sunil Kumar, SDR.


Judgment Text
Per Archna Wadhwa (for the Bench), J.

1. Duty of Rs. 40,96,119/- stands confirmed against M/s. Garg Ispat Udyog Ltd. along with imposition of penalty of identical amount. In addition, penalties of varying amounts stands imposed upon the other applicant appellants.

2. After hearing both the sites, it is seen that the impugned order of the Commissioner (Appeals) has dismissed the appeals for non-compliance with the stay order passed by him vide which M/s. Garg Ispat Udyog were directed to deposit an amount of Rs.20 lakhs. It is seen that the said appellant had already deposited an amount of Rs. 15 lakhs towards duty. However, inasmuch as the appellants did not comply with the said directions of the Commissioner (Appeals) to further deposit an amount of Rs.20 lakhs, all the appeals stand dismissed for non-compliance.

3. For better appreciation, we reproduce relevant paragraphs from the impugned orders of the Commissioner (Appeals):

'7. The appellant no. 1 vide their letter dated 15.4.2010 has informed this office that they are not in a position to deposit the said amount due to some unavoidable circumstances and made a request to exempt them from depositing the said amount and reconsider it. I observe that the appellant has failed to comply with the Stay Order No. 02-03 (DK)JPR-I/2010 dated 24.2.2010 and has not made deposit of Rs.20,00,000/- (Rs. Twenty lakh only) by the stipulated time of 30 days from the receipt of the Stay order nor has given any specific reasons in the letter dated 15.4.2010 which may be justifying the either extension of time limit or variation in the quantum of pre-deposit or exemption from pre-deposit.'

As is seen from the above, after passing of the said order, the applicant had moved an application dated 15.4.2010 for modification of the earlier stay order passed by the Appellate authority. Commissioner (Appeals) vide his impugned order had rejected the modification application as also dismissed the appeals vide the same order.

4. We find that the Tribunal in the case of Prem Nath Mongas Foods Beverages Pvt. Ltd. vs. CCE as reported in [1993 (63) ELT 245 (Tri)] has held that the Commissioner (Appeals) has powers to modify the stay order passed by him. Non consideration of the said modification application results in failure of justice. The Court also observed that inasmuch no show cause notice was issued to the appellants prior to the dismissal of the appeal for non-compliance with the stay order, the impugned orders are required to be set aside and matter needs to be remanded.

To the similar effect is the Tribunals decision in the case of Premchand Agarwal & Ors. Vs. CC Calcutta as reported in [1998 (29) RLT 168 (CEGAT). Tribunal while taking note of the fact that modification application as also the appeals stand dismissed by one order only, observed that there is a patent illegality in the order of the Commissioner (Appeals) inasmuch as the application for modification filed by the applicants was required to be disposed of independently, after giving a chance of personal hearing to the appellants and an opportunity to them to putforth their case. The Tribunal also observed that a show cause notice is required to be given before the disposal of the appeals on the ground of non-compliance. Reference is also made to another decision of the Tribunal in the case of Classic Rubber and Allied Products as reported in 2001 (46) RLT 911 (CEGAT-Ban)] laying down that before dismissing the appeal for non-compliance with the provisions of Section 35F, the appellants should have been given an opportunity.5. By applying the ratio of the above decision to the facts of the case, we find that admittedly the modification application was filed by the applicant and Commissioner (Appeals) was under a legal obligation to dispose of the said application. To reject the application and to dismiss the appeals simultaneously vide the same order does not meet the requirement of fair proceedings. Inasmuch as the applicant would come to know about the dismissal of the modification application vide the same impugned order along with the dismissal of its appeal. Even if the appellate authority deemed it fit to reject the modification application, interest of justice require him to extend the period to deposit the directed amount and to let the applicant also know about the same. In the absence of intimation about the decision on the modification of the application, the appellant cannot be expected to know about the same. As such, dismissal of the appeal for non-compliance along with rejection of the modification application violates the basic principle of natural justice.

6. In view of our foregoing discussion and keeping in the view the applicant had already deposited an amount of Rs. 15 lakhs, we dispense with the condition of pre-deposit of balance amount of duty and penalties imposed upon both the applicants and set aside the impugned order and remand the matter to Commissioner (Appeals) for reconsideration of the modification application before him. Needless to say a separate order should be passed on the modification application filed before him and be intimated to the applicant accordingly.

7. Both the stay petitions as also the appeals get disposed of in the above manner.8. I have gone through the order recorded by Member (Judicial). Since I am not agreement with the order recorded by Member (Judicial), I am recording this separate order.

9. As already stated the facts of the case are that the Commissioner (Appeal) called for pre-deposit of a part of the duty confirmed, and waiving the rest of the duty and penalty, for hearing of the appeal. Appellants filed an application for modification of stay order without giving any reason why the earlier order should be modified or why the appellant could not comply with the order. The Commissioner (Appeal) did not find any merit in the modification application. He dismissed the modification application and appeal together. Basically the appeal is dismissed because the condition of stay order has not been complied with.

10. The Appellants rely on the decision of the Tribunal in Premnath Monga Foods and Beverages Vs. CCE 1993 (63) E.L.T. 245 (Tribunal) to the effect that the Commissioner (Appeal) should have issued a Show Cause Notice in such cases before rejecting the appeal. Such a procedure is not followed by any judicial forum and there is no justification for burdening the Commissioners (Appeal) with such a procedure. If such procedure is prescribed litigants can keep filing applications for modification and Commissioners (Appeal) will be busy issuing Show Cause Notices in such cases. If an opportunity is given for a hearing it should meet the ends of justice. In this case a hearing also was not given.

11. There are no enacted legal provisions in the matter of application for modification of stay prescribing the grounds on which such application can be made, how many applications can be made and how many hearings should be given. So I am of the view that the matter should be decided on the facts of each case such that this method is not used as a delaying tactic. I am of the view that ruling regarding issue of Show Cause Notice in such situations can only help abuse of the process of law by evaders.

12. The facts in the case of Prem Nath Mooga Foods and Beverages (supra) are very different and I do not see any reason why that decision should be applied in this case. In that case the assesse had a case that the adjudication order by which classification list was approved was without Show Cause Notice and thus without complying with principles of natural justice. An order passed in such a situation cannot be relied upon in this case where fraudulent activity like taking Cenvat credit on the basis of invoices without receipt of goods. Further in this case the appellant asked for modification of stay order without giving any reasons.

13. Wherever an appellant had produced fresh facts justifying reconsideration of earlier order, the Courts have ruled in favour of fresh consideration of the matter. The following decisions relied upon by Tribunal while deciding the case of Prem Nath Mooga Beverages may be seen,-

(a) T. N. Electricity Board Vs. CEGAT-1991 (55) ELT 165

(b) Punjab Paints, Colours and Varnish Works Vs. CEGAT -1987 (32) ELT 656

In these cases the assesse had submitted fresh facts which were relevant for re-considering the application. On the other hand the case at hand is a case where the appellant did not give any valid reason for modification of stay. So it is very obvious that the appellant was just trying to gain time by filing a modification application and I am of the view that the Commissioner (Appeal) was right in rejecting the appeal for the reason that stay order has not been complied with.

14. The modification application filed by the appellant already stands rejected by the Commissioner (Appeal) for valid reasons. Allowing the appellant to go for another round of proceeding without further pre-deposit in this matter does not meet the ends of justice. I am using the expression ends of justice with an understanding that Revenue also needs justice and not just the assessee. I also take note of the fact that as per section 35F of Central Excise Act, pre-deposit is the rule and waiver of pre-deposit is an exception.

15. So in my view if the appellant, at this stage wants to get the benefit of a hearing before the Commissioner (Appeal) the appellant should be asked to make the pre-deposit called for by the Commissioner (Appeal).

(Mathew John) ember(Technical) POINT OF DIFFERENCE OF OPINIOIN

In the facts and Circumstances of the case whether the appeal should be remitted back for issuing order on application for modification of stay application filed by the Appellant before the Commissioner (Appeal) and then decision of the appeal as ordered by Member (Judicial) Or Whether the applicant should be asked to make the pre-deposit ordered by the Commissioner (Appeal) and then argue his case before the Commissioner (Appeal) as ordered by Member (Technical)? (Archana Wadhwa) Member(Judicial) (Mathew John) Member(Technical) The Registry may place the matter before the President CESTAT for resolving the above difference in views.

(Archana Wadhwa) Member(Judicial) (Mathew John) MPS* Member(Technical)

Per Archana Wadhwa

After going through the order of my learned brother, I would like to express some views. The issue required to be addressed in the present appeal is not as to whether Commissioner (Appeals) should have allowed or rejected the modification application. It is prerogative of the authorities before whom such modification applications are filed to consider the same on merits and take appropriate decision. Without commenting upon the result of modification application, the point required to be decided is as to whether Commissioner (Appeals) was justified in dismissing the appeal for non-compliance on the same very date and vide same very order vide which the modification application was rejected. Principles of natural justice requ

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ire him to intimate his decision on modification application to the appellants and to grant some more time to him for making a pre-deposit, as a consequence of rejection of the modification application. Interest of justice require the above course of action to be adopted by Commissioner (Appeals). Such type of orders passed by Commissioner (appeals) rejecting the modification application as also dismissing the appeal vide the same order is not in the interest of justice and result in denial of justice to the litigants. The proper course of action, in my view, was to decide the modification application, to intimate the result of such decision to the appellants and in case of rejection, extend the period to deposit and then to decide the appeal subsequently. This patent illegality in the orders of the Commissioner (Appeals) cannot be rectified at the stage of higher appellate forum and has to be rectified by him only. It may not be out of context to mention here even the CESTAT whenever they reject the modification application, extend the period to deposit the directed amount in the interest of justice. Commissioner (Appeals) should have followed the said procedure and that is why the matter stands remanded to Commissioner (Appeals).
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