Dismissal of appeal for default of others is not justifiable.

PJ/Case law/2012-13-1553

Case:- RAJINDER GAUR VS COMMISSIONER OF CENTRAL EXCISE

Citation:-2013(288) E.L.T. 498 (TRI.-DEL)

Issue:-Dismissal of appeal for default of others is not justifiable.

Brief Facts:-The Appellant is aggrieved against the order of the Customs, Excise & Service Tax Appellant Tribunal (“Tribunal”, for short) and contend that the following substantial question of law. i.e. “whether the Tribunal fell into error in holding that the failure to deposit an amount directed automatically resulted in adverse condition as far as appellants are concerned, disentitling them to make their contentions on merits.”

The facts of the case are that the main assessee M/s. K.P.Pouches (P) Ltd., manufacturing gutkha and pan masala was issued a show cause notice. Adjudication resulted in final order – in – original dated 30-11-2009. The tribunal directed M/s. K.P.Pouches (P) Ltd. to deposit Rs. 5 crores and at same time observed that in case this order was complied with and there was no need for the other appellants to make pre-deposit. M/s. K.P. Pouches (P) Ltd. approached this Court in CEAC 9/2011, which was dismissed. It did not comply with the order. As a result the Tribunal observed as follows in order dated 3-4-2012 that since the direction has not been complied with, the appellant was guilty of wilful violation of Section 35F of Central Excise Act, 1944.

Appellant Contentions:- It is contended that the order of the Tribunal made in the case of M/s. K.P. Pouches(P) Ltd. on 2-11-2011 nowhere mentions that in the event of default by the appellant, the present appellant and other aggrieved parties, would also be treated in the same fashion i.e. as defaulters. In the absence of any indication and even on the observation of merits of the appellant’s case since he was directed to pay penalty to the tune of Rs. One crore, the automatic assumption of default in compliance with the previous direction, was erroneous and without application of mind.

Reasoning of Judgment:-We have considered the submission from both side parties and perused the record, we find that it is apparent from the order dated 2-11-2011 that the Tribunal essentially directed M/s. K.P.Pouches (P) Ltd. to deposit Rs. 5 crores within 8 weeks. The present appellant’s request for waiver of the pre-deposit in respect of the amount directed to be paid by him. In these circumstances we find merit in the argument that without first dealing with the merits of the individual appellant’s case for stay, the Tribunal ought not to have mechanically assumed default and dismissed the appeal. This court in previous order dated 21-9-2012 and the connected matters dealt with the case other than the present one. i.e. Ravi Singhal, Supreme Road Transport Pvt. Ltd. and Supreme Trading Co. and observed that this approach of the Tribunal is indefensible. In these circumstances, the present appellant too has to succeed as in the case of CEAC Nos. 34/2012 [disposed of by order dated 21-9-2012 – 2013 (288) E.L.T. 495 (Del.)] for the same reasons. The Court sets aside the order of the Tribunal and directs to the present appellant for waiver of the pre-deposit , in regards to the application pending in this regard. The party is directed to appear before the Registrar on 31^st October, 2012 for hearing of the application for stay in appeal.

Decision:-The appeal is allowed in the above terms.

Comment:-The substance of this case is that it is not at all fair to dismiss the appeal for non compliance on the part of main appellant. The merits of the case ought to be considered before deciding any stay application.

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PJ/Case law/2012-13-1553

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