Whether condonation of delay beyond the statutory power of condonation by Commissioner Appeals allowable in petition filed to High Court?

Case:-M/s TEXCELLENCE OVERSEAS VERSUS UNION OF INDIA.

Citation:- 2013-TIOL-607-HC-AHM-CX

Brief Facts:-By preferring this petition under Article 226 of the Constitution, the petitioner has sought the following prayers:

“a. Your Lordships be pleased to issue an appropriate writ order or direction in the nature of a writ of Certiorari, or any other appropriate writ order or direction by quashing and setting aside the impugned order in original dtd 23.2.2009 and resultantly the order in Appeal dated 18.12.09 and uphold the refund granted already vide order dtd. 3.3.09.

b. Your Lordships be pleased to pending the final disposal of the present petition stay the operation and implementation of any recovery qua the above impugned orders dtd. 23.2.2009 & 18.12.09.

c. Your Lordships be pleased to pending the admission and final hearing of the present petition grant ex parte ad interim relief in terms of prayer B above.

d. Your Lordships be pleased to pass such other and further orders deemed fit and proper in the facts of the present case.”

The facts in this petition are in narrow compass. The petitioner had filed the refund claim of Rs. 4 lakhs. This was on the ground of an inquiry initiated as per the Directorate General of the Central Excise Intelligence (“DGCEI” for short) which related to excess payment of duty drawback. On 10.8.2001, panchnama in this respect was drawn and no adjudication process for confirming the dues were initiated.

The Assistant Commissioner sanctioned the refund claim of Rs.4 lakhsvide its order dated 2.6.2008 under order in original considering the said amount as pre-deposit relying on the decision of this Court rendered in case of Omkar Exports v. Union of India reported in 2009 (240) ELT 355 (Guj.). Such refund had already been paid to the petitioner. Revenue had challenged the said order raising various grounds. Such departmental appeal was allowed by the Commissioner (Appeals) vide its order dated 19.12.2008 and the same was challenged before CESTAT on 19.1.2009. Tribunal relying on the decision of this Court rendered in case of Omkar Exports (supra) set aside the order of the Commissioner(Appeals) vide its order dated 3.3.2009

In the meantime adjudicating authority which sanctioned the refund amount issued a fresh show cause notice on the ground that the refund was erroneously granted. After availing the opportunity of hearing, it confirmed the recovery of refund amount of Rs. 4 lakhs vide its impugned order dated 23.2.2009. Adjudicating authority has noted that personal hearing was offered to the assessee thrice who did not avail such opportunity of being heard in person. On noting that the principles of natural justice has been sufficiently followed, it decided the issue on the basis of the available evidence on record. The petitioner herein challenged the same before the Commissioner (Appeals) raising various grounds in such challenge. Such appeal was preferred on 3.8.2009 i.e. five months after the order impugned was passed. An application for condonation of delay was preferred along with the said appeal. It had been averred in the said application for condonation that the order in original had been received, but, was lost as the person concerned who received such an order did not file it at the proper place. Commissioner (Appeals) rejected this on the ground that there is delay of five months in filing the appeal. Invoking provisions of section 35 of the Central Excise Act, it held that it does not enjoy the powers to condone delay beyond a period of 30 days.

This was carried to the Tribunal by the petitioner which confirmed the order of the Commissioner(Appeals) relying on decision of Apex Court rendered in case of Singh Enterprises vs. CCE Jamshedpur reported in 2008 (221) ELT 163 (SC) = (2007-TIOL-231-SC-CX). The Tribunal also concurred with the findings that the Commissioner (Appeals) would not have power to condone the delay beyond the period of 30 days and the stipulated period of 60 days and accordingly, the petitioner’s appeal came to be rejected.

Appellant’s Contention:-Appellant submitted that the petitioner has a very good case on merits but only on the technical ground of limitation by not exercising powers of condonation of delay, both the authorities have not entertained the plea of the petitioners, although, he had made out sufficiently satisfactory grounds for such condonation. He also further urged that the petitioner cannot be deprived of his substantive right only on such technical grounds. He has sought to place reliance upon the decisions of this Court rendered in case of D.R. Industries Ltd. v. Union of India reported in 2008 (127) ECC 61 = (2008-TIOL-300-HC-AHM-CX) and also in case of Senior Superintendent of Post Office v. Union of India dated 23.6.2011 in Special Civil Application No.7350/2011. It would be profitable to reproduce the observations made in the said case at this stage:

“3. To the statutory provisions contained in the Finance Act, 1994 with respect to filing of appeal and limitation etc, there is no dispute. It is thus not in dispute that the power of Commissioner (Appeals) to condone the delay is only upto a maximum period of three months.

In that view of the matter, we find no illegality in the order under challenge. Counsel for the petitioner, however, drew our attention to the judgment of this Court in the case of D.R. Industries Ltd. and anr. vs. Union of India and ors. reported in 2008(3) G.L.H. 662 to contend that even in such cases where there is statutory limit to which delay can be condoned, the High Court in its extraordinary power can, in appropriate cases, interfere. To the preposition laid down in the said decision, we are not joining the issue. In a given case, an aggrieved person can knock the doors of the High Court seeking redressal against the orders in original and the High Court, in its extraordinary powers under writ jurisdiction of Article 226 of the Constitution, may for valid reasons, to obviate extreme hardship or injustice, entertain a challenge even beyond the period of limitation prescribed. In the present case, however, we are not inclined to adopt such a course for the simple reason that the amount of service tax and penalty demanded is not very large. Further, in any case it is a question of payment of tax from one Central Government Department to another Central Government Department. Looking to the facts and circumstances of the case, we are not inclined to exercise extraordinary discretionary jurisdiction and, therefore, the petition is dismissed.”

Respondent’s Contention:-The Respondent submitted that this Court may not interfere in extraordinary jurisdiction in the instant case when there is no error in their concurrent views. He however, has not disputed that neither of the authorities i.e. the Commissioner (Appeals) and the Tribunal examined the issue on merits. He heavily relied upon the decision of the Apex Court rendered in case of Singh Enterprises vs. CCE Jamshedpur (supra) to substantiate his decision. He has also placed reliance upon the decision of the Apex Court in case of S.S. Rathore v. State of Madhya Pradesh reported in 1989 (43) E.L.T. 790 (SC) = (2002-TIOL-398-SC-LMT) where doctrine of merger has been explained by the Apex Court which was examining the question of provisions of Administrative Tribunals Act. After considering the question in detail, it has concluded that doctrine of merger is applicable not only to the Courts but also to the Tribunal and order of lower quasi judicial authority merged into the appellate and revisional orders. Relevant findings are reproduced here-in-under for better comprehension of issue.

“11. The distinction adopted in Mohammad Nooh's case between a court and a tribunal being the appellate or the revisional authority is one without any legal justification. Powers of adjudication ordinarily vested in courts are being exercised under the law by tribunals and other constituted authorities. In fact, in respect of many disputes the jurisdiction of the court is now barred and there is a vesting of jurisdiction in tribunals and authorities. That being the position, we see no justification for the distinction between courts and tribunals in regard to the principle of merger. On the authority of the precedents indicated, it must be held that the order of dismissal made by the Collector did merge into the order of the Divisional Commissioner when the appellant's appeal was dismissed on 31.8. 1966.

In this background if the original order of punishment is taken as the date when cause of action first accrues for purposes of Article 58 of the Limitation Act, great hardship is bound to result. On one side, the claim would not be maintainable if laid before exhaustion of the remedies; on the other, if the departmental remedy though availed is not finalised within the period of limitation, the cause of action would no more be justifiable having become barred by limitation. Redressal of grievances in the hands of the departmental authorities take an unduly long time. That is so on account of the fact that no attention is ordinarily bestowed over these matters and they are not considered to be governmental business of substance. This approach has to be deprecated and authorities on whom power is vested to dispose of appeals and revisions under the Service Rules must dispose of such matters as expeditiously as possible. Ordinarily, a period of three to six months should be the outer limit. That would discipline the system and keep the public servant away from a protracted period of litigation. We are satisfied that to meet the situation as has arisen here, it would be appropriate to hold that the cause of action first arises when the remedies available to the public servant under the relevant service Rules as to redressal are disposed of.

Reasoning of Judgment:-On thus hearing counsel for both the sides and on duly considering the submissions made, it can be noted at the outset that the petitioner herein when challenged the order of adjudicating authority, the second show cause notice was issued after once the refund had already been allowed and paid to him. Both the authorities have rejected the appeals of the petitioner on the ground of limitation. Both the authorities had relied upon the decision of Apex Court in so doing. We have already held as noted here-in-above that there is no quarrel that the power of Commissioner (Appeals) to condone the delay is of three months maximum. And, therefore, no fault can be found with the approach of both the authorities as far as question of condonation of delay is concerned. We are therefore, naturally not to interfere with the orders of both the authorities. We have gathered from the materials on record that none of these authorities has decided the question on merit after the second round of litigation began and therefore, the question of merger would not arise until the matter is decided on merit and hence we seek to uphold the challenge to the order-in-original treating the circumstances as extraordinary.

In the instant case, as the petitioner has approached this Court urging to invoke extraordinary jurisdiction relying on the decision of D.R. Industries Ltd. v. Union of India (supra), recognising that this Court has extraordinary powers in appropriate case to interfere even while upholding the contention that there is statutory limitation to which delay can be condoned by the authorities. We ourselves have earlier in case of Senior Superintendent of Post Office v. Union of India (supra) recognised that if an aggrieved person knocks the door of High Court seeking redressal under writ jurisdiction for valid reasons, to obviate extraordinary hardship and injustice such challenge can be entertained even beyond the period of limitation.

In the instant case, we have found that in the first round of litigation present petitioner was refunded the amount by way of order in original. The respondents have also not disputed the fact that the petitioner has extremely good case on merit. We also need to record the fact that the petitioner while challenging the order impugned before the Commissioner(Appeals) not only had preferred the application for condonation of delay, but, had also substantiated the same grounds with sufficient and acceptable grounds for condoning such delay and thus has explained sufficiently from the beginning such delay. It is a different aspect that appellate forums are bound by the law on the issue. Thus the total length of delay being very small and with extremely good ground on merit to sustain, we are of the opinion that non interference at this stage would cause gross injustice to the petitioner. Therefore, we need to step in by invoking extraordinary jurisdiction.

At the cost of reiteration, we note that we are conscious of the fact that such powers are required to be exercised very sparingly and in event of extraordinary circumstances in an appropriate case where otherwise we would fail in our duty that such powers are needed to be invoked. We are therefore, of the opinion that orders impugned and appellate forums dated 7.1.2011 and 18.12.2009 though not be interfered with and yet the impugned order of order in original dated 23.2.2009 requires to be quashed and set aside.

Learned counsel Shri Dave under instructions submitted that he is not claiming any interest on the ground of refund. Therefore, no order in this respect is required to be made.

Decision:-The petition in the above terms stands allowed.

Comment:-The essence of this case is that although there is limitation for filing appeals but in extraordinary situations, when the case is on extremely strong merits, the High Court may interfere and provide relief to the assessee.

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PJ/Case Law/2013-14/1710

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