State of Haryana Vs CESTAT

Satish Kumar Mittal, J.@mdashThe State of Haryana has filed this appeal u/s 35G of the Central Excise Act, 1944 against the order dated 21-3-2006 (Annexure A-6) passed by the Custom, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "the Tribunal"), whereby the application for condonation of 778 days delay in filing the appeal has been dismissed on the ground that the delay has not been sufficiently explained and consequently the appeal has also been dismissed being barred by limitation.

2. The brief facts of the case are that the appellant had purchased 10000 polythene covers from M/s. Shivalik Agro Poly Products Limited (respondent TMo. 4 herein). Out of which, 3500 polythene coverstie covers were supplied by the aforesaid firm up to 28-2-1986 from Kalka Depot and the remaining polythene covers were supplied subsequently till May, 1986 from Parwanoo Depot. When the Department of Central Excise issued a show cause notice raising a demand of Rs. 30,34,806.50 towards the Central Excise Duty for the supply of aforesaid 10000 polythene covers, M/s. Shivalik Agro Poly Products Limited demanded the aforesaid amount from the appellant which gave rise to a dispute between the appellant and the said company. The matter was referred for adjudication to the sole Arbitrator, who vide its award dated 15-3-1989 has held that M/s. Shivalik Agro Poly Products Limited was entitled to the said amount towards the Excise Duty. In terms of the said award, the appellant paid Rs. 30,34,806.50 to the aforesaid company which was paid by it to the Central Excise Department for supply of the aforesaid 10000 polythene covers.

3. M/s. Shivalik Agro Poly Products Limited initiated the proceedings before the Central Excise authorities seeking to question the demand of Rs. 30,34,806.50 raised by the Central Excise Department. The Commissioner, Central Excise, Chandigarh vide its order dated 4-8-1995 dropped the demand of Rs. 30,34,806.50 and confirmed the demand to the tune of Rs. 14,31,495/-. The said order of the Commissioner, Central Excise, Chandigarh was upheld by the Commissioner, Central Excise (Appeals), Chandigarh vide order dated 23-1-2003. The said order was further upheld by the Tribunal on 29-7-2004 and the same became final.

4. Since the demand of Rs. 30,34,806.50 was reduced to Rs. 14,31,495/-, the appellant who paid the aforesaid amount to M/s. Shivalik Agro Poly Products Limited, claimed refund to the tune of Rs. 16,03,311.50 by filing an application with the office of Assistant Commissioner, Central Excise Division, Shimla on 13-8-1996. The said application was dismissed by the Deputy Commissioner, Central Excise and Customs Division, Khalini, Shimla-2 vide order dated 30-12-2002 on the ground that the same was not filed within six months (the limitation prescribed) from the date of passing of the order dated 4-8-1995, and rejected the claim of the appellant to refund the said amount.

5. Feeling aggrieved against the aforesaid order, the appellant filed an appeal before the Commissioner (Appeals), Central Excise, Chandigarh. The same was also dismissed vide order dated 2-9-2003. A perusal of the said order reveals that the Appellate Authority not only upheld the order passed by the Deputy Commissioner, Central Excise and Customs Division, Khalini, Shimla-2 on the ground of limitation but it was also observed that only the manufacturer could have claimed the amount and not the appellant.

6. Against the above-said order dated 2-9-2003, the appellant preferred an appeal before the Tribunal along with an application for condonation of delay. The Tribunal vide its order dated 21-3-2006 dismissed the application for condonation of delay as well as the appeal while observing as under:

The applicant relied on the decision of the Hon''ble Supreme Court in the case of State of Haryana Vs. Chandra Mani and others, to submit that the Hon''ble Supreme Court had condoned the delay of 109 days after considering the time consuming process a long hierarchy of officers. We find that as per the provision of Section 35B of the Central Act, 1944, the Tribunal has power to condone the delay within the period of limitation. In the present case, there is delay of 778 days. The reasons as reproduced above are not sufficient in not filing the appeal within the period of limitation. The contention in the application is only to the extent that the assessee has right to file the appeal even before the period of limitation. In the circumstances, we do not find any merit in the application and the same is dismissed. Consequently, the appeal is also dismissed.

7. The appellant has challenged the order dated 21-3-2006 passed by the Tribunal in this appeal while raising the following substantial questions of law:

(i) Whether the Tribunal was justified in dismissing the appeal filed by the appellant on the ground that as per the provision of Section 35(B) of the Central Excise Act, the Tribunal has power to condone the delay within the period of limitation ?

(ii) Whether the Tribunal has erred in law while dismissing the application for condonation of delay on the ground that the appellant had failed to show sufficient cause warranting condonation of delay of 778 days in filing the appeal?

(iii) Whether the Tribunal has erred in dismissing the appeal by overlooking the fact that refusal to condone the delay would result in miscarriage of justice as the right of the department to recover the amount of duty paid already stood adjudicated by the Tribunal in appeal No. E/689/03/LB(C) decided on 29-7-2004?

8. We have heard the counsel for the parties and gone through the impugned order as well as various other orders annexed with this appeal.

9. Learned Counsel for the appellant submitted that the Tribunal has erred in law while observing that as per the provision of Section 35(B) of the Central Excise Act (hereinafter referred to as ''the Act''), the Tribunal was clothed with the power to condone the delay within the, period of limitation. While referring to the provisions of Sub-sections (3) and (5) of Section 35 of the Act, learned Counsel submitted that the Tribunal has been empowered to admit an appeal after the expiry of the period of limitation, if it is satisfied that there was sufficient cause for not presenting the appeal within the prescribed period. Therefore, learned Counsel submitted that u/s 35(B) of the Act, there is no bar with regard to the power of the Tribunal to condone the delay after the expiry of the period of limitation. Learned Counsel further argued that the Tribunal has erred in concluding that the appellant therein had failed to demonstrate sufficient cause in the application seeking condonation of delay. Learned Counsel further submitted that in the application for condonation of delay, delay of 778 days was duly explained by giving sufficient reasons which have been totally overlooked. Learned Counsel submitted that the Tribunal has completely ignored the fact that in the facts and circumstances of the case, where the appellant is entitled to have the refund of an amount of Rs. 16,03,311.50, the refusal to condone the delay would result into miscarriage of justice. Learned Counsel argued that in view of the earlier decisions given, the appellant has a very good case on merits and he is legally entitled to get refund of the amount which was paid by it. Learned Counsel further contends that in the facts and circumstances of the case, the application for condonation of delay discloses sufficient reasons for not filing the appeal within the prescribed period of limitation. He contends that it is not the case where it can be said that the appellant was negligent or had acted in mala fide manner by not filing the appeal within the prescribed period. Learned Counsel contends that the Tribunal has passed totally a non-speaking order.

10. On the other hand, learned Counsel for the respondents submitted that the order passed by the Tribunal does not require any interference in this appeal as no substantial question of law is involved. He submitted that the Tribunal has rightly dismissed the application for condonation of delay as the appellant had failed to explain the sufficient reasons for not filing the appeal within the prescribed period of limitation. Therefore, the application for condonation of delay in filing the appeal and also the appeal were rightly dismissed and the said order does not require any interference.

11. After hearing the arguments of the learned Counsel for the parties, we are of the opinion that the Tribunal has erred in law while observing that "as per the provision of Section 35B of the Central Excise Act, 1944, the Tribunal has power to condone the delay within the period of limitation." Sub-section(3) and (5) of Section 35(B) of the Act are reproduced as under:

(3) Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the Commissioner of Central Excise, or, as the case may be, the other party preferring the appeal.

(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in Sub-section (3) or Sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period.

12. Sub-section (3) provides a limitation of three months for filing an appeal against the order of the Commissioner of Central Excise from the date on which the order sought to be appealed against is communicated to the aggrieved party. Sub-section (5) provides that the Tribunal may admit an appeal after the expiry of the relevant period if it is satisfied that there are sufficient grounds for not presenting the appeal within that period. The plain language of Sub-section (5) clearly indicates that if the appeal is filed after the period of limitation and if in an application for condonation of delay, the person who has filed the appeal, satisfies the Tribunal that there were sufficient cause for not presenting the appeal within time, the said appeal may be admitted. Therefore, it cannot be said, as observed by the Tribunal, that as per the provision of Section 35B of the Act, the Tribunal has power to condone the delay within the period of limitation.

13. Secondly, while dismissing the application for condonation of delay, the Tribunal has observed that in the present case the reasons given by the appellant seeking condonation of 778 days delay in filing the appeal are not sufficient. No reason has been given on what account the reasons given in the application for condonation of delay in filing the appeal were not sufficient. A perusal of the application seeking condonation of delay reveals that the appellant has given various reasons for not filing the appeal within limitation. It has been stated that after receipt of the order dated 29-9-2003, the legal opinion of the counsel was sought which was received on 17-12-2003. Thereafter the matter was referred to the office of Legal Remembrancer, Haryana, who vide its communication dated 7-10-2004 advised for filing the appeal by engaging one senior counsel and one junior counsel. The matter was immediately taken up with the Advocate on Record on 26-10-2004. However, the matter remained pending with the Advocate on Record till 19-5-2005. Thereafter, on 30-11-2005, the appellant approached the Legal Cell, Haryana Bhawan, New Delhi for filing the appeal. Ultimately the appeal bearing No. E/387/06 was filed. It has also been stated that in the application some delay had taken place due to inaction of some of the officials of the State Government against whom the disciplinary proceedings have been initiated.

14. In our opinion, the Tribunal has not properly considered the application for condonation of delay in light of the law laid down by the Supreme Court in various cases in this regard and has dismissed the said application while passing a non-speaking order only by one line that there are not sufficient reasons in not filing the appeal within the period of limitation. In State of U. P. and others Vs. Harish Chandra and others, , while condoning the delay of 480 days in filing the SLP by the State, it has been held by the Supreme Court that it is undoubtedly true that the applicant seeking condonation of delay is duty-bound to explain the reasons for the delay but as has been held in several cases, the very manner in which the bureaucratic process moves, if the case deserves merit the court should consider the question of condonation from that perspective. In another case reported as State of Bihar and Others Vs. Kameshwar Prasad Singh and Another, , again the Supreme Court has held that dismissing the appeal on technical ground of delay would, instead of advancing interests of justice, result in failure of justice. In G. Ramegowda, Major and Ors Vs. Special Land Acquisition Officer, Bangalore, , it has been held by the Supreme Court that the expression ''sufficient cause'' in Section 5 must receive a liberal construction so as to advance substantial justice. Further, the Supreme Court in N. Balakrishnan Vs. M. Krishnamurthy, has held that in absence of anything showing mala fide or deliberate delay as dilatory tactic, court should normally condone the delay. It was further held that where a court condones delay in positive exercise of discretion, superior court and more particularly the revisional court should not normally disturb the same but where request for condonation of delay is refused, it would be open to the superior court to come to its own finding on the basis of explanation for delay given by the party. In that case, delay of 883 days in filing the appeal was condoned. Again the Supreme Court in State of Nagaland Vs. Lipok AO and Others, has observed that the expression ''sufficient cause'' should be considered with pragmatism in justice-oriented approach rather than the technical detection of sufficient cause for explaining every day''s delay. The court should decide thematters on merits unless the case is hopelessly without merit. It has been ''further held by the Supreme Court that equally, the State cannot be put the same footing as an individual. If the appeals brought by the State are lost for such default no person is individually affected but what in the ultimate analysis suffers, is public interest.

15. In view of the aforesaid facts and circumstances and the law laid down by the Supreme Court, and also the reasons given in the application for condonation of delay, we are of the opinion that the appellant-State has given sufficient reasons for condoning the delay and the Tribunal was not justified in dismissing both the application for condonation of delay and the appeal filed by the appellant at the threshold on the ground that as per the provision of Section 35(B) of the Act, the Tribunal has power to condone the delay within the period of limitation. It cannot be said that the appellant was grossly negligent or there was a deliberate inaction or lack of bona fide in pursuing its remedy. By the impugned order, a great injustice has been resulted to the appellant who is claiming the refund from respondent No. 4 for an amount which was paid in excess to the Central Excise Department, particularly when the order of the Commissioner, Central Excise, Chandigarh was confirmed by the Tribunal and became final. In our opinion, the Tribunal should have condoned the delay. Thus, on the facts and. circumstances of the case, we are of the opinion that it is a fit case for condoning the delay. Hence, the delay of 778 days in filing the appeal is condoned. Consequently, the appeal is allowed and the impugned order dated 21-3-2006 passed by the Tribunal is set aside and the Tribunal is directed to admit the appeal and decide the same on merits in accordance with law.

16. Parties through their counsel are directed to appear before the Tribunal on February 12, 2008.