By TIOL News Service

BANGALORE, MAY 10, 2016: IN this interesting case, there is demand of Central Excise duty on the CENVAT availed capital goods removed by the Petitioner. The appeal against the Order in Original was filed beyond the condonable period and the Petitioner received a communication from the Superintendent (Appeals) returning the appeal as the same was filed beyond 90 days. The Petitioner filed a Writ Petition against the said communication and the same was disposed with a direction to the Commissioner (Appeals) to pass necessary orders. Consequently, the Commissioner rejected the appeal on the ground of delay. Again the Petitioner filed a Writ Petition. But the Single judge dismissed the same as the appeal was filed before the Commissioner (Appeals) beyond the outer limit. The Petitioner filed appeal against the order of the Single Judge.

While disposing the appeal, the High Court found that the matter needs to be segregated into two parts: one is the exercise of power by the statutory authority hearing appeal within the scope and ambit of the statute and the other is the exercise of power by the High Court under Article 226 of the Constitution.

On the first issue, the High Court found no error in the order of Commissioner (Appeals) in dismissing the appeal on the ground of delay under Sec 35 of the Central Excise Act, 1944. However, on the second issue, the High Court held:

+ As per the guidelines laid down in case of Panoli Intermediate (India) (P) Ltd. vs. Union of India 2015-TIOL-1556-HC-AHM-CX-LB , the power under Article 226 of the Constitution can be invoked for challenging the order passed by the original authority in cases where the order passed is without jurisdiction or by assuming the jurisdiction which is not possessed or the exercise of power in excess of the jurisdiction or by crossing the limits of the jurisdiction or that there is flagrant disregard to the law or the rules of procedure or violation of principles of natural justice or there is failure of justice or the order has resulted into gross injustice.

+ The issue in the instant case is removal of capital goods as such which is a subject matter of case law prevailing earlier and the interpretation of the word “as such ” . The decision of this Court, in case of Solectron Centum Electronics Ltd., 2014-TIOL-1652-HC-KAR-CX ., would go to show that there was a substantial question to be considered even by the first authority.

+ If the aforesaid vital defence is not to be considered by the first appellate authority, the resultant effect would be gross miscarriage of justice. Under these circumstances, it would be an appropriate case to exercise power under Article 226 of the Constitution to interfere with the order of the first appellate authority and to direct the first appellate authority to consider the matter in light of the observations made by this Court in the present order as well as after giving opportunity of hearing the appellant herein.

+ However, as the Petitioner cannot be said to be vigilant in filing the appeal, even if the order of the first appellate authority is to be interfered with, it should be on a condition that the appellant deposits 7.5% of the demand of duty, plus pay the cost of Rs.25,000 /- to the respondent.

With the above directions, the High Court restored the matter before the Original Authority.

(See 2016-TIOL-905-HC-KAR-CX)