By TIOL News Service

NEW DELHI, JULY 23, 2015: THE Appellant is aggrieved by the fact that the right of Appeal bestowed on the assessee by the Central Excise Act, has virtually been rendered nugatory since, successively, its Appeal has been declined consideration on merits, having instead held as time-barred.

It appears that on 28.7.2011, the Assistant Commissioner, Customs and Central Excise Division, Haldwani had concluded the proceedings and hearings in respect of the show cause notice dated 25.3.2011 issued to the Appellant. The Appellant's contention is that after a passage of eight months an order came to be passed by the said Officer on 30.3.2012 holding that the Appellant was not eligible for the exemptions claimed; a duty of Rs.3 ,45,629 /- along with penalty of a like amount was imposed under Section 11A of the Act. The legality of that Order is not the question before the Supreme Court.

The Appellant filed an Appeal against the said Adjudication Order in the Office of the Commissioner (Appeals), Customs and Central Excise (Meerut-II) asserting that consequent upon the initiation of the recovery proceedings by the Department, the Appellant learned for the first time, on 26.7.2012, of the passing of the aforesaid Order dated 30.3.2012. The case put forward is that the Adjudication Order dated 30.3.2012 appears to have been served on an employee of the Appellant, named Sanjay, who according to the Appellant was a ‘Kitchen boy' employed on daily wages, and was avowedly not authorized to deal with communications to and from the Appellant; he had unauthorisedly affixed the stamp/seal of the Appellant on the some documents purporting to establish the service of the Adjudication Order, on 3.4.2012. Accepting the service to have been properly effected on the Appellant, the Commissioner (Appeals) dismissed the Appeal filed by the Appellant by an Order dated 28.9.2012 on the ground that it was time-barred. The period was held to have started to run from 3.4.2012 and since the Appeal had been filed on 22.8.2012 it was held to be not maintainable, being beyond the prescribed period of sixty days. The merits of the Appeal were not gone into at all.

This decision was challenged before the Customs Excise and Service Tax Appellate Tribunal, New Delhi, which accepted the Department's version that the Adjudication Order had been duly served/delivered on the Appellant on 3.4.2012; since the Appeal came to be filed on 22.8.2012, the dismissal on the ground of limitation was held to be in consonance with the Act.

Thereafter, the Appellant approached the High Court of Uttarakhand at Nainital , which opined that an Appeal is a creature of statute and therefore its preferment beyond the period permitted by the relevant statute, reduced it to a futile exercise.

The Supreme Court noted that the Appellate Authorities as well as the High Court failed to keep in perspective the essential issue - namely - to ascertain the date from which limitation was to be calculated.

Sub-section (a) of Section 37C (supra) states that any decision, order, summons or notice may either be sent by registered post with acknowledgement due to the person for whom it is intended or his authorized agent. If this mode of service is unsuccessful then service can be effect by affixation. It is not the case of the Department that it simultaneously also dispatched the Order to the Appellant by registered post with acknowledgment due.

The Supreme Court observed,

"It is an anathema in law to decide a matter without due notice to the concerned party. Every effort must be taken to meaningfully and realistically serve the affected party so as not merely to ensure that he has knowledge thereof but also to enable him to initiate any permissible action. The Appellant justifiably submits that it was statutorily impermissible for the Respondents to serve the Adjudication Order on a “kitchen boy”, who is not even a middle level officer and certainly not an authorized agent of the Appellant. The version of the Appellant that it learnt of the passing of the Adjudication Order dated 30.3.2012 only when, in the course of the recovery proceedings, the Department's officials had visited its unit, is certainly believable. The fact that, firstly, the Order had not been passed in the presence of the Appellant, so as to render its subsequent service a formality, and secondly, that the Order came to be passed after an inordinate period of eight months should not have been ignored. This fact should not have been lost sight of by the Authorities below as it has inevitably led to a miscarriage of justice. The Inspector of the Department should have meticulously followed and obeyed the mandate of the statute and tendered the Adjudication Order either on the party on whom it was intended or on its authorized agent and on one else. It is not the Respondents' case that Shri Sanjay was the authorized agent. Even before us, despite several opportunities given, the Respondents have failed to file their response to the Special Leave Petitions so as to controvert the asseveration of the Appellant that Shri Sanjay on whom the decision was tendered was a mere daily wager ‘kitchen boy' and that the Appellant had no knowledge of the passing of the Adjudication Order. We are also informed that the recoveries envisaged in the Adjudication Order have already been effected."

The Supreme Court came to the clear conclusion that a miscarriage of justice has taken place, in that the Authorities/Courts below have failed to notice the specific language of Section 37C (a) of the Act which requires that an Order must be tendered on the concerned person or his authorized agent, in other words, on no other person, to ensure efficaciousness.

The Supreme Court observed, "it is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all."

It was further observed, "The Inspector who ostensibly served the copy of the Order should have known the requirements of the statute and therefore should have insisted on an acknowledgement either by the Appellant or by its authorized agent. The Inspector had a statutory function to fulfil , not a mere perfunctory one. The Appeals are accordingly allowed and the impugned Orders are set aside. In the facts obtaining before us, the computation of the period would commence at least from the date on which the Appellant asserts knowledge of its existence, i.e. on 26.7.2012. So computed, the Appeal filed before the Commissioner (Appeals) on 22.8.2012 would be within the prescribed period of 60 days and should, therefore, have been entertained on merits. It is ordered accordingly. The Appellant shall appear before the Commissioner (Appeals) on the forenoon of 3.8.2015. The Appeal shall then be taken up and heard on its merits."

There shall be no order as to costs.

(See 2015-TIOL-154-SC-CX)