By TIOL News Service

MUMBAI, AUG 17, 2015: AGAINST the order of Tribunal directing pre-deposit, the applicant had preferred an appeal but the High Court held that there was no substantial question of law involved. However, the High Court had granted an additional 8 weeks time for making the pre-deposit. This extension in time also did not fetch any results inasmuch as the applicant did not make any pre-deposit and finally the Tribunal dismissed the appeal in July, 2014.

The applicant has filed miscellaneous applications for restoration of these appeals.

It is submitted hat the pre-deposit of Rs.16.5 lakhs could not be made due to financial difficulty in view of the fact that the applicant who is a Chartered Accountant, his certificate of practice was suspended by the ICAI in July 2010 and the suspension was lifted only on 09.09.2013.The applicant also annexed copy of the Income Tax Returns for the Assessment year 2010-11 to 2013-14, wherein the income is approximately Rs.3 lakhs per annum and as such, the appellant did not have any surplus in hand after meeting the necessary expenditure. That, in spite of best efforts, he could arrange personal loan from State Bank of Patiala in January, 2015 for Rs.3.74 lakhs and also obtained loan against Equitable Mortgage of Property, of Rs.9 lakhs from Oriental Bank of Commerce during December, 2014 and thereafter could manage to make the pre-deposit vide challan dated 29.01.2015. In these circumstances, it is pleaded that the appeals be restored in the interest of justice. [Bombay High Court in case of Customs Appeal No. 96 of 2014 decided by Order dated 17.11.2014, Priya Dyers Vs. Commissioner of Central Excise - 2014 (305) ELT 504 (Guj) refers.]

The AR vehemently opposed the plea made by arguing that the doctrine of merger would apply; that since the extension of time for making pre-deposit was also not honoured by applicant pursuant to which the appeal was dismissed, restoring the appeal would amount to extension of time granted by the Hon'ble High Court. [Pernod Ricardo India (P) Ltd. Vs. Commissioner of Customs, ICD, Tughlakabad - 2010-TIOL-54-SC-CUS, Hari Singh Vs. State of Haryana - 1993 (66) ELT 23 (SC) refers]

Case laws were cited by both sides.

The Member (Judicial) observed thus -

"4. …we are of the view that doctrine of merger is not hit in the facts and circumstances of the case. Firstly, the Tribunal had only passed an interim order for pre-deposit, the time of which was extended by the Hon'ble High Court and upon violation of such pre-deposit condition, the appeal was dismissed by the Tribunal. As such, there is no consideration of merits either by this Tribunal or by the Hon'ble High Court. We agree with the observation of the Hon'ble Bombay High Court and the Hon'ble Gujarat High Court that the right to appeal is sacrosanct and where the delayed compliance of pre-deposit/interim order is explained sufficiently, the appeals needs to be restored in the interest of justice for a decision on merits of the case. Time and again the Hon'ble Apex Court has observed that the Courts/Tribunals are respected for the cause of justice and or for rendering justice and not for perpetuating injustice for the sake of procedural reasons. Accordingly, we allow the applications for restoration of appeals and direct the Registry that the appeals be restored to their original file. As the appellant has made the pre-deposit, the evidence of which has been placed on record, the compliance in terms of pre-deposit order dated 4.12.2013 is noted."

The Member (Technical) had a differing view.

Placing reliance on the decisions cited by the AR & of Lindt Exports - 2012-TIOL-218-HC-DEL-CUS and Shimnit Kiwalite Industries Ltd. - 2009-TIOL-2054-CESTAT-MUM and holding that the doctrine of merger applies, the Member (T) concluded thus -

"9. In view of the various judicial pronouncements the unambiguous interpretation is that the Tribunal has become functus officio and has no jurisdiction to entertain the application for restoration of appeal in view of the clear violation of the Hon'ble High Court order to make the pre-deposit by 12.6.2014."

The applications for restoration of appeals was rejected by the Member (T).

And, therefore, the matter is placed before the President of the Tribunal to nominate the Third Member to resolve the difference of opinion on the following point:-

Whether the Tribunal has jurisdiction to restore the appeal of the appellant despite the violation of High Court's order to make pre-deposit before 12.6.2014 as held by Hon'ble Member (Judicial).

OR

Whether the Doctrine of merger applies, the Tribunal has become functus officio and has no jurisdiction to entertain the application for restoration of appeal when the condition of pre-deposit by 12.6.2014 is violated by the appellant.