CX - Discretion vesting in tribunal must be exercised judiciously and not capriciously - It is improper to throw out a litigant on technical ground after appeal is entertained and kept pending: HC
By TIOL News Service
MUMBAI, JAN 30, 2018: AGAINST an o-in-a dated January 2012, M.K.Trading Co . had filed an appeal before the Tribunal.
This appeal was dismissed by the Tribunal on the following ground -
CX - Duty involved in the case is Rs.25,544/- and interest thereon - Order passed by Commissioner(A) u/s 35A of CEA, 1944 - in view of second proviso to section 35B of the CEA, 1944, Tribunal has discretion to refuse to admit appeal where amount of duty, amount of fine or penalty determined by such order does not exceed Rs.50,000/- (before 06/08/2014) and Rs.2 lakhs (on or after 06/08/2014) - appeal is dismissed only on the ground that duty involved is below threshold limit of Rs.50,000/- without going into the merits of the case: CESTAT [para 3, 4]
We reported this order as 2015-TIOL-2094-CESTAT-MUM.
The appellant went back to the Tribunal with an application for Rectification of an alleged Mistake in this order.
The applicant submitted that -
+ the amount of duty involved is Rs.25,544/-. However, taking into account penalty, the amount exceeds the threshold limit of Rs.50,000/- and, therefore, as per Section 35B(1) and proviso thereto, the Tribunal has discretion to refuse to admit the appeal in case duty or penalty or fine determined by the impugned order does not exceed Rs.50,000/-.
+ in the proviso the word 'or' should be read as 'and' to that effect the amount of duty including penalty exceeds the limit of Rs.50,000/- and, therefore, the appeal could not have been dismissed on this ground alone.
+ alternatively, since the appeal had been admitted and stay was granted, therefore, at the time of hearing the appeal, the Tribunal was not correct in dismissing the appeal only on the ground of monetary limit in terms of Section 35B of the CEA, 1944.
The Bench dismissed the ROM. We reported this order 2015-TIOL-2207-CESTAT-MUM thus –
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CX - It is very clear from s.35B(1) of the CEA, 1944 that if any of the amount i.e. either duty, or penalty or fine involved in a particular case is less than Rs.50,000/-, Tribunal has discretion not to admit the appeal - no cause to read 'or' as 'and' - ROM application dismissed: CESTAT [para 5]
CX - Maintainability - There is no stage prescribed under the law for exercising the discretion by the Tribunal for disposing of the appeal in terms of proviso to Section 35B(1) - even if appeal was admitted and stay was granted, in terms of the discretionary power, appeal can be rejected at the stage of final hearing the appeal: CESTAT [para 5 ]
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As regards the case laws cited, the CESTAT held that the same do not become precedence as the discretionary power provided in the proviso u/s 35B(1) of CEA, 1944 can be exercised by the bench depending upon the facts and circumstances of the case.
An appeal was filed against this order before the Bombay High Court and the same was admitted on the following substantial questions of law –
(a) Whether respondent no. 2 i.e. the tribunal has erred in rejecting the appeal at the stage of final disposal of appeal without taking into consideration the fact that the appeal has already been admitted after compliance of part payment of duty amounting to Rs.25,544/- as per the stay order no. S/56/12/SMB/C-IV dated 1st May, 2012.
(b) Whether the tribunal has erred in exercising its powers to reject the appeal under the proviso to section 35B on monetary limits which in fact is not available in case of the appeal of the appellant involving the amount of duty along with interest thereon and penalty which in total exceeds threshold limit of Rs.50,000/- which inter-alia is applicable only is available in case of issue involving only duty or only penalty not exceeding Rs.50,000/-?
After considering the submissions and adverting to the provisions of section 35B of the CEA, 1944, the High Court observed -
"7. It is surprising that at the final hearing of the appeal, which was filed in the year 2012, the tribunal perused the records only for the purpose of exercising this discretion and passed an order initially running into four pages. Then, on an application for rectification of this mistake, namely, dismissal of the appeal which was already admitted, by invoking a proviso, the tribunal devoted its attention to this issue and passed an order running into five pages. The time which the tribunal devoted for all this could have very well and fruitfully been devoted to the adjudication on merits of the appeal. It is improper to throw out a litigant on such a technical ground after the appeal is entertained and kept pending. Once the appeal was admitted in this case and kept pending, then, no useful purpose is served by dismissing it at the final hearing on the ground of maintainability. Ultimately, it is a discretion vesting in the tribunal, which it must exercise judiciously and not capriciously. We find that refusal to decide the appeal on merits was vitiated by an error of law apparent on the face of the record."
The orders (supra) passed by the Tribunal were set aside and the appeal was restored to the tribunal's file for adjudication on merits, in accordance with law.
The appeal was disposed of.
(See 2018-TIOL-176-HC-MUM-CX)
