By TIOL News Service

NEW DELHI, APRIL 06, 2018: THE facts are that show cause notice demanding CE duty on clandestine manufacture/sale etc. of cigarettes was issued on 25th March, 1988. As per the Order in Original dated 10.07.1992, the appellant was liable to pay a total CE duty Rs.23.22 Crores. Penalty was also imposed in addition. The Tribunal by order dated 19th August, 1993 had directed the appellant to deposit a total of Rs.18.83 crores within three months as a pre-condition and stipulation for hearing the appeals on merits.

The appellant had challenged the pre-deposit order before the High Court and the Supreme Court, with alternative prayer for extension of time for compliance. Extension of time was granted and terms were also modified. However, the terms imposed were not adhered to and complied as only part payments were made.

The Tribunal on 7th February, 1996 dismissed the appeals for failure of the appellant to make the pre-deposits.

In 2017, the appellant moved a miscellaneous application before the Tribunal for condonation of delay in filing restoration application and an application for restoration of the appeal primarily on the pretext that disputed tax had been paid.

The CESTAT rejected the applications filed on the ground that there was a delay of more than 22 years, which was extraordinary and the Tribunal had no power to condone the same.

Against this order, the assessee is in appeal before the Delhi High Court.

The appellant submitted that the Tribunal had erroneously dismissed the application for restoration on the ground of extraordinary delay without appreciating the law and facts of the present case; that there was no delay at all as the Appellant was under the shelter of BIFR till May, 2016, and if at all there was a delay, then that is only of 14 months;that the Appellant was facing a financial crunch and, therefore, the pre-deposit could not be made within the prescribed time; that the Appellant had made the pre-deposit in installments till March, 2011. Apex Court decisions 2015-TIOL-90-SC-CX-LB, 2002-TIOL-444-SC-LMT and High Court decisions 2016-TIOL-465-HC-MAD-ST & 2006-TIOL-449-HC-AHM-CX were also cited in support of their arguments.

After considering the elaborate submissions, the High Court noted that the Judgments relied by the appellant are based on facts, hence, are not of any help, and further observed -

+ The list of dates and events filed by the appellant itself demonstrate sheer negligence and lack of bona fide.

+ The Tribunal on 7th February, 1996 dismissed the appeals for failure of the appellant to make the pre-deposits. The order of dismissal and non-compliance was made nearly three and a half years after the Order in Original dated 10th July, 1992 and the order of the Tribunal directing pre-deposit dated 19th January, 1993. Thus, sufficient time and opportunity was granted

+ The order of dismissal of the appeal dated 7th February, 1996 was not challenged for 22 years. In 2017, the appellant woke from slumber and moved a miscellaneous application for restoration of the appeal primarily on the pretext that disputed tax had been paid. 

+ This delay of 22 years cannot be condoned on vague assertions and general statements that law of condonation of delay is liberal and justice would prevail if the appeals are heard on merits for payments have been made. Such pleas are specious and deserve rejection.

+ The Order in Original was passed on 10th July, 1992. Recoveries obviously had to be made, especially once the Order in Original had become final. Mere recoveries or even payment after years cannot result in restoration of the appeals or justify condonation of delay in moving the restoration application.

+ There is no doubt that liberal construction of the words "sufficient cause" can be put when there is neither negligence nor inaction nor want of bona-fides imputable to the applicant. However, in this case, there is not only negligence, but also inaction as well as the petition lacks bona-fides.

+ Appellant states that, pursuant to the orders passed in October, 2010 in cases of independent companies, in December, 2010, Vice-President (Law) was asked to file restoration application in the appeals before the Tribunal. The plea is not substantiated. It is accepted that no restoration application was filed. Contention that the appellant company was not aware of default by the Vice-President (Law) and had assumed that the restoration application had been filed, is moonshine, doctored and apparently false for it is accepted that till 2017 no attempt was made to ascertain and verify whether the application was listed and the order passed. Copy of the application is not on record and could never be located.

+ Contention that proceedings were pending before BIFR and therefore, restoration application could not be filed, is again not the true reason and cause for not filing restoration application.

+ Tribunal had dismissed the appeals for non-payment of the pre-deposit on 7th February, 1996, a year before the appellant was declared as sick company by BIFR vide order dated 3rd April, 1997.

+ Net worth of the appellant turned positive during the financial year ending 31st March, 2007 and the BIFR vide order dated 29th June, 2007 had discharged the appellant from purview of the enactment relating to sick companies, though as per the appellant direction to implement provisions of the scheme and monitoring before the BIFR had continued. Even thereafter, no application was filed before the Tribunal for ten years, till 2017. The appellant clearly accepted the order of the Tribunal and did not seek revival of the appeals and hearing on merits.

+ The appellant has been grossly negligent and derelict. Their inaction reflects acceptance and abandonment. The appellants have failed to show good cause and justification. On the other hand, their conduct lacks bona fide and manifests recklessness. This careless attitude and indifference is unacceptable.

The High Court, therefore, concluded that it did not find any valid ground or reason to interfere with the impugned order of the CESTAT.

The appeal was dismissed.

(See 2018-TIOL-626-HC-DEL-CX)