2014 (9) TMI 561 - HC - Central Excise

Court dismisses writ petition, upholds AAIFR decision on appeal delay. Emphasizes natural justice principles violation.

M/s. Andhra Cement Ltd. Versus Dy. Commissioner Central Excise, Guntur

The court dismissed the writ petition, upholding AAIFR's decision to condone the delay in filing the appeal. It emphasized the violation of natural ... Condonation of delay for filing an appeal before Appellate Authority for Industrial and Financial Reconstruction (AAIFR) - Sick unit - order issued versus order served - AAIFR condoned the delay in favor of revenue - Held that:- order dated 21st July, 2008, was passed without issue of notice and hearing the respondent-Revenue on the question whether or not waiver of interest/penal interest or penalty were justified. Directions were issued for waiver of entire interest levied or leviable on excise duty and service tax arrears. It was further directed that the payment of the principal amount should be made in five annual instalments, without any interest/penal interest or penalty. (The modified scheme refers to period of 7 years and 5 annual instalments for payment but the learned counsel for the petitioner has stated that the scheme, which was actually sanctioned, postulated payment of dues in 5 years). It is apparent and manifest that there was violation of principles of natural justice. This is why the Revenue had filed an appeal, inter alia, stating that the order directing complete waiver of interest and penalty should not have been passed without hearing them and without their point of view being considered and examined by the BIFR. It is submitted on behalf of the respondent-Revenue that settlement cannot be forced and imposed on an unwilling party and whether or not to accept the terms had to be decided by the Central Excise authorities in accordance with law as per the guidelines in vogue and applicable. AAIFR has rightly relied on the decision of a Division Bench of this Court in Director-General of Income Tax (Admn) vs. Board of Industrial and Financial Reconstruction and Ors.,[2000 (8) TMI 981 - HIGH COURT OF DELHI]. - Decided against assessee. Issues Involved:1. Condonation of delay in filing appeal before AAIFR.2. Violation of principles of natural justice.3. Applicability of limitation period under Section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985.4. Validity of the modified rehabilitation scheme sanctioned by BIFR.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing Appeal Before AAIFR:The petitioner challenged the order dated 12th August 2011, passed by AAIFR, which condoned the delay in filing an appeal by the Excise Department against the BIFR order dated 21st July 2008. The AAIFR held that the limitation period began when the respondent received the certified copy of the BIFR order on 22nd December 2009. The respondent had applied for the certified copy on 14th December 2009 and received it on 6th January 2010, subsequently filing the appeal. The petitioner argued that the respondent was aware of the BIFR order as of 24th October 2008, evidenced by correspondence and legal opinions obtained by the respondent.2. Violation of Principles of Natural Justice:The BIFR's order dated 21st July 2008, which sanctioned a modified rehabilitation scheme, was passed without notifying or hearing the Excise Department. This order included waivers of interest and penalties and allowed the payment of principal dues in installments. The respondent contended that such waivers should not have been granted without their input, as the settlement terms needed to be accepted by the Central Excise authorities in accordance with applicable guidelines.3. Applicability of Limitation Period Under Section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985:Section 25 stipulates that an appeal must be filed within 45 days from the date a copy of the order is issued, with a possible extension to 60 days for sufficient cause. The AAIFR and the court relied on the precedent set in Director-General of Income Tax (Admn) vs. BIFR, which clarified that the limitation period begins when the certified copy is issued to the aggrieved party. In this case, the certified copy was received by the respondent on 6th January 2010, making the appeal timely.4. Validity of the Modified Rehabilitation Scheme Sanctioned by BIFR:The BIFR's order included concessions such as waivers of interest and penalties and installment payments for principal dues. The AAIFR and the court found that these concessions were granted without proper notice or hearing for the Excise Department, violating principles of natural justice. The court noted that the BIFR did not communicate the order as required under Regulation 15, which mandates authenticated communication under the Secretary's signature or an authorized officer.Conclusion:The court dismissed the writ petition, upholding AAIFR's decision to condone the delay in filing the appeal. It emphasized the violation of natural justice principles in the BIFR proceedings and the necessity of following proper procedures for issuing orders. The court directed the parties to appear before AAIFR for further proceedings, ensuring that the respondent's contentions would be considered in accordance with relevant guidelines and policies.