2015 (1) TMI 626 - HC - Central Excise

High Court directs restoration of appeal, considering financial constraints and revival efforts.

PUNALUR PAPER MILLS LTD. Versus COMMISSIONER OF C. EX. & CUS., COCHIN

The High Court allowed the appeal, set aside the Tribunal's order, and directed the restoration and hearing of the appeal on its merits. The Court ... Restoration of appeal - application for restoration of the appeal after making the pre-deposit was not allowed by the Tribunal by holding the view that it was filed after about 16 years - Held that:- When there cannot be any dispute regarding the financial constraints of the appellant, that resulted in the inability of the appellant to make the deposit, the question is only whether the reasons pointed out by the appellant in seeking restoration are justified or not. It is informed by the learned senior counsel for the appellant that during the entire period the department has also not taken any step to enforce the liability as against the appellant. This shows that apparently the financial difficulty of the Company was a matter within the knowledge of the Department also. Therefore, when there cannot be any dispute with regard to the sufficiency of the reasons and when there is ample power for the Tribunal to restore the appeal, merely because there happened to be a delay of 16 years, the application should not have been rejected. The delay has been explained in detail in Annexure I. The Company which was functioning from 1888 went into red sometime in early 1990’s and now the appellant herein has entered into a MOU with the State Government also and it has revived its affairs. - Appeal restored. Issues:- Restoration of appeal after a delay of 16 years due to failure in making a pre-deposit.Analysis:The appeal before the High Court was filed against an order passed by the Tribunal, which refused to allow the restoration of the appeal due to a significant delay of 16 years in making the pre-deposit. The appellant, a Public Ltd. Company managing a paper manufacturing factory, had its appeal dismissed for not complying with the condition of making a deposit of a specified amount within the given timeframe. Subsequently, the appellant pursued legal remedies through a writ petition and a writ appeal, both of which were unsuccessful, leading to the final dismissal of the appeal.The appellant presented various facts to demonstrate the revival of the company's affairs under new management, including settling dues, signing agreements, and making substantial payments towards liabilities. The appellant argued that Section 35C of the Act provides the Tribunal with the power to restore the appeal, emphasizing that the delay was due to financial constraints during the period when the company was under Court Receiver.The Department, however, supported the Tribunal's decision, asserting that the delay of 16 years was inexcusable, and no leniency should be granted to the appellant for failing to make the pre-deposit within a reasonable time.In its analysis, the High Court referred to a Supreme Court judgment where an appeal was restored despite a delay, considering that the deposit had been made. The High Court acknowledged the financial difficulties faced by the appellant and the lack of enforcement actions by the Department during the period in question. The Court concluded that the reasons provided by the appellant for seeking restoration were valid, especially given the Company's history and efforts to revive its operations.Ultimately, the High Court held that the appeal should have been restored and disposed of on its merits, noting that a similar appeal for a different period had been allowed previously without challenge from the Department. The High Court allowed the appeal, set aside the Tribunal's order, and directed that the appeal be restored and heard on its merits, emphasizing that the delay, although significant, was adequately explained by the appellant's circumstances.