2017 (5) TMI 1140 - HC - Central Excise

High Court overturns tribunal decision, allows Tax Appeal, emphasizes substantive issues over technicalities.

Chandrabhan Singh Versus Commissioner of Central Excise Ahmedabad

The High Court allowed the Tax Appeal, overturning the tribunal's decision to reject the delay condonation application. The appellant, a Customs House ... Condonation of delay - Levy of penalty under Rule 26 of Central Excise Rules - Clandestine removal fo goods - Held that: - the appellant was CHA and being a CHA the appellant was required to take due care and was supposed to know the law, the learned tribunal has refused to condone the delay. However, it appears that there does not appear to be any other mala fide intention on the part of the appellant in not preferring the Appeal within the period of limitation. As such, by not preferring the Appeal within the period of limitation, the appellant was not going to be benefited. Even otherwise, considering the fact that when against the Order-in- Original other Appeal /Appeals at the instance of the co-noticee is /are pending before the learned tribunal, the learned tribunal ought to have condoned the delay even on imposing reasonable cost - on imposing reasonable cost to be deposited with the Commissioner of Central Excise, which the appellant has agreed to pay to the Department, delay caused in preferring the Appeal be condoned - appeal allowed - decided in favor of appellant. Issues:1. Condonation of delay in filing an appeal before the Customs, Excise & Service Tax Appellate Tribunal.2. Consideration of grounds for condonation of delay.3. Applicability of penalty on the appellant.4. Justification for condoning delay based on lack of mala fide intention.5. Comparison with pending appeals by co-noticees.Analysis:Issue 1: Condonation of delay in filing an appealThe appellant filed a Tax Appeal against an Order-in-Original imposing a penalty of &8377; 17.25 lakhs after a delay of 365 days. The appellant submitted a delay condonation application stating lack of awareness about the penalty order. The tribunal rejected the condonation application, leading to the present appeal.Issue 2: Consideration of grounds for condonation of delayThe appellant argued that the tribunal took a hyper-technical view and failed to appreciate the reasons for the delay. It was emphasized that there was no deliberate delay or mala fide intention on the part of the appellant. The appellant, being a Customs House Agent (CHA), was expected to be aware of the law. The tribunal's refusal to condone the delay was challenged based on the appellant's lack of benefit from the delay and the pending appeals by co-noticees.Issue 3: Applicability of penalty on the appellantThe penalty of &8377; 17.25 lakhs was imposed on the appellant for allegedly aiding the main noticee in fraudulent activities. The appellant's involvement was linked to issuing bogus documents enabling the main noticee to avail CENVAT credit unlawfully.Issue 4: Justification for condoning delay based on lack of mala fide intentionThe appellant's counsel cited the Supreme Court case of Improvement Trust, Ludhiana Vs. Ujagar Singh to argue for condonation of delay unless mala fides were evident. It was contended that the delay should be overlooked to allow the matter to be contested on merits rather than on technicalities.Issue 5: Comparison with pending appeals by co-noticeesThe fact that appeals by co-noticees were pending before the tribunal was highlighted to support the request for condonation of delay. It was argued that the delay could be excused by imposing reasonable costs, as the appellant diligently pursued the matter upon becoming aware of the penalty order.In the judgment, the High Court allowed the present Tax Appeal, quashing the tribunal's decision and directing the appellant to pay a cost of &8377; 15,000 to be deposited with the Commissioner of Central Excise within three weeks. Upon compliance, the tribunal was instructed to entertain and decide the appeal on its merits. This decision was based on the appellant's conduct post-awareness of the penalty order and the need to avoid dismissing the case on technical grounds.