CESTAT dismisses appeal after appellant fails to appear despite seven hearing opportunities and medical excuse

CESTAT dismissed appeal for want of prosecution after appellant failed to appear despite seven hearing opportunities. HC had directed appellant to fulfill pre-deposit within 60 days, which was already satisfied, and CESTAT to decide appeal within 120 days. Appellant's director submitted medical certificate showing lumbar spondylitis requiring three months bed rest from June 2024, but failed to appear even after recovery period ended. CESTAT rejected restoration application, noting it's not a matter of right and requires exceptional circumstances with valid reasons. Despite SC precedent in Chennappa Mudaliar requiring merit-based decisions, CESTAT exercised powers under Rule 21 to pass ex-parte final order after repeated non-appearance.

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The core legal questions considered by the Tribunal in this matter are:

(1) Whether the appeal dismissed by the Tribunal on the ground of non-appearance of the appellant's Authorized Representative and consequent want of prosecution can be restored.

(2) Whether the Tribunal was justified in deciding the appeal on merits despite non-appearance of the appellant or its Authorized Representative on multiple scheduled hearing dates.

(3) The applicability and interpretation of Rule 20 of the CESTAT (Procedure) Rules, 1982, particularly regarding dismissal of appeals for default and restoration thereof.

(4) The relevance and impact of the Supreme Court's jurisprudence on dismissal of appeals for default and the obligation of the Tribunal to decide appeals on merits.

(5) Whether the appellant demonstrated sufficient cause for non-appearance and failure to prosecute the appeal, warranting restoration.

Issue-wise Detailed Analysis

Issue 1 & 2: Justification of dismissal and decision on merits despite non-appearance

The Tribunal examined the procedural history of the appeal, noting that the appellant's Authorized Representative failed to appear on seven separate occasions despite notices and opportunities. The appellant's counsel contended that the Director's severe illness and lack of communication from the Authorized Representative caused the absence, and that the appellant had a strong case on merits.

The Tribunal referred to the statutory framework, particularly Rule 20 of the CESTAT (Procedure) Rules, 1982, which empowers the Tribunal to either dismiss an appeal for default or decide it on merits when the appellant fails to appear. The proviso to Rule 20 allows restoration if sufficient cause for non-appearance is shown.

The Tribunal also took note of the relevant statutory provisions under Section 35C of the Central Excise Act, 1944 and Section 86(7) of the Finance Act, 1994, which limit the number of adjournments to three, reinforcing the need for procedural discipline.

Despite the illness-related medical certificate indicating bed rest for three months ending 23.09.2024, the appellant failed to appear on subsequent dates (27.09.2024, 09.10.2024, 28.10.2024, and 05.11.2024). The Tribunal found no valid or justifiable reason for continued non-appearance beyond the bed rest period and noted that the daily order sheets were regularly uploaded online, negating any claim of ignorance about hearing dates.

Therefore, the Tribunal concluded that the dismissal was not for want of prosecution per se, but that the appeal was decided on merits based on the material on record, including the grounds of appeal and submissions available.

Issue 3: Interpretation and application of Rule 20 of CESTAT (Procedure) Rules, 1982

The Tribunal emphasized that Rule 20 grants discretion to either dismiss an appeal for default or decide it on merits. The proviso mandates restoration if sufficient cause is shown for non-appearance. However, restoration is not a matter of right and is to be granted only in exceptional cases with valid reasons.

In this case, the Tribunal found that the appellant failed to demonstrate sufficient cause for non-appearance on multiple occasions, especially after the medical bed rest period. Hence, the Tribunal declined restoration.

Issue 4: Supreme Court jurisprudence on dismissal for default and decision on merits

The Tribunal extensively relied on a three-Judge Bench Supreme Court decision which clarified that appellate tribunals are mandated to decide appeals on merits and do not possess power to dismiss appeals solely for default or non-appearance. The Court held that dismissal for default circumvents the statutory obligation to dispose of appeals on merits and is impermissible.

The Tribunal distinguished the present case from those where appeals were dismissed for want of prosecution. Here, the appeal was adjudicated on merits despite the appellant's absence, consistent with the Supreme Court's directive.

The Tribunal also noted that the appellant relied on earlier Supreme Court decisions predating the three-Judge Bench ruling, which were superseded by the later authoritative pronouncement.

Issue 5: Sufficiency of reasons for restoration

The appellant's submissions centered on the Director's illness and lack of communication from the Authorized Representative. The Tribunal accepted the medical certificate for the initial period but found that the appellant failed to appear on multiple subsequent dates after the bed rest period ended.

The Tribunal held that restoration is not to be granted routinely but only in exceptional circumstances where valid reasons exist. The appellant's failure to appear for seven hearings without adequate justification did not meet this threshold.

Accordingly, the Tribunal dismissed the restoration applications.

Significant Holdings

"Restoration of Appeal (ROA) is not a matter of right of the appellant. It is not to be permitted in routine manner, and is permitted only in exceptional cases where it is inevitable and there are valid reasons for restoring the appeal."

"Rule 20 of the CESTAT (Procedure) Rules, 1982 prescribes as follows: 'Where on the day fixed for the hearing of the appeal or on any other day to which such hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or hear and decide it on merits: Provided that where an appeal has been dismissed for default and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing, the Tribunal shall make an order setting aside the dismissal and restore the appeal.'"

"The Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing." (Supreme Court precedent)

"The Tribunal has decided the case on merits taking into the grounds of appeal from the Appeal Memorandum filed by the appellant. This Tribunal had offered seven (7) opportunities but the appellant failed to appear."

"As per Rule 21 of CESTAT (Procedure) Rules, 1982, CESTAT has powers to pass final order ex-parte if the appellant does not respond to repeated offer for hearings."

Final determinations:

• The appeal was rightly decided on merits despite the appellant's non-appearance on multiple occasions.
• The appellant failed to demonstrate sufficient cause for non-appearance to justify restoration of the appeal.
• The Tribunal's exercise of discretion under Rule 20 to decide the appeal on merits and refuse restoration was appropriate.
• Restoration applications were dismissed accordingly.

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