2025 (9) TMI 402 - AT - Service Tax

Appeal dismissed as time-barred under Section 85(3A) FA 1994; condonation limited to one-month beyond two-month period

M/s Small Arms Factory (Kalpi Road, Kanpur) Versus Commissioner of Central Excise & Service Tax, Allahabad

M/s Small Arms Factory (Kalpi Road, Kanpur) Versus Commissioner of Central Excise & Service Tax, Allahabad - TMI 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the Commissioner (Appeals) acted within statutory limits in dismissing the appeal as time-barred and in refusing to condone delay beyond the one-month extension permitted under the proviso to the statutory appeal period (Section 85(3A) of the Finance Act, 1994/related proviso to Section 35 of the Central Excise Act, 1944 as applied to service tax). 2. Whether the Appellate Tribunal should exercise its procedural discretion under Section 35C(1A) of the Central Excise Act and Rule 20 of the CESTAT Procedure Rules, 1982 to grant further adjournments or set aside dismissal for default where the appellant was repeatedly absent and sought adjournments. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power to condone delay in filing appeal before Commissioner (Appeals): statutory limit and effect of Section 85(3A)/first proviso Legal framework: Section 85(3A) of the Finance Act, 1994 prescribes that an appeal shall be presented within two months from receipt of the order, and the Commissioner (Appeals) may, if satisfied that the appellant was prevented by sufficient cause, allow presentation within a further period of one month. Equivalent historic provision and the proviso to Section 35 of the Central Excise Act set similar timelines (primary period + limited proviso extension). The Limitation Act (Section 5) is excluded to the extent that the statutory proviso prescribes the maximum condonation period. Precedent treatment: The Court followed and relied on the ratio of the Supreme Court in Singh Enterprises which holds that the appellate authority has no power to condone delay beyond the statutorily prescribed proviso period (30 days in that context; analogous here to one month). The decision in Pathapati Subba Reddy was applied for principles governing limitation, condonation discretion, and relevant judicial approach. Interpretation and reasoning: The statutory language confines the Commissioner (Appeals) to a fixed additional period upon showing of sufficient cause; legislative intent excludes wider application of the Limitation Act's Section 5 to extend that period. The Tribunal reasoned that where the appeal was filed after the combined statutory period (primary period plus proviso extension), the Commissioner (Appeals) correctly held the appeal as time-barred. Reliance on Singh Enterprises supports that the appellate authority's condonation power cannot exceed the statutory proviso. Pathapati Subba Reddy was cited to emphasize that while courts have discretionary power to condone delay for sufficient cause, such discretion must yield to explicit statutory limitation and may be declined where there is inordinate delay, negligence or want of due diligence; and merits of the case are irrelevant to condonation applications. Ratio vs. Obiter: The holding that the Commissioner (Appeals) cannot condone delay beyond the one-month proviso extension is treated as ratio (binding principle applied to the facts). Citations to broader principles in Pathapati Subba Reddy serve as guiding ratio for evaluating sufficiency of cause and limits of discretion; subsidiary remarks about Section 5 of the Limitation Act are treated as explanatory and applied (ratio supporting exclusion of Section 5 where statute prescribes specific condonation limit). Conclusion: The Tribunal concluded that the Commissioner (Appeals) rightly held the appeal to be filed beyond the prescribed period and rightly dismissed it as time-barred; no power existed to condone the delay beyond the one-month proviso. Issue 2 - Tribunal's discretion under Section 35C(1A) and Rule 20 to grant adjournments or act where appellant defaults Legal framework: Section 35C(1A) empowers the Appellate Tribunal to grant time and adjourn hearings for reasons to be recorded in writing, but limits adjournments to no more than three times to a party during hearing. Rule 20 of the CESTAT Procedure Rules, 1982 permits the Tribunal, in its discretion, to dismiss an appeal for appellant's default or hear and decide on merits and requires setting aside dismissal where sufficient cause is shown subsequently. Precedent treatment: The Tribunal applied the statutory rule and its procedural responsibilities; it relied on the procedural limitation on adjournments and on Rule 20's balancing of discretion to dismiss for default with the requirement to restore where sufficient cause is satisfactorily shown. Interpretation and reasoning: The Tribunal noted repeated listing for hearing on multiple dates and that the appellant's counsel sought only adjournments, with the matter being listed on the fourth occasion. Section 35C(1A)'s limitation on the number of adjournments and Rule 20's provision for dismissal of appeals for appellant default supported declining further indulgence. The absence of any sufficient cause shown to the Tribunal for non-appearance or for prior delay prevented the Tribunal from exercising its remedial discretion in favor of the appellant; procedural rules were applied to ensure expedition and finality of adjudication. Ratio vs. Obiter: The determination that the Tribunal may dismiss or refuse further adjournments where a party repeatedly defaults without sufficient cause is ratio - an application of statutory discretion and procedural rule to the facts. Observations about the need to record reasons and limits on adjournments are operative directions rather than obiter. Conclusion: The Tribunal exercised its discretion under Section 35C(1A) and Rule 20 to refuse further adjournments and to dismiss the appeal where the appellant repeatedly defaulted and failed to provide sufficient cause; no ground existed to set aside the dismissal for default. Cross-references and synthesis The Tribunal's conclusions on both issues are interrelated: the substantive dismissal as time-barred (Issue 1) is reinforced by procedural non-compliance and repeated defaults at the Tribunal stage (Issue 2). The statutory limitation on condonation and the procedural limits on adjournments combine to bar relief where the appeal was filed after the statutory period and the appellant thereafter failed to prosecute the appeal when listed for hearing. Final disposition applied by the Court The Tribunal found no merit in the appeal, upheld the view that the Commissioner (Appeals) correctly dismissed the appeal as time-barred, and dismissed the appeal under the Tribunal's procedural powers for appellant's default and lack of sufficient cause for delay or non-appearance.