By TIOL News Service

MUMBAI, OCT 26, 2015: THE petitioner assessee had filed an application in the year 2002 with the Board for Industrial Finance and Reconstruction (BIFR) set up under the Sick Industrial Companies (Special Provisions) Act, 1985, to rehabilitate them.The Board eventually concluded that the company is not viable and, therefore, recommended winding up of the petitioner-company in the month of November, 2006.

After the winding up proceedings were commenced, the Jt. Commissioner, CE passed an order on 1st February, 2007. That order resulted in the petitioner being visited with certain monetary liabilities.

In the meanwhile, by an order dated 22nd March, 2007, a Provisional Liquidator came to be appointed.

The order passed on 1st February, 2007 by the Joint Commissioner was challenged by the petitioner before the Commissioner (Appeals)on 3rd September, 2007.

The Commissioner (Appeals) dismissed the appeal on the ground that it was time barred.

In appeal, the Single Member Bench of the Tribunal on 29th May, 2009 held thus -

"The appellants have complied with the stay order. Nobody is present on behalf of the appellants. However, I accordingly heard learned DR and has gone through the impugned order.

2. It is seen that Commissioner (Appeals) has dismissed the appeal as barred by limitation on the ground that he has no powers to condone the delay beyond the condonable period prescribed in the statute. I find law is no more res-integra and stands settled by following decisions :

1. Maithan Ceramic Limited Vs. C.C.E. Jamshedpur - 2002-TIOL-362-CESTAT-KOL-LB

2. Raja Mechanical Company Pvt. Ltd. Vs. C.C.E. [2002 (144) E.L.T. 36 (Del.)]

3. Singh Enterprises Vs. C.C.E. Jamshedpur - 2007-TIOL-231-SC-CX

3. In view of the above, I find no merit in the appeal and reject the same."

The petitioner applied for recalling of this ex-parte order and restoring the appeal to the file of the Tribunal for hearing on merits and in accordance with law.

The Tribunal found that the appeal was dismissed by the Bench on finding that the First Appellate Authority has no power to condone the delay beyond the period within which the assessee has to file an appeal before the Appellate Authority u/s 35 of the CEA, 1944. The Tribunal also observed that whether liquidation or otherwise, the ratio of the judgment of the Hon'ble Supreme Court in the case of   M/s. Singh Enterprises - 2007-TIOL-231-SC-CX,   will apply in the case.

Before the High Court, the petitioner submitted that the facts and circumstances in this case are identical to those mentioned in the judgment of Balaji Steel Re-Rolling Mills - 2014-TIOL-92-SC-CX-LB.

The counsel for the Revenue submitted that on 29th May, 2009, and equally on 11th April, 2014, the Tribunal dismissed the appeal on merits& once there is a dismissal of the appeal on merits, then, the judgment of the Hon'ble Supreme Court will not apply. Hence, the petition be dismissed.

The High Court observed -

+ The BIFR had recommended in the month of November, 2006 / January 2007, that the petitioner be wound up. It is during this time that it is stated that all the operations and activities at the factory came to a standstill. There was closure notice and the factory was closed. It is, therefore, impossible for the petitioner to have been aware of an order stated to be pasted on its factory gate. Once all operations were closed and the factory was not operating, then, the appeal filed before the Commissioner (Appeals) could not be said to be barred by limitation. It is this argument which was rejected by the Commissioner (Appeals) by his order passed on 31st July, 2008.

+ Once the earlier dismissal of the appeal on merits was ex-parte, then, the Tribunal could have, by some conditions being imposed, recalled the order and given a chance to the appellant-petitioner to argue the appeal on its merits.

+ We find that the above perfunctory manner of disposal of the appeal on two occasions and in the absence of the petitioner and its advocates does not sub-serve the larger interest of justice.

+ It is, therefore, in the peculiar facts and circumstances of this case that we set aside the orders dated 29th May, 2009 and 11th April, 2014 and direct that the appeal of the petitioner be restored to the file of the Tribunal for being disposed of afresh on merits and in accordance with law, uninfluenced by any earlier findings and conclusions. This order is passed because the petitioner was under winding up from 22nd March, 2007, till the said order was set aside and recalled by this Court. In such circumstances, the petitioner deserves an opportunity to satisfy the Tribunal about the correctness of the view of the Commissioner (Appeals).

The Writ Petition was allowed but the petitioner was asked to first pay costs quantified at Rs.25,000/-.

Nonetheless, the High Court made the following specific mention - …, when we set aside such orders of the Tribunal, we should not be taken to be laying down any precedent for being applicable in future cases.

(See 2015-TIOL-2472-HC-MUM-CX)