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whether the Customs, Excise and Service Tax Appellate Tribunal (in short ‘the Tribunal’) has the power to dismiss the appeal for want of prosecution or not. -Apex court held that Tribunal could not= CIVIL APPEAL NO. 10265 OF 2014 (Arising out of Special Leave Petition (C) NO. 8738 OF 2014) Balaji Steel Re-Rolling Mills …. Appellant(s) Versus Commissioner of Central Excise and Customs …. Respondent(s)

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10265 OF 2014
(Arising out of Special Leave Petition (C) NO. 8738 OF 2014)
Balaji Steel Re-Rolling Mills …. Appellant(s)

Versus

Commissioner of Central Excise
and Customs …. Respondent(s)

J U D G M E N T

R.K. Agrawal, J.

1) Leave granted
2) The sole question of law which arises for consideration in the present
appeal is as to whether the Customs, Excise and Service Tax Appellate
Tribunal (in short ‘the Tribunal’) has the power to dismiss the appeal for
want of prosecution or not.
3) The appellant is a partnership firm engaged in the manufacture and sale
of Hot Re-rolled products. The Commissioner of Central Excise and Customs,
Aurangabad, vide order dated 20.07.1999, re-fixed the annual capacity of
production and duty liability of the appellant. Being aggrieved, the
appellant moved the Tribunal. The Tribunal, vide order dated 18.01.2002,
remanded the matter back to the Commissioner of Central Excise and Customs
with a direction to determine the capacity of production in accordance with
law after hearing the appellant. The Commissioner of Central Excise and
Customs, Aurangabad, once again affirmed the order dated 20.07.1999. The
appellant filed an appeal before the Tribunal against the order dated
14.05.2004 passed by the Commissioner of the Central Excise & Customs,
Aurangabad which was placed for hearing on 22.08.2012. On the very said
date, the appellant as also his counsel were not present. The Tribunal,
therefore, dismissed the appeal for want of prosecution. The restoration
application was also dismissed. The appellant preferred an appeal before
the High Court of Bombay, Bench at Aurangabad being Central Excise Appeal
No. 14 of 2013. The High Court, by order dated 18.01.2014, dismissed the
appeal on the ground that no substantial question of law arises for
consideration.
4) Against the said order, the appellant has preferred this appeal by
way of special leave.
5) Heard Mr. Shashibhushan P. Adgaonkar, learned counsel for the
appellant and Shri K. Radhakrishnan, learned senior counsel for the
respondent.
6) Learned counsel for the appellant submitted that even if the
appellant was not present before the Tribunal when the appeal was taken up
for hearing, it could not have been dismissed for want of prosecution as
Section 35C of the Central Excise Act, 1944 (in short ‘the Act’) enjoins
upon the Tribunal to pass orders thereon as it thinks fit, that is,
confirming, modifying or annulling the decision or order appealed against
or may refer the case back to the authority which passed such decision or
order with such directions as it may think fit, for a fresh adjudication or
decision, as the case may be, after taking additional evidence, if
necessary. Thus, there is no power vested in the Tribunal to dismiss the
appeal for want of prosecution even if the appellant therein has not
appeared when the appeal was taken up for hearing.
7) He further submitted that Rule 20 of the Customs, Excise and Service
Tax Appellate Tribunal (Procedure) Rules, 1982 (in short ‘the Rules’)
cannot be resorted to as the Section itself does not give power to the
Tribunal to dismiss the appeal for want of prosecution.
8) Learned senior counsel for the respondent, however, submitted that under
Rule 20 of the Rules, the Tribunal has been given the power to dismiss the
appeal for want of prosecution if the appellant does not appear, and
therefore, the order passed by the Tribunal as also by the High Court calls
for no interference.
9) Section 35C(1) of the Act which deals with the powers of the Tribunal
reads as under:-
“35C. Orders of Appellate Tribunal.-(1) The Appellate Tribunal may, after
giving the parties to the appeal an opportunity of being heard, pass such
orders thereon as it thinks fit, confirming, modifying or annulling the
decision or order appealed against or may refer the case back to the
authority which passed such decision or order with such directions as the
Appellate Tribunal may think fit, for a fresh adjudication or decision, as
the case may be, after taking additional evidence, if necessary.”
10) Rule 20 of the Rules which gives a power to the Tribunal to dismiss
the appeal for default in case the appellant does not appear when the
appeal is called on for hearing reads as under:-
“RULE 20. Action on appeal for appellant’s default. – 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.”
11) From a perusal of the aforesaid provisions, we find that the Act
enjoins upon the Tribunal to pass order on the appeal confirming, modifying
or annulling the decision or order appealed against or may remand the
matter. It does not give any power to the Tribunal to dismiss the appeal
for default or for want of prosecution in case the appellant is not present
when the appeal is taken up for hearing.
12) A similar question came up for consideration before this Court in The
Commissioner of Income-Tax, Madras vs. S. Chenniappa Mudaliar, Madurai 1969
(1) SCC 591 wherein this Court considered the provisions of Section 33 of
the Income-tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946
which gave power to the Tribunal to dismiss the appeal for want of
prosecution. For ready reference, Section 33(4) of the Income Tax Act,
1922 and Rule 24 of the Appellate Tribunal Rules, 1946 are reproduced
below:-
Section 33(4) of the Income Tax Act, 1922
“33(4). The Appellate Tribunal may, after giving both parties to the appeal
an opportunity of being heard, pass such orders thereon as it thinks fit,
and shall communicate any such orders to the assessee and to the
Commissioner.”
Rule 24 of the Appellate Tribunal Rules, 1946
“24. Where on the day fixed for hearing or any other day to which the
hearing may be adjourned, the appellant does not appear when the appeal is
called on for hearing, the Tribunal may dismiss the appeal for default or
may hear it ex parte.”

Considering the aforesaid provisions, this Court held as under:-
“7. The scheme of the provisions of the Act relating to the Appellate
Tribunal apparently is that it has to dispose of an appeal by making such
orders as it thinks fit on the merits. It follows from the language of
Section 33(4) and in particular the use of the word “thereon” that the
Tribunal has to go into the correctness or otherwise of the points decided
by the departmental authorities in the light of the submissions made by the
appellant. This can only be done by giving a decision on the merits on
questions of fact and law and not by merely disposing of the appeal on the
ground that the party concerned has failed to appear. As observed in
Hukumchand Mills Ltd. v. CIT, the word “thereon” in Section 33(4) restricts
the jurisdiction of the Tribunal to the subject-matter of the appeal and
the words “pass such orders as the Tribunal thinks fit” include all the
powers (except possibly the power of enhancement) which are conferred upon
the Appellate Assistant Commissioner by Section 31 of the Act. The
provisions contained in Section 66 about making a reference on questions of
law to the High Court will be rendered nugatory if any such power is
attributed to the Appellate Tribunal by which it can dismiss an appeal,
which has otherwise been properly filed, for default without making any
order thereon in accordance with Section 33(4). The position becomes quite
simple when it is remembered that the assessee or the CIT, if aggrieved by
the orders of the Appellate Tribunal, can have resort only to the
provisions of Section 66. So far as the questions of fact are concerned the
decision of the Tribunal is final and reference can be sought to the High
Court only on questions of law. The High Court exercises purely advisory
jurisdiction and has no appellate or revisional powers. The advisory
jurisdiction can be exercised on a proper reference being made and that
cannot be done unless the Tribunal itself has passed proper order under
Section 33(4). It follows from all this that the Appellate Tribunal is
bound to give a proper decision on questions of fact as well as law which
can only be done if the appeal is disposed of on the merits and not
dismissed owing to the absence of the appellant. It was laid down as far
back as the year 1953 by S.R. Das, J. (as he then was) in CIT, v. Mtt. Ar.
S. Ar. Arunachalam Chettiar that the jurisdiction of the Tribunal and of
the High Court is conditional on there being an order by the Appellate
Tribunal which may be said to be one under Section 33(4) and a question of
law arising out of such an order. The Special Bench, in the present case,
while examining this aspect quite appositely referred to the observations
of Venkatarama Aiyar, J. in CIT v. Scindia Steam Navigation Co. Ltd.
indicating the necessity of the disposal of the appeal on the merits by the
Appellate Tribunal. This is how the learned judge had put the matter in the
form of interrogation:

“How can it be said that the Tribunal should seek for advice on
a question which it was not called upon to consider and in respect of
which it had no opportunity of deciding whether the decision of the
Court should be sought.”

Thus looking at the substantive provisions of the Act there is no escape
from the conclusion that under Section 33(4) the Appellate Tribunal has to
dispose of the appeal on the merits and cannot short-circuit the same by
dismissing it for default of appearance.”
13) Applying the principles laid down in the aforesaid case to the facts of
the present case, as the two provisions are similar, we are of the
considered opinion that 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. The High Court also erred in law
in upholding the order of the Tribunal.
14) We, therefore, set aside the order dated 18.01.2014 passed by the
High Court of Judicature of Bombay, Bench at Aurangabad and also the order
dated 22.08.2012 passed by the Tribunal and direct the Tribunal to decide
the appeal on merits.
15) Accordingly, the appeal is allowed with a cost of Rs. 25,000/- to be
payable by the Respondent.
……………………………………….J.

(ANIL R. DAVE)
………………………………………..J.

(KURIAN JOSEPH)
………………………………………..J.

(R.K. AGRAWAL)

NEW DELHI;
NOVEMBER 14, 2014.

ITEM NO.1A COURT NO.14 SECTION III
(For judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 8738/2014

(Arising out of impugned final judgment and order dated 18/01/2014 in CEA
No. 14/2013 passed by the High Court of Bombay at Aurangabad)

BALAJI STEEL RE-ROLLING MILLS Petitioner(s)

VERSUS

C.C.E.& CUSTOMS Respondent(s)

Date : 14/11/2014 This petition was called on for pronouncement
of judgment today.
For Petitioner(s) Mr. Shashibhushan P. Adgaonkar, Adv.
For Respondent(s) Mr. K. Radhakrishnan, Sr. Adv.
Ms. Sunita Rani Singh, Adv.
For Mr. B. Krishna Prasad, AOR
Hon’ble Mr. Justice R.K. Agrawal pronounced the reportable judgment
of the Bench comprising Hon’ble Mr. Justice Anil R. Dave, Hon’ble Mr.
Justice Kurian Joseph and His Lordship.
Leave granted.
The appeal is allowed with a cost of Rs. 25,000/- to be payable by
the Respondent in terms of the signed reportable judgment.
(R.NATARAJAN) (SNEH LATA SHARMA)
Court Master Court Master
(Signed reportable judgment is placed on the file)

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