Judgment:
$~S-2 * IN THE HIGH COURT OF DELHI AT NEW DELHI DECIDED ON:
28. 07.2017 + CM APPL.39577-39579/2016 IN CEAC32006 COMMISSIONER OF CENTRAL EXCISE ........ Petitioner
Through: Mr. Sameer Jain, Standing Counsel for CBEC with Mr. Mark Wright, Advocate. versus M/S MODERN INDUSTRIAL ENTERPRISES ..... Respondent Through: Mr. Balbir Singh, Sr. Advocate with Mr. Krishna Kumar R.S., Mr. Rajesh Kumar and Mr. Abhishek Baghel, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA S.RAVINDRA BHAT, J.
(ORAL) 1. The applicant seeks impleadment in an appeal under Section 35G of the Central Excise Act which was disposed of by this Court on 02.02.2015.
2. The appeal (CEAC32006) was preferred by the Revenue, i.e., the Central Excise Department aggrieved by an order of the Central Excise and Service Tax Appellate Tribunal (‘CESTAT’) dated 18.07.2005. This Court had while entertaining the appeal formulated the following questions of law: - CEAC32006 Page 1 of 6 3. “1. Whether the Commissioner of Central Excise, Delhi-I had territorial jurisdiction to issue a show cause notice to M/s. Florida Electrical Industries Limited?.
2. Whether on the facts and circumstances of the case, the Customs, Excise and Service Tax Appellate Tribunal was right in law, in concluding that duty demand against M/s. Modern Industrial Enterprises could not be confirmed since it was not possible to arrive at the value of clearances separately between M/s. Florida Electrical Industries Limited and M/s. Modern Industrial Enterprises?.” The applicant contends that it was not impleaded as a party in the main appeal and that consequently this Court should appropriately clarify the effect of the judgment and order disposing of the appeal. By the judgment and order, the Court pronounced upon two issues, i.e., as to the question of jurisdiction (that was answered in paragraph- 8 of the final judgment) and the second - and more substantial question - pertaining to the controversy at hand relating to the CESTAT’s holding that the duty demand against two entities, i.e., M/s Modern Industrial Enterprises and M/s Florida Electrical Industries Ltd. could not be determined on account of inability of the Revenue to segregate the material. On this aspect, the Court pronounced in favour of the Revenue holding that the Tribunal’s approach could not have been supported and that the Commissioner had in fact relied upon certain materials which ought to have been analysed by the CESTAT. On the basis of these findings, the Court required the CESTAT to re- examine the matter in the light of the observations in the final judgment. One of the parties, i.e., M/s Modern Industrial Enterprises had sought review of the order; those proceedings were disposed of on CEAC32006 Page 2 of 6 05.08.2016. The applicant M/s Florida Electrical Industries Ltd. contends that the clarification is necessary for the purpose of stating that the appeal by the Revenue was not preferred in accordance with the statute i.e. Section 35G inasmuch as it was not impleaded. It is argued on behalf of the appellant by Mr. Balbir Singh, learned senior counsel, that the letter of Section 35G and the procedure prescribed for it in the CESTAT Rules applicable for such appeals necessitated the impleadment of each party and the preferring of a separate appeal in case of a common order on multiple appeals. In the present case, when the appeal was lodged in the first instance, only M/s Modern Industrial Enterprises was impleaded. Later, the Revenue sought to change the memo of parties – without any application to that effect. In the circumstances, it could not be said that a decision was rendered in properly instituted proceedings by way of an appeal resulting in a judgment adverse to M/s Florida Electrical Industries Ltd. or the other assessees/noticees. Learned counsel stressed that the impleadment application is necessary because the CESTAT has expressed a concern as to whether in fact the final order of this Court has the effect of in any way disturbing the findings vis-à-vis respondents/assessees other than M/s Modern Industrial Enterprises.
4. Learned counsel elaborated his submissions by reference to the procedure mandated by law which requires clearance by the appropriate authority, i.e., the Central Board of Excuse and Customs (CBEC) before an appeal is preferred. It is submitted that the appeal did not disclose any particulars as to whether authority in respect of all seven appeals was in fact given. Emphasizing that appeals are a CEAC32006 Page 3 of 6 creation of statute and, therefore, parties seeking recourse to them have to strictly follow the procedure prescribed in law, learned counsel relied upon the authority of the judgment in Northern Plastics Ltd. v. Hindustan Photo Films Mfg. Co. Ltd., 1997 (91) ELT502(SC); he also relied upon Cumbum Roadways (P) Ltd. v. Somu Transport (P) Ltd., (1966) 3 SCR7to say that if there is a common judgment covering several cases or causes it is not sufficient if an appeal is preferred against one litigant; rather in case the appellant is aggrieved by a common order and wishes to obtain a judgment from a superior Court against all parties, they too must be impleaded in a properly laid out appeal.
5. Lastly, it was contended that the issue is not merely academic but rather one of substance because in the event the CESTAT were to affirm the Commissioner’s findings, the adverse consequence of a penalty is likely to arise. It was submitted that the issue of penalty would arise in the case of the five individual assessees/parties and not merely the two corporate entities, i.e., M/s Modern Industrial Enterprises and M/s Florida Electrical Industries Ltd. As far as the facts go, regardless the rules that even though in the first instance when the appeal was filed only one party, i.e., M/s Modern Industrial Enterprises was impleaded nevertheless before the Court took the cognizance of the matter (which was on 06.02.2006), another memo of parties was filed on 02.02.2006. This listed the names of all the parties who were appellants before the CESTAT including M/s Florida Electrical Industries Ltd. Thereafter, notice was issued by the Court. The record would also reveal that six out of the CEAC32006 Page 4 of 6 seven of the respondents/parties had caused vakalatnama to be filed before the Court. In fact M/s Florida Electrical Industries Ltd. not only authorised one counsel to appear but in the event of his inability to act for it authorised another counsel to appear and filed vakalatnama. Furthermore, the first opening paragraph of the appeal clearly records as follows: - “That the appellant is aggrieved by the CESTAT Final order No.540-546/05-EX dated 18.07.05 passed by the Hon’ble CESTAT in appeal No.E/3900-3906/04-NB(A) whereby the Hon’ble CESTAT has allowed and accepted the appeal of the party and modified the order of the revenue .” 6. In the light of the above facts, this Court is of the opinion that the submission of the applicant with respect to them not being impleaded cannot be accepted. Not only were they impleaded in the memo of parties but also served with notice. The appeal is clearly directed against a common order so far as it concerns all the seven matters that were decided by the CESTAT. In these circumstances, the rule enunciated in Cumbum Roadways (supra) is not attracted. Likewise, as far as the issue of locus standi goes, there can be no doubt in the context of the right to appeal premised upon statutory provision, the mandate of the statute is to be followed. However, in the facts of the present case, the Court discerns no infirmity fatal or otherwise to say that the judgment finally disposing of the appeal in any manner prejudices the assessees/respondents, all of whom had notice and knowledge of the proceedings.
7. So far as the second aspect urged with respect to the substantial question of law is concerned, the second question of law formulated CEAC32006 Page 5 of 6 by this Court clearly shows that the Court was aware and conscious of the fact that two entities, i.e., M/s Modern Industrial Enterprises and M/s Florida Electrical Industries Ltd. were involved. The Court’s findings that the CESTAT should have analyzed the materials before it, which had been taken into account by the Commissioner in this regard in order to carry out the exercise of segregation, precisely addresses this issue. Here too, the Court does not discern any prejudice because the respondents who are parties/appellants before the CESTAT were before the Court and most of them were represented.
8. In the light of the above discussion, the Court is of the opinion that there is no merit in the applications; the same are accordingly dismissed. JULY28 2017 /vikas/ S. RAVINDRA BHAT (JUDGE) R.K. GAUBA (JUDGE) CEAC32006 Page 6 of 6