Judgment:
N.N. Mathur, J.
1. We have heard Mr. Manoj Bhandari, learned Counsel for the petitioner and Mr. N.M. Lodha, Sr. Central Government Standing Counsel. The petitioner - a private Company has approached to this Court under Articles 226 and 227 of the Constitution of India aggrieved of the order of Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as CEGAT) whereby its appeal has been dismissed for want of prosecution by the impugned order (Annexure-5) dated 5-2-2001. The principal contention is that the Tribunal is not empowered to dismissed an appeal for default of appearance but has to decide the same on merit in view of the expression 'thereon' used in Section 35C(1) of the Central Excises & Salt Act, 1944.
2. The necessary facts giving rise to the instant writ petition are that petitioner-Company is a manufacturer and processor engaged in manufacture of textile fabrics falling under different headings of the Schedule to the Central Excise Tariff Act, 1985. It clears duty for the goods in accordance with the provisions of the Act and the rules made thereunder. The petitioner was served with a show cause notice to reverse the deemed Modvat credit of Rs. 47,249/- alleged to have been taken fraudulently by the petitioner in contravention to Rule 57(A) to Rule 57(F) read with notification dated 3rd September, 1986 of the Central Excise & Tariff Rules. Petitioner submitted a reply to the show cause notice. The Additional Commissioner confirmed the demand and also imposed the equal penalty by order dated 17th February, 1999. The petitioner preferred an appeal, which was rejected by the order of the Commissioner (Appeals) dated 6th July, 2000. Aggrieved of the said order, the petitioner further appealed under Section 35B before the CEGAT. On 5th February, 2001 the Chartered Accountant appearing for the petitioner did not appear before the CEGAT on account of his illness. An adjournment was sought by sending a telegram. The learned Technical Member of the CEGAT dismissed the appeal for want of prosecution by the impugned order, dated 5-2-2001. The petitioner filed an application for restoration, but the same was also rejected by the order dated 25th September, 2001.
3. In order to appreciate the controversy involved, it will be useful to refer certain provisions of the Central Excises & Salt Act, 1944 as well as the Customs Act, 1962. Section 35B of the Excise Act provides that any per-son aggrieved by any of the orders enumerated in sub-section (1) thereto may appeal to the Appellate Authority under Sub-section (5) of Section 35B. The Appellate Tribunal has power to admit appeal. Section 35C deals with the method and manner in which appeal filed before the Appellate Tribunal has to be disposed of. Section 35C(1) of the Central Excises & Salt Act is extracted as follows :-
'35C(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, con-finning, 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.'
4. Section 129A of the Customs Act provides that any person aggrieved by any of the orders mentioned in sub-section (1) thereof, may appeal to the Appellate Tribunal. Under Sub-section (5) of Section 129 of the Customs Act the Appellate Tribunal may admit an appeal. The manner and method of disposing the appeal filed before the Appellate Tribunal is provided in Section 129B(1) of the Customs Act, which is extracted as follows :-
'129B(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.'
Rule 20 of the CEGAT (Procedural) Rules, 1982 enables the Appellate Tribunal to dismiss the appeal for default of appearance.
5. It is contended by the learned Counsel that part of Rule 20 which enables the Appellate Tribunal to dismiss the appeal for default of appearance is not only unreasonable, but also contrary to law laid down by the Apex Court in the case of Commissioner of Income Tax, Madras v. S. Channlappa Mudaliar reported in A.I.R. 1969 S.C. Page 1068. It is also submitted that Rule 20 has been held to be ultra vires of the provisions of Section 35C(1) of the Central Excises & Salt Act, 1944 and as well as Section 129B(1) of the Customs Act, 1962. A Division Bench of Gujarat High Court in Viral Laminates Pvt. Ltd. v. Union of India reported in [1998 (100) E.L.T. 335 (Guj.)] has declared that the Appellate Tribunal has no power to dismiss the appeal for non-appearance of the appellant and the appeal should be decided on merit.
6. That scheme of the provisions of the two Acts relating to the Appellate Tribunal apparent is that it has to dispose of an appeal by making such orders as it thinks fit on merit. It follows from the language of Section 35C(1) of the Excise Act and Section 129B(1) of the Customs Act and particularly the expression used '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 decision on merits on question of facts and law and not by merely disposing of the appeal on the ground that the party concerned has failed to appear. The expression 'thereon' used in Section 35C(1) of the Excise Act and Section 129B(1) of the Customs Act is of great significance. The said ex-pression has been dealt with by the Supreme Court in Mudaliar's case (supra) in the back ground of Section 33(4) of the Indian Income Tax Act and Rule 24 of the Appellate Tribunal Rules of 1946. It is pertinent to notice the observations made by the Apex Court in Mudaliar's case as follows :-
'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 of Income-tax, the word 'thereon' in Section 33(4) restricts the jurisdiction of the Tribunal to the subject matter of the appeal and the word '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 Commissioner of Income-tax, 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 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 Commissioner of Income-tax v. 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 done 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 oppositely referred to the observations of Venkatarama Aiyar J. in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. Indicating the necessity or 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 66(4) of 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. Now, although Rule 24 provides for dismissal of an appeal for the failure of appellant to appear, the rules at the material time did not contain any provi-sion for restoration of the appeal. Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal (vide Shri Bhagwan Radha Kishan v. Commissioner of Income-tax and Mangat Ram Kuthiala v. Commissioner of Income-tax). There is a conflict of opinion among the High Courts whether there is any inherent power to restore an appeal dismissed for default under the Civil Procedure Code (Mulla, Civil Procedure Code, Volume II, Pages 1583,1584). It is unnecessary to resolve that conflict in the present case. It is true that the Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases, been held similar to, and identical with, the powers of an Appellate Court under the Civil Procedure Code. Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24. It clearly comes into conflict with Subsection (4) of Section 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is the rule which must give way to the provisions of the Act. We would accordingly affirm the decision of the Special Bench of the High Court and hold that the answer to the question which was referred was rightly given in the affirmative.'
7. Considering the entire scheme of the relevant provisions and particularly the expression 'thereon' appearing in Section 33(4) of the Income Tax Act as well as provisions of Section 66 relating to reference to the High Court, the Apex Court held that Tribunal has no power to dismiss an appeal for non-appearance of the appellant and the appeal must be decided on merit. It is, thus, evident that the manner and method in which the appeal filed before the Appellate Tribunal under the provisions of the Income Tax Act, 1922 is required to be disposed of are the same as envisaged under Section 35C(1) of the Excise Act as well as Section 129B(1) of the Customs Act. Therefore, the decision rendered by the Supreme Court in Mudaliar's case applies to the instant controversy with full force. Thus, there ii no manner of doubt that the appeal filed before the Tribunal has to be disposed of on merit and cannot be dismissed for want of appearance of the appellant. A Division Bench of the Delhi High Court in Prakash Fabrics v. Union of India reported in [2001 (130) E.L.T. 433 (Del.) = 2001(44) RLT Page 459] dealing with the identical situation observed :
'Where there is no appearance on behalf of the appellant, the Tribunal has to decide the appeal ex parte. The Court further observed that the use of expression 'thereon' means that the Tribunal has to pass order on the subject matter of appeal and on the issue of controversy.'
8. The learned Counsel has also brought to our notice a decision of the Apex Court in J.K. Synthetics Ltd. v. Collector of Central Excise reported in [1996 (86) E.L.T. 472 (S.C.) = 1996 (6) S.C.C Page 92], wherein the Court held that an order deciding the appeal ex parte can be recalled and the appeal can be heard afresh if the appellant shows sufficient cause for his non-appearance.
9. Consequently, we allow this writ petition and set aside the order dated 5-2-2001 (Annexure-5) and the order dated 25-9-2001 (Annexure-8) and restore the appeal filed by the petitioner before the CEGAT to its original number. The Tribunal shall decide the appeal afresh on merit after giving an opportunity of hearing to the parties concerned. No order as to cost.