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2025 Supreme(Online)(Guj) 11282
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Pranav Trivedi, JJ
Universal Comfort Products Ltd. – Appellant
Versus
Union Of India – Respondent
R/SPECIAL CIVIL APPLICATION NO. 10869 of 2025
For the Appellants/Petitioners: Amal Paresh Dave
For the Respondents: Pradip D Bhate, Utkarsh R Sharma
The Appellate Tribunal possesses inherent and express powers under Rule 41 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, to recall an ex-parte order and restore an appeal to prevent a miscarriage of justice, even if it has technically become functus officio.
Headnote:(A) Central Excise - Cenvat Credit Rules, 2004 - Rule 6(6) - Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - Rule 41 - Ex-parte order - Restoration of appeal - Power of Tribunal to recall/review its own order to secure ends of justice - Whether Tribunal becomes functus officio after passing final order - Held, Tribunal has inherent power to set aside ex-parte order and restore appeal on showing sufficient cause - Mistake apparent on face of record regarding interpretation of retrospective effect of notification - Impugned order rejecting rectification application set aside - Matter restored to Tribunal for fresh hearing.
Facts of the case:
The petitioner, a manufacturing company, challenged an ex-parte order passed by the CESTAT. The petitioner contended that due to a change in address during a corporate merger, they did not receive notice of the hearing resulting in an ex-parte dismissal. Furthermore, the petitioner argued that the CESTAT committed a mistake apparent on the record by incorrectly applying the prospective effect of an amendment to the Cenvat Credit Rules, ignoring precedents that supported retrospective application. The CESTAT dismissed the rectification application, claiming it had become functus officio.
Findings of Court:
The High Court held that the CESTAT possesses wide powers under Rule 41 of the 1982 Procedure Rules to make orders necessary to secure the ends of justice. The court observed that the Tribunal's view of having become functus officio was incorrect. The failure to address the prima facie mistake apparent on the record constituted a failure to exercise jurisdiction to prevent a miscarriage of justice.
Issues: Whether the Tribunal is empowered to recall an ex-parte order after becoming functus officio and whether sufficient cause was shown for non-appearance.
Ratio Decidendi: A Tribunal is clothed with inherent power and express statutory power under Rule 41 of the 1982 Rules to recall its order to secure the ends of justice, particularly when an order is passed ex-parte due to sufficient cause or when there is an error apparent on the record.
Result: Petition allowed; impugned order of the Tribunal quashed and set aside; matter restored to the Tribunal for fresh adjudication.
| Table of Content |
|---|
| 1. summary of facts leading to the petition. (Para 1 , 2 , 3) |
| 2. contentions of parties regarding ex-parte order. (Para 4 , 5) |
| 3. tribunal's power to correct errors and restore appeals. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 4. final outcome of the writ petition. (Para 13) |
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Amal Dave for the petitioner and learned advocate Mr. Utkarsh Sharma for the respondent.
2. The petitioner has prayed for the following reliefs:
“A. Your Lordships may be pleased to issue a Writ of Certiorari or Mandamus or any other appropriate writ, order or direction, thereby quashing and setting aside Miscellaneous Order No.10023/2025 dated 31.01.2025 and directing the Appellate Tribunal to recall Final Order No.11831/2023 dated 30.08.2023 and restoring the Petitioner's Excise Appeal No.10992 of 2013-SM: or in the alternative, your Lordships may be pleased to issue a Writ of Certiorari or a Writ of Mandamus or any other appropriate writ, direction or order, quashing and setting aside Final Order No.11831/2023 dated 30.08.2023 and directing the Appellate Tribunal to pass a fresh Order after hearing the Petitioner on merits;
3. Brief facts of the case are as under:
3.1 The petitioner Company is engaged in the manufacture of excisable goods classifiable under Chapter 84 of the First Schedule to the Central Excise Tariff Act, 1985. The petitioner effected the removal of finished goods having an aggregate assessable value of Rs.15,92,280/- to developers of Special Economic Zones (for short ‘SEZ’)during the period from 2007-08 and 2008-09 without payment of excise duty or reversal of proportionate credit in terms of Rule 6(3)(ii) of the Cenvat Credit Rules, 2004.
3.2 A show-cause notice dated 28.2.2011 was issued to the petitioner alleging that the clearances of goods made to SEZ developers do not fall within the purview of Rule 6(6)(i) of the Cenvat Credit Rules, 2004 and, therefore, the petitioner was not eligible for the exemption. It was also alleged that the petitioner failed to maintain separate records for inputs/ input services and did not pay the required 10% of the value of exempted goods cleared.
3.3 The petitioner filed reply to the show-cause notice contending that no provisions of Rule 6 of the CENVAT Credit Rules has been violated. The adjudicating authority passed an Order-in-Original dated 19.12.2011 confirming the demand for excise duty along with interest and penalty on the ground that the clearances made by the petitioner to SEZ developers without payment of duty were not eligible for exemption under the provisions of Rule 6(6) of the CENVAT Credit Rules, 2004.
3.4 Being aggrieved, the petitioner preferred an appeal before the Commissioner (Appeals) Central Excise. The Commissioner of Central Excise (Appeals) rejected the appeal filed by the petitioner by order dated 21.1.2013. Being aggrieved, the petitioner preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal(‘CESTAT’ for short). The CESTAT passed an order dated 30.8.2023 holding that the benefit under Rule 6(6) of the CENVAT Rules, 2004, as amended by Notification No.50/2008-CE (NT) applies only to supplies made to SEZ developers only from 31.12.2008 onwards and the claim of the petitioner for retrospective effect was rejected holding that as the amendment was prospective. It was also held by the CESTAT that supplies to SEZ developers before this date did not qualify as export and accordingly upheld the denial of CENVAT credit by dismissing the appeal.
3.5 The petitioner received recovery notice only on 16.1.2024 and became aware that an order has been passed by the CESTAT.
3.6 The petitioner, therefore, filed a rectification application on 27.2.2024 being Excise Misc. Application No. 10042 of 2024 in Excise Appeal No. 10992 of 2013 before CESTAT contending that the order was passed without considering the correct legal position and relevant similar issue has alr
