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       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

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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

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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

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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

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“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

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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

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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.

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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)