M/S G M ENTERPRISES G 731 RIIC V. COMMISSIONER OF CENTRAL EXCISE

EXCIA/40/2011

AI Insights

The case involves M/S G M Enterprises, which appealed against the decision of the Custom Excise and Service Tribunal regarding the entitlement to avail Cenvat Credit on duty paid on blades used in razors. The appeal was initially filed in 2008 but faced significant delays and procedural issues, including being time-barred and not moved for several years. The High Court of Rajasthan, after considering the prolonged delay and lack of sufficient cause for condonation, dismissed the appeal without considering it on merits.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 738100 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 04-10-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Kolkata-II vs. West Bengal Infrastructure Dev. Fin. Corpn. Ltd., Collector, Land Acquisition Anantnag & Anr. vs. Mst. Katiji & Ors., State of Nagaland vs. Lipok AO, G.S. Enterprises vs. Commissioner of Central Excise, Jaipur, Brahma Dutt Modi vs. Commissioner of Central Excise Jaipur
• Laws Referred To: Central Excise Act, 1944, Cenvat Credit Rules, 2001
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SIDDHARTH RANKA; MUZAFFAR IQBAL
• Assessee Lawyers: SAMEER JAIN; DAKSH PAREEK
• Keywords: Central Excise Duty; CENVAT credit; Delay condonation; Manufacture and clearance of razors
• Section: 5; 4A

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Central/Excise Appeal No. 40 / 2011 M/S G M Enterprises G 731 RIICO Industrial Area, Bhiwadi represented by counsel Shri Sameer Jain and C. Hari Shankar) who are duly authorized by authorised signatory Shri Puneet Mahajan, resident of B-7, 5038, Vasant Marg, New Delhi-70 ----Appellant Versus Commissioner Of Central Excise, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sameer Jain with Mr. Daksh Pareek For Respondent(s) : Mr. Siddharth Ranka with Mr. Muzaffar Iqbal _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 04/10/2017 1. The application (18342/17) has been filed by the original appellant with the following prayer:- “It is therefore, most humbly prayed that this application may kindly be allowed and the appeal filed be considered on application and the appeal be allowed. Any other order, which this Hon’ble Court deem just and proper may kindly be passed in favour of the appellant-applicant.” 2. The application is allowed and the appeal is considered on merits. 3. The facts of the case are that the present appellant is manufactures and clears razors, with tucks blades, in blister packing, to M/s Gillette India Ltd. (hereinafter referred to as “Gillette”), on job work basis. The issue in controversy is (2 of 14) [EXCIA-40/2011] whether the appellant was entitled, while paying Central Excise duty on the blister packed products cleared by it on which duty was paid by it on MRP basis, under Section 4A of the Central Excise Act, 1944 (hereinafter referred to as “the CEA 44”)-to avail Cenvat Credit, under the Cenvat Credit Rules, 2001 of the duty paid on the blades. The subject matter of the appeal is decision of the Custom Excise and Service Tribunal which reads as under:- “We have perused the records and have heard both the sides. We have also been shown samples of the razor packings under assessment. They are marketed as under names like “NEW SAVAGE SAFETY RAZOR CLICK-ACTION RAZOR WITH BALANCE HANDED”, NEW WILKINSON SWORD PREMIUM METAL HEAD FOR SAFER CLOSER SHAVES”, 7’O CLOCK- PERMASHARP STAINLESS”, and “NEW WILKINSON SWORD CLICK RAZOR” internationally designed for closer shave”. As already noted, these razors are blister packed along with blades. About the free supply blades, the packs state “FREE 2 SAVAGE BLADES’, FREE 2 WILKINSON SWORD Premium Blades’, FREE 5 BLADES WORTH Rs. 23.50, FREE 1 WILKINSON STAINLESS BLADE’. It is thus, clear from the packing that the items under sale at the declared MRPs are safety razors and blades are under “free” supply. It is noted that in respect of one particular packing of plastic razor, the MRP of the razor is Rs. 23.50, which is the same as the price of 5 free supply blades. Thus, in respect of this packing, as a matter of fact, no duty will be payable on the razor manufactured by the assessee once the credit of duty in respect of the free supply blades is given is Cenvat Credit. Clearly, there is no value addition by the input (blades) so as to satisfy the requirement of Value Added Tax. In fact, the tax relief claimed on the input accessory, effectively makes the newly manufactured item, (razors) tax free.” (3 of 14) [EXCIA-40/2011] 4. The present appeal though moved and filed on 2nd September, 2008 but was not moved till this Court passed an order on 1st May, 2017 which reads as under:- “The matter is listed on Board without original file. The file is either pending or disposed of but the original file is not traceable. Counsel for the parties are directed to reconstruct the file within a period of one week from today, if it is not decided on merits. If the file is not reconstructed within a week as aforesaid, the matter shall stand disposed of with liberty to the parties to get the matter revived within a period of four weeks from today. If the file is reconstructed, the matter be listed in Court on 15.05.2017. The matter stands disposed of accordingly.” 5. The decision of the Tribunal was of 2004, however, under bonafide mistake the appeal was preferred before the Delhi High Court on 15th February, 2005 and the same came to be dismissed on the point of jurisdiction before the Delhi High Court with liberty to approach the jurisdictional High Court vide order dated 12.7.2007. The present appeal was filed after the decision of 2nd September, 2008, when the matter was originally filed the registry has pointed out the appeal to be time barred by 1175 days where an application was moved on 23rd October, 2008 by the counsel for the appellant with his own affidavit where he has raised following contentions:- “That the registry has pointed out the appeal to be time barred by 1175 days which is erroneous and wrong because of the following reasons: (a) The impugned CESTAT was passed by the CESTAT Branch at New Delhi on 27.9.2004 and was served thereafter, to the appellant. (b) An appeal against the said order was preferred before the Hon’ble Delhi High Court Numbering 9/2005 which was posted for (4 of 14) [EXCIA-40/2011] admission on various dates after issuance of notice. (c) Finally the appeal was dismissed as withdrawn on the point of jurisdiction before the Delhi High Court with liberty to approach the jurisdictional High Court vide order dated 12.7.2007. (d) That therefore, in the facts and circumstances the registry is wrong in asking for condonation of delay application.” 6. He contended that there is no need of filing of delay condonation application however, application may be accepted and delay if any may be condoned in filing the appeal. Though this application was filed on 23rd October, 2008, it seems that no notice was issued to the respondents and for the first time notice was issued or copy was served to the Central Government Counsel when the matter was listed before us on 31st May, 2017 along with filing of the demand draft in the name of Registrar by the counsel for the appellant. 7. Thereafter, the matter was adjourned time and again and the matter was mainly heard on delay condonation application and serious consequences are required to be considered by us therefore, without narrating the facts in detailed, it is true that the judgment was delivered in 2004, the appellant has gone to Delhi High Court but the appeal was filed on 2nd September, 2008 therefore, the contention which has been raised by counsel for the respondent in his reply which reads as under:- “7.3. That it is submitted that delay of 322 days and not 350 days in filing of appeal on 02.09.2008 is being admitted now before the Hon’ble Court, that too when the same was pointed out by the counsel of the revenue department, the appellant/applicant now cannot be granted another chance to seek condonation (5 of 14) [EXCIA-40/2011] of delay, that too after a lapse of more than 3542 (350+3192) days which is inexcusable and would amount to gross abuse of process of law.” 8. However, in alternative he has also submitted as under:- 11. That in the contents of Paragraph No. 8 (a) the delay has been computed of 322 days which is incorrect and actual delay works out to 350 days which is calculated as hereunder:- Date from Date to No. of days 27-09-2004 (Date of CESTAT order) 11-10-2004 (Date of receipt of CESTAT order) ---- 11-10-2004 (Date of receipt of CESTAT order) 15-02-2005 (Date of filing of appeal before Hon’ble Delhi High Court) 127 15.02.2005 (Date of filing of appeal before Hon’ble Delhi High Court) 12.07.2007 (Date of order passed by Hon’ble Delhi High Court) --- 12.07.2007 (Date of order passed by Hon’ble Delhi High Court) 27.07.2007 (Date of receipt of order passed by Hon’ble Delhi High Court) – 27.07.2007 (Date or receipt of order passed by Hon’ble Delhi High Court) 02.09.2008 (Date of filing of appeal before Hon’ble Rajasthan High Court) 403 Total 530 Less: Time granted as per 35G(2A) 180 DELAY IN FILING OF APPEAL 350 9. The question comes for consideration whether an appeal which was filed on 2nd September, 2008 was not moved for almost 9 years therefore, condonation of delay application where the notice was not issued by the department for almost 8 years, (6 of 14) [EXCIA-40/2011] the delay should be considered from the date of judgment or from date of receipt of the order or from the date of dismissal by Delhi High Court judgment or from the knowledge of judgment to the respondent. 10. Counsel for the appellant contended that in view of the decision of Supreme Court in case of Commissioner of Income Tax, Kolkata-II vs. West Bengal Infrastructure Dev. Fin. Corpn. Ltd. 2012 (279) E.L.T. 3 (S.C) wherein it has been held as under:- “5. Looking to the amount of tax involved in this case, we are of the view that the High Court ought to have decided the matter on merits. In all such cases where there is delay on the part of the Department, we request the High Court to consider imposing costs but certainly it should examine the cases on merits and should not dispose of cases merely on the ground of delay, particularly when huge stakes are involved. 6. Accordingly, the impugned order is set aside and the matter is remitted to the High Court to decide the case de novo in accordance with law. 11. Another decision in case of Collector, Land Acquisition Anantnag & Anr. vs. Mst. Katiji & Ors. 1987 (28) E.L.T. 185 (S.C.) wherein it has been held as under:- 3.“The legislature has conferred the power to condone delay by enacting Section 5 (Any appeal or any application, other than an application under any of the provisions of Order XXI of the CPC, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period) of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression \"sufficient cause\" employed by the legislature is adequately elastic to enable the courts to apply the law in a (7 of 14) [EXCIA-40/2011] meaningful manner which subserves the ends of justice-that being the life-purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:- 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. \"Every day's delay must be explained\" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the 'State' which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including (8 of 14) [EXCIA-40/2011] the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step-motherly treatment when the 'State' is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing, and passing-on- the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non-grate status. The Courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression \"sufficient cause\". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even handed justice on merits in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order of the High Court dismissing the appeal before it as time barred, is therefore, set aside. Delay is condoned. And the matter is remitted to the High Court. The High Court will now dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides.” 12. He has also relied upon the decision in case of State of Nagaland vs. Lipok AO 2005 (183) E.L.T. 339 (S.C.) wherein it has been held as under:- “10. The proof by sufficient cause is a condition precedent for exercise of the extraordinary restriction vested in the court. What counts is not the length of the delay but the sufficiency of the cause and shortness of the delay is one of the circumstances to be taken into account in using the discretion. In N. Balakrishnan v. M. Krishnamurthy MANU/SC/0573/1998 : 2008(228)ELT162(SC) it was held by this Court that Section 5 is to be construed liberally so as to do substantial justice to the parties. The provision contemplates that the Court has to go (9 of 14) [EXCIA-40/2011] in the position of the person concerned and to find out if the delay can be said to have been resulted from the cause which he had adduced and whether the cause can be recorded in the peculiar circumstances of the case is sufficient. Although no special indulgence can be shown to the Government which, in similar circumstances, is not shown to an individual suitor, one cannot but take a practical view of the working of the Government without being unduly indulgent to the slow motion of its wheels. 11. What constitutes sufficient cause cannot be laid down by hard and fast rules. In New India Insurance Co. Ltd. v. Shanti Misra MANU/SC/0547/1975 : [1976]2SCR266 this Court held that discretion given by Section 5 should not be defined or crystallised so as to convert a discretionary matter into a rigid rule of law. The expression \"sufficient cause\" should receive a liberal construction. In Brij Indar Singh v. Kanshi Ram ( MANU/PR/0115/1917 : (1917)19BOMLR866 it was observed that true guide for a court to exercise the discretion under Section 5 is whether the appellant acted with reasonable diligence in prosecuting the appeal. In Shakuntala Devi Jain v. Kuntal Kumari MANU/SC/0335/1968 : [1969]1SCR1006 a Bench of three Judges had held that unless want of bona fides of such inaction or negligence as would deprive a party of the protection of Section 5 is proved, the application must not be thrown out or any delay cannot be refused to be condoned. 12. In Concord of India Insurance Co. Ltd. v. Nirmala Devi MANU/SC/0384/1979 : [1979]118ITR507(SC) which is a case of negligence of the counsel which misled a litigant into delayed pursuit of his remedy, the default in delay was condoned. In Lala Matu Din v. A. Narayanan MANU/SC/0621/1969 : [1970]2SCR90, this Court had held that there is no general proposition that mistake of counsel by itself is always sufficient cause for condonation of delay. It is always a question whether the mistake was bona fide or was merely a device to cover an ulterior purpose. In that case it was held that the mistake committed by the counsel was bona fide and it was not tainted by any mala fide motive. 13. In State of Kerala v. E.K. Kuriyipe , it was held that whether or not there is sufficient cause (10 of 14) [EXCIA-40/2011] for condonation of delay is a question of fact dependant upon the facts and circumstances of the particular case. In Milavi Devi v. Dina Nath : (1982)3SCC366a, it was held that the appellant had sufficient cause for not filing the appeal within the period of limitation. This Court under Article 136 can reassess the ground and in appropriate case set aside the order made by the High Court or the Tribunal and remit the matter for hearing on merits. It was accordingly allowed, delay was condoned and the case was remitted for decision on merits.” 13. Counsel for the respondent submits that the issue is now covered by the decision of Delhi Tribunal in case of G.S. Enterprises vs. Commissioner of Central Excise, Jaipur 2014 (313) E.L.T. 340 (Tri.-Del.). Counsel for the respondent contended that the appellant has not moved application for delay condonation in proper form. Even assuming in 2008 the applicant has taken the ground which are made out in para 2 but the same was never considered and even contention regarding Delhi High Court there is a gross delay even from the date of one year one month seven days and from 2004, if we take the knowledge to the department it is only in 2017 therefore, technically there is delay of 13 years in preferring this appeal. 14. Taking into account the situation counsel for the respondent contended that the affidavit in reply which has been filed by the department as stated hereinabove para 7.3 and the judgment which is delivered by jurisdictional court in Tax Appeal No. 5/2013 decided on on 29th August, 2016 wherein the Division Bench speaking for Division Bench has stated as under:- “This is an excise appeal filed U/s 35G of the Central Excise Act,1944 questioning order of CESTAT dt.3-3-2011. (11 of 14) [EXCIA-40/2011] However, office has pointed out delay of 504 days in filing appeal in support thereof application has been filed seeking condonation of delay u/S 5 of Limitation Act & certain medical prescriptions have been annexed with the application but we find that the last prescription annexed with the application is of February,2012 and it is not the case of the appellant that he was not running his business during the interregnum period and after we have heard counsel for appellant at length we are not satisfied with the explanation furnished seeking condonation of delay of 504 days and that apart we find that its a case of evasion of service tax and the Central Excise Division Kota gathered an information that the present appellants are engaged in providing services of cable network service & had obtained service tax registration on 19-1-2004 but was not paying service tax leviable under Finance Act,1994 on the services rendered as Cable Operator since 16-8-2002 and the officer of the department searched the premises of the appellant situated at 2-A-21 Mahaveer Nagar, Kota u/S 82 of the Finance Act,1994 on 13-1- 2004 under the authority of search warrant issued by Commissioner, Central Excise Commissionerate, Jaipur-I and only thereafter show cause notice was issued on 13-12-2004 within the period of limitation & after opportunity being afforded to the appellant finally the demand of service tax has been confirmed by the Tribunal under order impugned before us. As already observed we are not satisfied with the explanation furnished for the delay, that apart we also granted opportunity to appellant's counsel to make submissions on merits as well and after hearing we are not satisfied to grant indulgence prayed for. Accordingly, the application seeking condonation of delay u/S 5 of Limitation Act stands rejected, as a consequence appeal becomes incompetent & accordingly dismissed.” 15. Another decision in case of Brahma Dutt Modi vs. Commissioner of Central Excise Jaipur 2014 (313) E.L.T. 42 (Raj.) wherein it has been held as under:- (12 of 14) [EXCIA-40/2011] “8. We find no good ground to take a different view than the one taken by the Tribunal as we too have come to the same conclusion that there was no sufficient cause for condonation of delay in filing such application. 9. In the first place, the appellant not being an illiterate villager could not have taken an excuse that they did not know the legal provision relating to limitation to file such application. It is much more so when it being a company paying excise duty on regular basis is guided by legal experts on regular basis. Secondly; when the appellant is guided by experts in the subject (excise), it is not possible to hold that they would now know the provisions which govern limitation because such provisions are frequently applied by the lawyers in Tribunal for filing applications and thirdly in the absence of any details mentioned in the application, it was rightly held that the alleged cause pleaded was not a bona fide cause. 10. In the light of foregoing discussion, we are completely in agreement with the view taken by the Tribunal and hence dismiss the appeal as being devoid of merit.” 16. He contended that in view of this there is gross delay and he has also contended that the appellant was not serious about his right otherwise appeal of 2004 though assuming and even it is filed in 2008 was never moved and the department was taken aback by all of sudden when notice was issued in 2017 that too when copy was served to the Central Government Counsel by the Court. 17. We have heard counsel for both the sides. 18. We are aware that the matter requires to be viewed very seriously. It is true that the original record was not available and application was moved after we have passed an order on 1st May, 2017 to reconstruct the matter. (13 of 14) [EXCIA-40/2011] 19. From the record, it is very clear that the matter was not admitted and even on delay condonation application notice was not issued and the application was moved in 2008. The explanation which is standard in para 2 where the office has pointed out that delay of 1175 days and that too 2008 was not properly supported by the affidavit of the parties. No doubt the demand draft is of the local counsel but the parties have not supported any affidavit in the delay condonation application. The ground which has been given for condonation of delay was that the counsel for Delhi was not well and the party’s main partner of Director of the company was busy with the sickness of the family on personal affidavit which he has said in the rejoinder. 20. While going through the tax matter it is always the great concern from the court in excise department when it is a question of refund of Cenvat Credit, the court has to be very gracious in the matter. If the litigation is really genuine, the matter requires immediate attention and moving the matter in 2004 and order filed in 2008 not moving for 8 years, the court has to be very slow and has no choice in the proceedings on the matter of delay condonation application. 21. In our considered opinion, 2004 order even if we take from the Delhi High Court judgment, there is a delay of one year one month seven days which is very serious in nature when for explanation for the same is not there and application was moved after 9 years which further added fuel to the fire. 22. In that view of the matter, the condonation of delay application though Mr. Ranka has submitted that the gross delay (14 of 14) [EXCIA-40/2011] of more than 10 years is required to be accepted, we are not inclined to grant the delay condonation application looking to the bona fides the same requires to be rejected. We are not considering the matter on merits only on the ground of lethargic approach of the parties and negligence in the matter and throwing everything on the office of the High Court is not proper. 23. It would not be duty of the office but for the litigant of the litigation to put it for further hearing if they require any urgent order. 24. In that view of the matter, since the file was reconstituted after order of 1st May, 2017, we are not inclined to grant the application u/s 5 of the Limitation Act. 25. The application u/s 5 of the Limitation Act as well as appeal stand dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. A.Sharma/71 "