Gowri Shankar, Member (Technical)
1. Ronak Dyeing Ltd, appellant before us, was served a shown cause notice proposing short payment of duty and consequent payment of interest and liability to penalty. The manufacturer filed an appeal from this order to the Commissioner (Appeals). The appeal was received at the Commissioner's office five months and seven days after the expiry of three months provided for filing the appeal under sub-section (1) of section 35 of the Act. The Commissioner (Appeals) noted that the law did not confer upon him to condone the delay of five months in filing this appeal. The proviso under sub-section (1) of section 35 only permitted him to condone delay not exceeding three months. He therefore dismissed the appeal as barred by limitation. This appeal is against the order.
2. The counsel for the appellant contends that the appeal before the Tribunal being in time, it is required to take up, consider and dispose of on merits the appeal notwithstanding that it is against an order dismissing on limitation. He says this is the law laid down in Mark Auto Industries vs. CCE 2000 (41) RLT 756. The departmental representative contends that this decision is erroneous and requires reconsideration.
3. Mark Auto Industries had filed an appeal to the Tribunal against the order of the Commissioner (Appeals) dismissing the appeal filed by it before him against the order of the adjudication authority as barred by limitation. The Tribunal did not accept the contention of the departmental representative that since the Commissioner (Appeals)'s order was on limitation, the Tribunal was not competent to examine the merits of the issue. It said that, the Commissioner (Appeals)'s order of dismissal although on limitation, resulted in the adjudicating authority's order merging in his. Therefore the Tribunal was competent to go into the merits of the issue.
4. The departmental representative had relied upon the judgment of the division bench of the Madras High Court in Central Board of Excise and Customs vs. Ashok Leylands 1985 (22) ELT 17. The division bench was concerned with the following situation. The appeal by Ashok Leyland against an order of adjudication of the Deputy Collector of Customs, Madras was dismissed by the Appellate Collector of Customs as barred by limitation. Ashok Leyland thereupon filed a revision petition to the Central Boards of Excise & Customs against the order of the Deputy Collector. The Board rejected the appeal petition on the ground that the original order has merged with the appellate order. Ashok Leyland thereupon filed a writ petition before the High Court. On his view that the Board was not justified in refusing to exercise the powers of revision on the facts and circumstances of the case, the single judge of the High Court allowed the writ petition and set aside the order of the Board. The Board appealed this order to the division bench. The argument that the central government counsel advanced before the bench was that the Deputy Collector's order has merged with the order of the appellate authority and therefore Ashok Leyland could not file a revision against that order of the Dy. Collector. The division bench did not accept his contention. It noted that the Board could entertain a revision petition against an order not being an order passed under Section 128 of the Act. The bench was of the view that when the Appellate Collector rejected the appeal before him as barred by limitation, it was not by an order passed under Section 128. "An order could be taken to have been passed in appeal under Section 128, only if the appellate authority has passed an order either confirming, modifying or annulling the decision or order appealed against. An order dismissing an appeal as out of time cannot be said to be an order passed under Section 128... Since the appellate authority has rejected the appeal as time barred, it should be taken that there has been no effective appeal, and as such, there is no order in appeal as contemplated by the expression 'order passed in appeal under Section 128' occurring in Section 130."
5. In coming to this conclusion, the Tribunal has referred upon the Supreme Court judgement in Collector of Customs vs. East India Commercial Co. Ltd. AIR 1964 SC 1124. The Supreme Court said in that judgement that an appellate authority may, reverse the order under appeal, modify that order or dismiss the appeal. The court said that in all these three cases, the operative order is the order of the appellate authority. The order of confirmation is as efficacious as an appellate order of reversal or modification. The Tribunal cited this order to say that when the appellate authority dismisses the appeal as barred by limitation, it confirms the order of the primary authority. It also relied upon the Supreme Court's judgment in V.M. Salgaocar & Bros. P. Ltd. vs. CIT 2000 (38) RLT 619 which said that the dismissal of an appeal by the Supreme Court by a non-speaking order results in merger of the order appealed against in the Supreme Court's order. The court said that this view applies to a non-speaking order passed by any appellate authority; here the Madras High Court's judgment in Ashok Leyland was not good law.
6. With the greatest possible respect, we are not able to accept as correct this decision of the Tribunal. It has proceeded on the basis that, while dismissing an appeal on limitation, the appellate authority proceeds to confirm the order appealed against; that on dismissal on limitation, the order appealed against merges with the order of the appellate authority and that, in the absence of this interpretation, the right to appeal will be denied.
7. The judgment of the Madras High Court in CBEC vs. Ashok Leyland did not say that an order of an appellate authority dismissing an appeal on limitation was not an order disposing of the appeal. It Specifically noted that an order rejecting an appeal may be "construed as an order passed under Section 128; for the appellate authority has no other power except the power conferred under Section 128" but that will not be an order in appeal filed under Section 128, for an order in appeal can only mean an appellate order on merits."
8. In CCE vs. East India Commercial Co. Ltd., the question before the Supreme Court was whether the Calcutta High Court could have jurisdiction to issue a writ against the Collector of Customs, Calcutta in respect of adjudication order passed under the Sea Customs Act, 1978 notwithstanding the fact that was taken in the appeal against his order has been dismissed by the Central Board of Revenue against which the High Court had held that it had no jurisdiction to issue a writ. The Rajasthan High Court had held that where the original authority passing the order was within the jurisdiction of the high court, and the appellate authority was not within such jurisdiction, the high court would still have jurisdiction to issue a writ to the original authority, "where the appellate authority had merely dismissed the appeal and the order of the original authority stood confirmed without any modification whatsoever." Some other high courts had taken a different view, that even when the appeal was merely dismissed, the order of the original authority merges with the order of the appellate authority, and if the appellate authority was beyond the territorial jurisdiction of the high court, no writ could be issued even to the original authority.
9. It is in this context that the Court made its observation which the Tribunal, in Mark Auto Inds. has quoted. It noted that the appellate authority could do one of three things - reverse the order in appeal, modify or merely dismiss the appeal and confirm the order without any modification. The Court said that in the first two cases where the order of the original authority is reversed or modified, it is the appellate authority's order which is the operative order. It is said that on principle it was difficult to draw a distinction between the first two kinds of orders passed by the appellate authority and the third kind of order passed by it. "In all these cases, after the appellate authority has disposed of the appeal, the operative order is the order of the appellate authority where it has reversed the original order or modified it or confirmed it." It therefore concluded that if the appellate authority was beyond the territorial jurisdiction of the High Court, the High Court could issue a writ to the original authority.
10. The Supreme Court was thus not concerned with an order disposing of an appeal on limitation. It would not be correct to say that when an appellate authority dismisses an appeal on limitation, it confirms the order of the original authority. It is in fact difficult to see how the appellate authority could do so. When the appellate authority dismisses an appeal on limitation, it does not even proceed to look at the merits of the issue. It is only in the case of an effective appeal before it, an appeal which has to be heard and decided on merits, that the appellate authority will be required to consider the merits. Therefore, in the case of an appeal which is not an effective appeal, in that it is not filed within time, an order dismissing it on limitation cannot be said to be an order confirming an order of the original authority. The consequence of such dismissal on limitation may well be the same as if the appellate authority had dismissed the appeal on merits. That is however so because there was no effective appeal filed against that order. The same result would take place if no appeal were filed at all against that order. In V.M. Salgaocar & Bros. P. Ltd. vs. CIT 2000 (38) RLT 619, again the Supreme Court was not concerned with the consequence of an appellate order dismissing an appeal on limitation. In paragraph 10 of this judgement, the Court said that different considerations apply when a special leave petition under Article 136 of the Constitution is dismissed by saying "dismissed", and an appeal under Article 133 is dismissed also with the word "the appeal is dismissed." In the former case, dismissal by the Court does not reflect on the correctness or otherwise of the order from which leave to appeal is sought. When an appeal is dismissed though by a non-speaking order, the doctrine of merger applies and the Court upholds the decision of the High Court or of the Tribunal from which the appeal is provided. The conclusion drawn in Mark Auto from this that the doctrine of merger applies whenever an appeal is dismissed by a non-speaking order by any authority is, no doubt correct. However, this does not result in the view that it went on to express, that the Madras High Court's judgment in Ashok Leyland is no longer good law. As we have noted, this view ignores the fact that an order dismissing an appeal on limitation is not an order dismissing an appeal on merits. Different considerations apply in both situations. it also assumes that an order of dismissing an appeal on limitation is a non-speaking order. An order dismissing an appeal on limitation is, by the fact of it, a speaking order. It may deal, and often extensively with the grounds advanced for condonation of delay.
11. The Supreme court has in fact explained the decision clearly in the judgment in Rani Choudhary vs. Lt. Col. Suraj Jeet Choudhary 1982 (2) SCC 596. Patak J., said "there are of course, cases where the trial decree does not merge with the appellate decree. Such instances arise where the appeal is dismissed in default, where it is dismissed as having abated by reason of the omission of the appellant to implead the legal representative of a deceased respondent or where it is dismissed as barred by limitation." After noticing this judgment, the Andhra Pradesh High Court in Mirza Muzamdar Hussain vs. D. Bhaskara Reddy & Ors. AIR 1988 AP 13 has held that an order, appeal of which is dismissed on limitation would not merge with that appellate order. The Delhi High Court expressed the same view in Commissioner of Income Tax vs. Eurasia Publishing House Pvt. Ltd. 1998 (232) ITR 0381. Lahoti J., summing up the discussion in regard to the doctrine of merger said as follows.
"The following principles emerge: (i) the application of the doctrine of merger cannot be rendered in applicable by drawing a distinction between an application for revision and an appeal; (ii) the application of the doctrine of merger depends on the nature of the appellate or revisional order in each case and on the scope of the statutory provisions conferring the appellate or revisional jurisdiction. The doctrine of merger is not a doctrine of rigid and universal application. Whether there is fusion or merger of the order of the inferior tribunal into an order by a superior tribunal shall have to be determined by finding out the subject-matter of appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute; (iii) ordinarily, a judgment pronounced in appellate or revisional jurisdiction after issuing a notice of hearing to both the parties would replace the judgment of the lower court thus constituting the appellate or revisional judgment as the only final judgment; (iv) doctrine of merger does not apply where an appeal is dismissed (i) for default, (ii) as having abated by reason of the omission of the appellant to implead the legal representatives of a decreased respondent; (iii) as barred by limitation; (v) an appeal dismissed in limine on the ground of the bar of limitation may still be an order in appeal for the purpose of determining whether a right of further appeal would be available or not but that does not amount to saying that the order appealed against merges into the appellate order dismissing the appeal in limine as barred by time."
12. In view of our differing perception on the applicability of the judgment of the Supreme Court in East India Commercial Company and V.M. Salgaoncar & Bros. P. Ltd., and the Madras High Court in Ashok Leyland we would have been required to refer the decision in Mark Auto to a larger bench for reconsideration. However, in the light of the fact that Mark Auto did not notice the judgment of the Supreme Court in Rani Choudhory vs. Lt. Col. Suraj Jit Choudhory, the Andhra Pradesh High Court in Mirza Mazumdar Hussain vs. D. Bhaskara Reddy & Ors and the Delhi High Court in Eurasia Publishing House, all of which lay down a proposition contrary to that laid down by the Tribunal, we do not feel ourselves bound by their decision. We are required to follow the judgment of the Supreme Court and the High Courts.
13. The conclusion therefore is clearly inescapable that an order, the appeal against which is dismissed as barred by limitation does not merge in the order of dismissal. The right to appeal against the order dismissing the appeal as out of time however continues to subsist. The only issue that would lie in such a case before the second or the consequent appellate authority is whether the order of the appellate authority dismissing an appeal as barred by limitation was maintainable or not. That second or subsequent appellate authority cannot go into the merits of the issue. This would be the position even in a situation, which is conceivable, in which the first appellate authority, after having expressed its view on the merits of the issue, still proceeds to dismiss the appeal as barred by limitation.
14. The bench of the Tribunal which decided Mark Auto has also been swayed by the perception that if it were to hold otherwise than it did, to right of appeal would be denied. It cannot be disputed that in a situation, where the powers of the appellate authority to condone the delay are limited, such hardship could be caused. Persons who may genuinely be prevented from filing an appeal within six months from the time provided in the law would find these appeals dismissed as out of time. The answer to this is found in the fact that right of appeal is not absolute and unfettered. That right is conferred by the legislature, and is subject to the limits that the legislature may impose. If the law as it stands does impose undue hardship on a class of appellants, the correct course would be to amend it so as to remove the cause of hardship. It is not permissible for the Tribunal to rewrite the law. "All laws of limitation", the Supreme Court said, "lead to some inconvenience and hard cases. The remedy is for the legislature to amend the law suitable. The courts can administer the law as they find them, and they are seldom required to be astute to defeat the law of limitation." (Commissioner of Income Tax vs. Ranchhoddas Karsondas 1959 36 ITR 569). In point of fact, the conclusion that the Tribunal has arrived at in Mark Auto would have the effect of nullifying the provisions of the law laying down a time limit for filing an appeal. Appeals filed before this Tribunal against these orders of Commissioner (Appeals) dismissing the appeal before them as barred by limitation will have to be taken up and disposed of by the Tribunal on merits, notwithstanding that the appeal before the Commissioner (Appeals) may have been field months or years after the period of limitation provided in law. The provisions of the Acts prescribing a time limit for filing the appeal would cease to have any meaning.
15. We now turn to the matter before us. The appeal before the Commissioner (Appeals) is filed beyond six months provided in the Act. The Commissioner has rightly said that he is not in position to condone the delay having regard to the provisions of the statute. We are not able to find his order to be contrary to law.
16. The appeal is accordingly dismissed.