M/S Maa Kalyani Electrical Through Its Proprietor Pravesh Chandra Mandal vs. Union Of INDIA

Held

The Court held that the reasoning of the Appellate Authority in its order dated January 17, 2024, was fallacious and based on a misunderstanding of the law. The initial appeal was dismissed for failure to make the mandatory pre-deposit of 7.5% of the duty amount, as recorded in the order dated January 10, 2023, and not on the merits of the case. Since the appeal had not been decided on merits but had not been entertained due to a procedural defect, the Appellate Authority had not become 'functus officio' upon the petitioner depositing the required amount. The principle established is that an authority is not functus officio if a previous appeal was dismissed for a procedural non-compliance and not on merits, allowing for the appeal to be entertained once the procedural defect is cured. The impugned order dated January 17, 2024, was set aside, and the appeal was restored to its original number for the Appellate Authority to decide it in accordance with law after verifying the pre-deposit.

Facts

The petitioner, M/s. Maa Kalyani Electrical, filed a writ petition challenging an order dated January 17, 2024, passed by the Commissioner (Appeals), CGST & Central Excise, Ranchi. This order rejected the petitioner's second appeal, stating the authority was 'functus officio' and could not alter a previous decision. The petitioner had initially filed an appeal against an order dated March 3, 2022, passed by the Deputy Commissioner, CGST & Central Excise, Jamshedpur. This first appeal was dismissed on January 10, 2023, by the Appellate Authority solely for non-compliance with the mandatory pre-deposit of 7.5% of the duty amount as required under Section 35F of the Central Excise Act, 1944, read with Section 83 of the Act. The petitioner subsequently paid the requisite 7.5% and approached the Appellate Authority again, requesting their appeal be entertained and decided.

Key Issues

1. Whether the Commissioner (Appeals) erred in holding that he had become 'functus officio' and could not entertain the petitioner's appeal after the mandatory pre-deposit of 7.5% of the duty amount was made, when the previous appeal was dismissed for non-compliance with this pre-deposit requirement and not on merits? (Question of law turning on Section 35F of the Central Excise Act, 1944, and Section 83 of the Act). Petitioner's Contention: The petitioner argued that the initial appeal was dismissed solely on the procedural ground of failing to make the pre-deposit, not on the merits of the case. Therefore, once the pre-deposit was made, the Appellate Authority should have entertained the appeal. The petitioner was not contesting the service tax liability and had discharged it with interest before the show-cause notice was issued. Revenue's Contention: The judgment records no specific arguments from the respondents.