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Case Law Details

Case Name : Citizen Umbrella Manufacturers Ltd Vs Commissioner of Customs (Port) (Calcutta High Court)
Appeal Number : CUSTA/28/2024
Date of Judgement/Order : 22/05/2024
Related Assessment Year :

Citizen Umbrella Manufacturers Ltd Vs Commissioner of Customs (Port) (Calcutta High Court)

The Calcutta High Court’s ruling in the case of Citizen Umbrella Manufacturers Ltd vs Commissioner of Customs (Port) addresses crucial issues of delay in filing appeals and the acceptance of new Chartered Accountant (CA) certificates by adjudicating authorities. This judgment has significant implications for procedural fairness and the integrity of documentary evidence in customs and taxation disputes.

Background of the Case

Citizen Umbrella Manufacturers Ltd filed appeals challenging a common order by the Customs, Excise, and Service Tax Appellate Authority, Kolkata, dated April 18, 2018. The appeals were notably delayed by 1158 days, prompting the Court to examine whether the delay could be condoned.

Delay in Filing Appeals

The primary issue was whether the delay in filing the appeals was justified. The appellants argued that they had been diligently pursuing the matter. Initially, they were advised to seek rectification from the tribunal, which proved inappropriate as the grounds were actually of appeal nature. This misadvised rectification application was pending until its dismissal on February 22, 2019. Furthermore, the appellants had lodged a criminal complaint concerning allegedly forged CA certificates, which consumed additional time.

Despite the significant delay, the Court noted the appellants’ consistent efforts to resolve the matter, including filing a criminal complaint and pursuing legal remedies against the non-action of the police. Consequently, the Court found the explanation satisfactory and condoned the delay, emphasizing the importance of diligent prosecution in legal proceedings.

Validity of Chartered Accountant Certificates

Another critical issue was whether a new CA certificate could be accepted after allegations that the original certificate was fake. The initial rejection of the refund was based on the submission of a CA certificate purportedly issued by a deceased accountant. The Court underscored that the adjudicating authority is not bound to accept CA certificates as conclusive proof without verification.

The Court acknowledged that the adjudicating authority must thoroughly examine all relevant documents, including any new CA certificates provided by the appellants. This approach aligns with ensuring a fair assessment and avoiding unjust denial of legitimate claims based on technicalities or unverified documents.

Tribunal’s Consistent Opinion

The Court also noted the tribunal’s consistent stance that new CA certificates can be considered if the original is found defective or unacceptable. This practice promotes justice by allowing appellants to rectify previous errors and submit accurate documentation, ensuring that decisions are based on substantive compliance rather than procedural missteps.

Conclusion

The Calcutta High Court’s decision in Citizen Umbrella Manufacturers Ltd vs Commissioner of Customs underscores the judiciary’s commitment to procedural fairness and thorough examination of evidence. By condoning the delay in filing appeals and allowing the consideration of new CA certificates, the Court ensured that justice is not thwarted by procedural delays or initial documentation errors.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

All these appeals have been filed by the assessee challenging the common order passed by the Customs, Excise and Service Tax Appellate Authority, Kolkata, Eastern Zonal Bench dated 18.4.2018. All the appeals are time barred, inasmuch as, there is a delay of 1158 days. Under normal circumstances the court will not exercise discretion in such matters where the delay is inordinate and unexplained. Thus, it is required to be seen as to whether the appelant have offered an explanation which is acceptable and whether the delay can be condoned. From the averments set out in the condone delay petition we find that the appellants have not been sleeping over their right but have been diligently prosecuting the matter soon after the order was passed by the tribunal on 18.4.2018. It appears that the appellant was advised to file rectification application before the tribunal which later on the appellants realised were not proper remedy as the grounds raised in the rectification application were, in fact, grounds of appeal. The application was pending before the tribunal till it was dismissed on 22.2.2019. The allegations against the appellants were that for the purpose of obtaining refund of the special additional duty the appellants had produced chartered accountant certificate which appeared to be a fake document since the chartered accountant, who said to have been issued the certificate was dead. The appellants appear to have been advised that first year to prove its case before the criminal forum which led to filing a criminal complaint in the Jorasanko Police Station on 4.4.2019. The Officer-in-Charge of the said Police Station did not take appropriate step on the said complaint which necessitated the appellants to file a complaint before the concerned Magistrate under section 156[3] of the Code of Criminal Procedure. The said complaint was registered as case no.47 of 2019 and by order dated 11.4.2019 further explanation was ordered. Ultimately, the police filed FIR on 15.6.2019 under sections 406, 420, 465, 467, 468, 471 and 120B of the Indian Penal Code, 1860. Subsequently, final report was filed on 9.4.2023 exhonerating the accused persons.

Being aggrieved by the same, the appellants filed naraji petition on 5.12.2023 objecting the final order. The learned Magistrate by an order dated 29.12.2023 allowed the said petition and directed further investigation of the matter. Thus, the criminal proceedings are pending at that stage and thee is a very slow progress. In the meantime, the appellants were advised to file the appeal before the court challenging the order passed by the learned tribunal. The above facts will show that the appellants were deligent in prosecuting the matter, more particularly taking effective steps to bring the wrongdoers within the framework of law. Therefore, we are of the view that the delay though being inordinate has been properly explained.

For the above reason, the applications are allowed and the delay in filing the appeal is condoned.

The learned tribunal by the impugned order had dismissed the appeals filed by the appellants challenging the order passed by the Commissioner of Customs [Appeals] dated 22.9.2017 by which the appellant/assessee confirmed the order passed by the adjudicating authority in Order-in-Original dated 28.10.2016, 30.11.2016, 28.10.2016 and 28.12.2016. The sum and substance of the matter is that the chartered accountant’s certificate which was produced by the appellants were found to be fake and, consequently, it was held that the refund of special additional duty was erroneous and order was passed to recover the refund which was sanctioned. Though the adjudicating authority and the appellate authority held the appellants responsible for producing such a false certificate, there is nothing on record to show that the appellants with knowledge and deliberately produced a fake document. In the absence of any material to the said effect, the adjudicating authority as well as the appellate authority should not be recorded such a finding. Thus, rending the finding to be perverse.

The next issue would be as to whether the adjudicating authority will accept a chartered accountant certificate as gospel truth and automatically sanctioned the refund. The answer to this query is obviously, ‘no’.

Though the assessee produced a certificate issued by the chartered certificate yet the adjudicating authority is entitled to verify the aspect as to whether the duty has been passed on or not. Even assuming the certificate issued by the chartered accountant is either defective, false or not acceptable for certain reasons nothing prevents the assessee from producing another certificate from the chartered accountant since it is the adjudicating authority, who will consider not only the certificate issued by the chartered accountant but other records which the assessee may be called upon to produce to examine as to whether refund can be sanctioned.

The learned advocate for the appellants submitted that the learned tribunal was consistently of the opinion that in cases where certificates were found to be either false or not acceptable fresh chartered accountant certificate can be considered, if produced by the assessee.

As observed earlier, there is nothing on record to indicate that the appellants with certain ulterior motive and with full knowledge produced a false document stating the same to be true. The learned advocate for the appellants had produced copies of the orders produced by the learned tribunal in Customs Appeal nos. 75364 of 2018 dated 11.3.2024, Customs Appeal no.77136 of 2017 dated 23.11.2023, Customs Appeal no.77038 of 2017 dated 18.10.2023 and Customs appeal no.77140 of 2017 dated 9.10.2023. In all these cases, the learned tribunal has remanded the matter to the adjudicating authority to check the veracity of the fresh chartered accountant certificate and other documents and proceed to take a decision in the matter.

In the light of the above, we are of the view that the matter can be remanded back to the adjudicating authority for a fresh consideration, taking note of the chartered accountant certificate dated 23.11.2016 issued by R. Rampuria & Co., Chartered Accountant called upon the appelant to produce the other documents and records, afford an opportunity of personal hearing to the authorised representative of the appellants and also the veracity of the documents and take a fresh decision on merits and in accordance with law without being in any manner influenced by any of the observations made in the earlier orders, which have been set aside.

The appeals are allowed with the above direction.

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