Pankaj Steel Corporation vs Cce on 4 March, 2004

Customs, Excise and Gold Tribunal - Delhi

Pankaj Steel Corporation vs Cce on 4 March, 2004
Equivalent citations: 2004 (95) ECC 584
Bench: A T V.K., P Chacko
ORDER P.G. Chacko, Member (J)

1. Pankaj Steel Corporation, proprietary concern of one Smt. Usha B. Agarwal, is the appellant in
this appeal. It is trading in waste and scrap of iron and steel. In November 1999, the appellant
purchased in public auction about 860 MTs of waste and scrap valued at about Rs. 60 lakhs from
the Oil and Natural Gas Corporation Ltd. (ONGC, for short). After the sale of the waste and scrap to
the appellant, ONGC by letter dated 24.11.99 amended the release order incorporating therein
clauses relating to payment of excise duty on the scrap. ONGC insisted that the appellant should
fulfil all the conditions before taking delivery of the material. The appellant took the stand that no
excise duty was leviable on the waste and scrap, whereupon ONGC directed the appellant to execute
a bond to indemnify them against any demand of excise duty that might be raised by the
department. A bank guarantee for Rs. 8 lakhs was accordingly furnished by the appellant in favour
of ONGC and the same was amended from time to time to increase the amount which ultimately
stood at Rs. 8,44,500.

2. The Department by show-cause notice dated 23.5.2000 raised a demand of duty on ONGC in
respect of the above goods sold to the appellant. The Additional Commissioner of Central Excise,
who adjudicated the show-cause notice, confirmed the demand against ONGC and also imposed on
them a penalty. Aggrieved by the decision of the Additional Commissioner, ONGC filed appeal with
the Commissioner (Appeals). That appeal was rejected. ONGC did not choose to file any appeal
against the order of the Commissioner (Appeals). They, however, proceeded to encash the bank
guarantee executed by the appellant. In the present appeal before us, the appellant is challenging the
order of the Commissioner (Appeals).

3. We have heard both sides on the preliminary issue i.e. whether the appellant had locus standi to
file-this appeal. On this issue, the Counsel for the appellant has argued that, as the order of the
Commissioner (Appeals) has not been appealed against by ONGC and has the effect of casting on
the appellant the ultimate burden of duty in respect of the subject goods, the latter is a 'person
aggrieved' within the meaning of Section 35-B of the Central Excise Act so as to challenge the said
order. Counsel has heavily relied on the Supreme Court's decision in I.D.L. Chemicals Ltd, v. Union
of India, 1997 (57) ECC 45 (SC) : 1996 (86) ELT 182 (SC) to substantiate his point. He has also
quoted from the Supreme Court's judgment in Assistant General Manager, Central Bank of India v.
Commissioner, Municipal Corporation for the City of Ahmedabad and Ors., 1995 (4) SCC 696, which
is one of the judgments referred to in I.D.L. Chemicals (supra). Counsel has also relied on the
Madras High Court's decision in Tamil Nadu Neivsprint and Papers Ltd. v. Union of India, 1993
(66) ELT562 (Mad)

4. The SDR has hotly contested the plea that the appellant is an 'aggrieved person' under Section
35-B of the Central Excise Act. No show-cause notice was issued to the appellant by the department
for any purpose whatsoever, nor was any order passed against the appellant by the original authority

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 Pankaj Steel Corporation vs Cce on 4 March, 2004

or the first appellate authority. The order of the Commissioner (Appeals), passed against ONGC, has
not burdened the appellant with any duty, penalty or other liability. In the circumstances, there
could not be any grievance for the appellant against the department. If, at all, the appellant has any
grievance, it is against ONGC, for which the appellant has no remedy under Section 35-B of the
Central Excise Act. In support of these arguments, the SDR has relied on the following decisions:

Hindustan Photo Films v. CC, 1989 (43) ELT 429 (Tri.) CYMA Industries v. CCE, Rajkot, 1997 (96)
ELT 309 (Tri.) Rohit Pulp and Paper Mills v. CCE, Bombay, 2000 (70) ECC 441 (Tri.) : 2000 (120)
ELT 566 (Tri.) Sattelite Engg.Ltd. v. CCE, Bangalore, 2000 (71) ECC 307 (Tri.) : 2001 (130) ELT 684
(Tri) Jaiswal Engg. Works Pvt. Ltd, v. CCE, Pune, 2003 (58) RLT 239 (CESTAT) Referring to the
case law cited by the Counsel, the DR has submitted that, in those cases, the Apex Court was
considering the wider concept of locus standi under Articles 32 and 226 of the Constitution of India.
That concept cannot be imported into the realm of statutory appeals. The DR has sought to buttress
this point by relying on the Hon'ble Supreme Court's decision in Northern Plastics Ltd. v. Hindustan
Photo Films Mfg. Co. Ltd., 1997 (58) ECC 59 (SC) : 1997 (91) ELT 502 (SC).

5. Admittedly, the department did not issue any show-cause notice to the appellant. A show-cause
notice was issued to ONGC to recover Central Excise duty from them on the goods which they had
sold to the appellant without payment of duty and also to penalize them for evasion of duty. The
original authority confirmed the demand of duty against ONGC and imposed a penalty on them. The
first appellate authority upheld the decision of the original authority in an appeal preferred by
ONGC. It is the order of the first appellate authority that has been challenged before the Tribunal by
the appellant. The respondent in this appeal is the Commissioner of Central Excise who represents
the Department. The appellant has no case that it has any grievance against the department which
has not burdened the appellant with duty, penalty or any other liability in relation to the goods
under the Central Excise Act. Had the department burdened it with any such liability, the appellant
would have been a party to the adjudication proceedings. The appellant was, admittedly, not party to
the proceedings. The appellant, therefore, cannot be a 'person aggrieved' under Section 35-B of the
Central Excise Act. It was held by this Tribunal long ago in the case of Hindustan Photo Films
(supra) that an appeal filed by a third party was not maintainable under Section 129-A of the
Customs Act. The provisions of Section 35-B of the Central Excise Act being pari materiel with those
of Section 129A of the Customs Act, the ratio of the decision in Hindustan Photo Films is equally
applicable to an appeal filed under Section 35-B of the Central Excise Act by a person who was not a
party to the adjudication proceedings. In the case of Northern Plastics (supra), the Hon'ble Supreme
Court dealt with the meaning of 'person aggrieved' under Section 129-A of the Customs Act. After
examining the scheme of appellate remedies under the Customs Act, the Court held that only parties
to adjudication proceedings could prefer appeal to the Tribunal under Section 129-A of the Act. The
Court, however, observed that a third party might perhaps be treated to be legally aggrieved by the
order of adjudication and might legitimately prefer an appeal to the Tribunal as a 'person aggrieved'
if it was shown that he was interested in the subject goods and any order of release of the goods to
the party to the proceedings was prone to create a legal injury to him. The Court clarified that, in
order to earn a locus standi under Section 129-A as 'aggrieved person' other than the party arraigned
before the adjudicating authority, it must be shown by the person claiming to be 'aggrieved' that he,
being a third party, had a direct legal interest in the goods involved in the adjudication process.

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 Pankaj Steel Corporation vs Cce on 4 March, 2004

After carefully considering the facts of the instant case, we find that the appellant had no direct legal
interest in the goods (scrap) at the relevant stage. The adjudication was on the question whether
ONGC was liable to pay Central Excise duty on the goods under the Act at the time of its clearance.
The appellant had acquired no legal interest in the goods at that stage. Its interest, if any, was only
contractual by reason of its agreement with ONGC. Hence, the appellant cannot be considered to be
covered by the exception laid down by the Apex Court in the case of Northern Plastics (supra). As
the appellant was, admittedly, a third party to the adjudication proceedings as also to the first
appellate proceedings, it was not a 'person aggrieved' within the meaning of Section 35-B of the
Central Excise Act as per the ruling in Northern Plastics.

6. The Apex Court's ruling has been followed by this Tribunal in the cases of Rohit Pulp and Paper
Mills (supra) and Jaisiual Engg, Works (supra). In Rohit Pulp and Paper Mills, an appeal was filed
with the Collector (Appeals) by Rohit Pulp and Paper Mills Ltd. under Section 35 of the Central
Excise Act against an order of the original authority rejecting the refund claim of another party viz..
Penwalt India Ltd. The appellants were not a party to the proceedings before the original authority.
It was held that the appellants were not an 'aggrieved person' within the meaning of Section 35 to
file appeal before the Collector (Appeals). In the case of jaiswal Engg. Works (supra), the
department has issued a show-cause notice to Telco Ltd. for denying them Modvat credit on certain
inputs supplied by the appellants, Jaiswal Engineering Works (P) Ltd. Telco contested the demand.
The adjudicating authority confirmed the demand on the ground that no duty had been paid on the
inputs. It was Jaiswal Engg. Works (P) Ltd. who approached this Tribunal against the order of the
Commissioner (Appeals). The Tribunal held, by relying on the Supreme Court's ruling in Northern
Plastics, that Jaiswal Engg. Works (P) Ltd. were not 'persons aggrieved' and hence had no right to
file appeal against the decision taken by the adjudicating authority against TELCO. A similar view
was taken by the Tribunal with reference to Section 129-A of the Customs Act in the case of
Hindustan Photo Films. In the case of Cyma Industries (supra), it was held by the Tribunal that any
person other than the one who paid duty had no locus standi to claim refund of the duty under
Section 11-B of the Central Excise Act.

7. The Counsel has heavily relied on the Supreme Court's Judgment in Assistant General Manager,
Central Bank of India and Ors. v. Commissioner, Municipal Corporation for the City of Ahmedabad
and Ors. (supra) in which it was held that a tenant had the right to appeal under the Bombay
Provincial Municipal Corporations Act, 1949 against property tax assessment order passed against
the landlord. In the said case, the Apex Court considered the provisions of the Bombay Rents, Hotel
and Lodging House Rates Control Act, 1947 [for short, Bombay Rent Act] as well as the Municipal
Corporations Act. Section 10 of the Bombay Rent Act empowered the landlord to pass on the burden
of increase in property tax to the tenant. Section 140 of the Municipal Corporations Act made the
tenant liable to pay property tax in case the landlord failed to pay the same. In the particular case,
there was also an agreement between the landlord and the tenant whereunder the obligation to
discharge property tax liability was placed on the tenant. Having regard to the statutory and
contractual provisions, the Apex Court held that it would be grossly unjust to deny to the tenant the
right of appeal against the assessment order passed by the Municipal authorities against the
landlord. The Court was acting under Article 136 of the Constitution of India. The considerations
which entered into the decision of the Apex Court do not exist in the instant case, nor do we have

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 Pankaj Steel Corporation vs Cce on 4 March, 2004

such overriding powers as the Apex Court has under Article 136 of the Constitution of India to grant
equitable reliefs. Here, we are only concerned with the appellate remedy under the Central Excise
Act and are bound by the ratio of the Supreme Court's decision in Northern Plastics, which is
squarely on the point.

8. In I.D.L Chemicals (supra), the Supreme Court was considering the question whether the
appellants had locus standi to file Writ Petition in the High Court against an order of demand of
duty raised on Steel Authority of India Ltd. (buyer of goods manufactured and supplied by the
appellants). The Apex Court held that the appellants were entitled to invoke the writ jurisdiction of
the High Court. The scope of locus standi under Article 226 of the Constitution of India is much
wider than that under statutory provisions. It has been held so by the Hon'ble Supreme Court in the
case of Northern Plastics (supra) itself. The relevant part of the judgment in Northern Plastics is
extracted below:

"It has also to be noted that the wider concept of locus standi in public interest litigation moved
before this Court under Article 32 of the Constitution of India which itself is a fundamental right or
under Article 226 before High Courts which also offers a constitutional remedy cannot be imported
for deciding the right of appeal under the statutory provisions contained in the Customs Act.
Whether any right of appeal is conferred on anyone against the orders passed underline Act in the
hierarchy of proceedings before the authorities has to be judged from the statutory settings of the
Act and not de hors them. Therefore, in our view, the High Court in the impugned judgment had
erred in drawing the analogy from the more elastic concept of locus standi under Article 32 or
Article 226 evolved by the Court by its decisions on the subject."

In the light of the above ruling, we find that it will be wrong to apply the ratio of I.D.L. Chemicals to
the instant case. For the same reason, we are unable to follow the Madras High Court's decision in
Tamil Nadu Newsprint and Papers (supra) wherein a Writ Petition filed by. Tamil Nadu Newsprint
and Papers Ltd. against an order passed by the Collector (Appeals) against the manufacturer of the
goods was held to be maintainable.

9. For the reasons already recorded, we hold that the appellant has no locus standi to file appeal
under Section 35-B of the Central Excise Act against the order passed by the Commissioner
(Appeals) against NGC. Accordingly, the appeal is dismissed.

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