Commissioner of Central Excise vs CEAT Ltd.

This Notice of Motion has been taken out by the Commissioner of Central Excise, Mumbai-III for condonation of delay of 825 days in filing the Central Excise appeal u/s 35G of the Central Excise Act, 1944 (Act) from the order of CESTAT dated 12 March, 2010. Section 359 of the Act provides a period of 180 days for filing an appeal to this Court from the order of CESTAT. The undisputed dates are as under;-

(a) The CESTAT passed the impugned order on 12 March, 2010 [ 2010 (254) ELT 349 ].

(b) The appellant filed an application for rectification of mistake on 8 July, 2010.

(c) CESTAT dismissed the rectification application on 17 January, 2011.

(d) On 30 January, 2012 the appellant filed Writ Petition in this Court challenging the impugned order which was disposed of on 31 August, 2012 by this Court with liberty to file a fresh petition.

(e) The accompanying Central Excise Appeal was filed on 7 January, 2013 and the present Notice of Motion for condonation of delay was filed on 10 January, 2013 in this Court.

Learned counsel for the appellant Revenue submitted that the delay has occurred due to the fact that the appellant was prosecuting bona fide its application for rectification of mistake and thereafter the Writ Petition in this Court. Therefore, according to him, sufficient cause has been shown for the delay in filing the appeal and the same be condoned.

Even if it is assumed that the appellant had sufficient cause for the time taken in filing the application for rectification of mistake, there is no satisfactory explanation for the period of one year between 17 January, 2011 when the application for rectification was dismissed by CESTAT and 30 January, 2012 when the Writ Petition was filed in this Court. The only explanation offered in the affidavit in support is as under:--

I say that the said delay is neither deliberate nor intentional but has occurred due to procedural formalities, which were required to be complied with by the different officials in the department in different stages of processing the papers. I say that in government offices, the matters are not decided by one authority alone but the papers are processed for approval and sanction by chain of officers from lower rung to the top, who are required to consider the case on merits and propose action to be taken and the said proposal from the lower rung is considered by superior authorities at different stages and ultimately the final sanction is accorded. I say that this process consumes reasonable time.

The explanation is not at all satisfactory and thoroughly vague.

The Supreme Court in the matter of Office of The Chief Post Master General and Others Vs. Living Media India Ltd. and Another, has while refusing to condone the delay, inter alia, observed:

In our view, it is the right time to inform all the Government bodies, their agencies and instrumentals that unless they have reasonable and acceptable explanation for the delay and there was a bona fide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process. The Government Departments are under a special obligation and ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for the Government Departments. The law shelters every one under the same light and should not be swirled for the benefit of a few.

The affidavit in support of the Motion does not give any explanation for the delay but merely states that the process takes reasonable time. It would be pertinent to note that when the petitioners filed their writ petition on 30 January, 2011 the time to file an appeal u/s 359 of the Act had already expired.

Apart from the above, we have also looked into the merits of the order of the CESTAT. By the impugned order the CESTAT upheld the order of Commissioner of Central Excise dropping the show cause notice demanding an amount of Rs. 6.83 crores from the respondent-assessee being the amount of suo motu credit of Additional Excise Duty (AED) after having paid the same to the Revenue as the credit on AED could not be utilised for payment of Basic duty of Excise but only be utilised for payment of AED. This was done by retrospective amendment in 2004. Therefore, the AED credit utilised was paid into the revenue through PLA and the original AED credit for payment of Basic Excise Duty was suo motu taken by the respondent and upheld by the Commissioner of Central Excise. The CESTAT in the impugned order holds as follows:--

The impugned credit had been legitimately earned by the assessee on procurement of inputs on payment of duty and used for payment of duty following the amendment of Cenvat Credit Rules under Budget 2003. Vide Circular No. 7/16/2003-CX., dated 6-3-2003, the C.B.E. & C. had also clarified that it was considered appropriate not to put any cap on the use of the AED (GSI) credit accruing prior to 1-3-2003. In terms of the provisions enacted in Finance Act, 2004, the debits were held not amounting to payment of duty and the assessee was required to meet the same obligation by payment from PLA. In the instant case, the debits were held to be of no consequence when the assessee was required to pay duty initially discharged using AED (GSI) credit. Therefore, the credit needed to be restored and was correctly ordered so by the Commissioner. We find considerable merit in the finding of the Commissioner that but for the statutory changes introduced with effect from 1-3-2003 following which the assessee had discharged the duty liability on tyres using AED (GSI), it would have continued to have the impugned credit in its account. We also find that the Commissioner correctly held that the respondent had taken the impugned credit under valid duty paying documents under cover of which inputs had been received. Accordingly, we sustain the impugned order and reject the appeal filed by the Revenue.

Learned counsel for the appellant has relied upon the decision of the Larger Bench of the CESTAT in BDH Industries Ltd. v. Commissioner of Central Excise (Appeals), Mumbai, 2008 (229) E.L.T. 364. The said decision has already been considered by CESTAT in the impugned order and it has been distinguished as inapplicable. The CESTAT held that the ratio of the said case relates to excise duty paid and the procedure to be followed for getting back such excess duty paid and has no application in this case as there is no issue of refund but only restoring the AED credits taken prior to 1 April, 2000. The learned counsel for the Revenue is unable to point out why the distinction made by CESTAT in the impugned order is incorrect. In view of the above we are not inclined to condone the gross delay in filing the appeal. The Notice of Motion is accordingly dismissed.