Commissioner of Central Excise vs Leading Solution India P. Ltd.

Ajay Kumar Mittal, J.—This appeal has been preferred by the Revenue u/s 35G of the Central Excise Act, 1944 (in short, "the Act") against the order dated July 26, 2012, annexure A-3 passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal"), claiming the following substantial questions of law:

(i) Whether the Tribunal has power to condone the delay u/s 35B(5) of the Central Excise Act, 1944 in case of Departmental appeal filed after the Review Committee decision u/s 35E ibid?

(ii) Whether the divisional Bench of the Tribunal was bound by larger Bench decision in the case of 2010 (257) ELT 239 or it could have taken different view without referring the matter to the larger Bench?

(iii) Whether the divisional Bench of the Tribunal was justified in relying on the earlier decision of the Tribunal in the case of 2000 (120) ELT 201 which was based on a totally different statutory provisions as were applicable at that time as dearly observed by the larger Bench in the case of 2010 (257) ELT 239 ?

(iv) Whether the aforesaid impugned order of the hon''ble Tribunal needs to be set aside in view of Supreme Court decision in the case of Thakker Shipping P. Ltd. Vs. Commissioner of Customs (General), ?

A few facts relevant for the decision of the controversy as available on the record, may be noticed. The respondent-assessee was engaged in the manufacture of high foamed coaxial cables 1/2", 7/8" and high foamed super flexed coaxial cables 7/8" falling under Chapter sub-heading 8544 20 10 to the first schedule to the Central Excise Tariff Act, 1985. Later on the assessee vide its letter dated November 24, 2008 intimated change of its name from M/s. Leading Solution India P. Limited to L.S. Cable India P. Ltd. with effect from November 25, 2008. It is now engaged in the manufacture of excisable goods, namely, flexible foam dieletrical RF feeder cable, super flexible foam dieletrical RF feeder cable, flexible foam dieletrical aluminium RF feeder cable and low loss flexible foam dieletrical RF feeder cable chargeable to Central excise duty under Chapter 85 of the Central excise tariff. It obtained Central excise registration u/s 6 of the Act for manufacture of finished goods. It imports certain inputs which are exempt from custom duty under notification dated March 1, 2005 as amended subject to following the procedure prescribed under the Customs (Import of goods on concessional rate of duty for the manufacture of Excisable goods) Rules 1996 (in short, "the Rules"). The assessee in accordance with the provisions of these rules applied to the jurisdictional Central excise authority for registration which was granted to it. The Department alleged that the assessee imported certain goods by declaring their false description in the documents and in this manner, wrongly availed of duty exemption under a notification dated March 1, 2005. It was on this basis that show-cause notice dated April 22, 2010, annexure A-1 was issued to the assessee as to why exemption from whole of the duty of customs be not denied to it and penalty be not imposed under sections 112(a) and 114(a) of the Act. The adjudicating authority vide order dated February 28, 2011, annexure A-2 dropped the proceedings against the assessee holding that the goods had been rightly classified by it and that the exemption availed of by it was applicable to it. The said order was reviewed by the committee constituted by the Department and it was held that the order passed by the adjudicating authority was not legal and proper and therefore the appeal was required to be filed by the Department before the Tribunal. Accordingly, the appeal was filed on August 1, 2011 along with application for condonation of delay of 63 days in filing the appeal. The Tribunal vide order dated July 26, 2012, annexure A-3 dismissed the appeal holding that there was no provision for condonation of delay in filing the review appeal u/s 35E(4) and also relied upon the judgment of the larger Bench of the Tribunal in AZO Dye Chemicals [2000] 120 ELT 201 (Trib.-Delhi) [LB]. Hence the present appeal by the Revenue.

We have heard learned counsel for the parties and perused the record.

The point that arises for consideration in this appeal is whether in case of delay in filing the appeal where the Committee of Chief Commissioner of Central Excise takes a decision to file an application to the Tribunal beyond the period of one month from the date of communication of the order in terms of section 35E(4) of the Act the Tribunal is competent to condone the delay for sufficient cause u/s 35B(5) of the Act.

It may be noticed that section 35E(4) of the Act is pari materia to section 129D(4) of the Customs Act, 1962 (in short, "the 1962 Act") whereas section 35B(5) of the Act and section 129A(5) of the 1962 Act are similar. The hon''ble apex court in Thakker Shipping P. Ltd. Vs. Commissioner of Customs (General), held that section 129A(5) of 1962 Act stands incorporated in section 129D(4) of 1962 Act by way of legal fiction and has to be given effect to and in such circumstances, it could not be said that the Tribunal had no power to condone the delay. It was held as under (page 404 of 17 GSTR):

From the plain language of section 129D(4), it is clear that section 129A has been incorporated in section 129D. For the sake of brevity, instead of repeating what has been provided in section 129A as regards the appeals to the Tribunal, it has been provided that the applications made by the Commissioner u/s 129D(4) shall be heard as if they were appeals made against the decision or order of the adjudicating authority and the provisions relating to the appeals to the Tribunal shall be applicable in so far as they may be applicable. Consequentially, section 129A(5) has become integral part of section 129D(4) of the Act. In other words, if the Tribunal is satisfied that there was sufficient cause for not presenting the application u/s 129D(4) within the prescribed period, it may condone the delay in making such application and hear the same.

Parliament intended entire section 129A, as far as applicable, to be supplemental to section 129D(4) and that is why it provided that the provisions relating to the appeals to the Tribunal shall be applicable to the applications made u/s 129D(4). The expression, ''including the provisions of sub-section (4) of section 129A'' is by way of clarification and has been so said expressly to remove any doubt about the applicability of the provision relating to cross objections to the applications made u/s 129D(4) or else it may be said that provisions relating to appeals to the Tribunal have been made applicable and not the cross objections. The use of expression ''so far as may be'' is to bring general provisions relating to the appeals to Tribunal into section 129D(4). Once the provisions relating to the appeals to the Tribunal have been made applicable, section 129A(5) stands incorporated in section 129D(4) by way of legal fiction and must be given effect to. Seen thus, it becomes clear that the Act has given express power to the Tribunal to condone delay in making the application u/s 129D(4) if it is satisfied that there was sufficient cause for not presenting it within that period.

Further, the Tribunal while rejecting the prayer of the appellant for condonation of delay had relied upon its decision in 2000 (120) ELT 201 . The judgment in AZO Dye Chemicals [2000] 120 ELT 201 (Trib.-Delhi) [LB] was overruled by the apex court with the following observations (page 403 of 17 GSTR):

Section 129D(4) makes it clear that where an application is made by the Commissioner to the Tribunal in pursuance of an order under sub-section (1) within a prescribed period from the date of communication of that order, such application shall be heard by the Tribunal as if it was an appeal made against the decision or order of the adjudicating authority and the provisions regarding appeals u/s 129A to the Tribunal, in so far as they are applicable, would be applicable to such application. The crucial words and expressions in section 129D(4) are, ''such application'', ''heard'', ''as if such application were an appeal'' and ''so far as may be''. The expression ''such application'', inter alia, is referable to the application made by the Commissioner to the Tribunal in pursuance of an order under sub-section (1) of section 129D. The period prescribed in section 129D for making application does not control the expression ''such application''. It is difficult to understand how an application made u/s 129D(4) pursuant to the order passed under sub-sections (1) or (2) shall cease to be ''such application'' merely because it has not been made within the prescribed time. If the construction to the words ''such application'' is given to mean an application filed by the Commissioner before the Tribunal within the prescribed period only, the subsequent expressions ''heard'', ''as if such an application were an appeal'' and ''so far as may be'' occurring in section 129D(4) of the Act may be rendered ineffective. The view of the larger Bench of the CEGAT in 2000 (120) ELT 201 and the reasons in support thereof do not commend to us. We are unable to accept the view adumbrated by the CEGAT. The clear and unambiguous provision in section 129D(4) that the application made therein shall be heard by the Tribunal as if it was an appeal made against the decision or order of the adjudicating authority and the provisions of the Act regarding appeals, so far as may be, shall apply to such application leaves no manner of doubt that the provisions of section 129A(1) to (7) have been mutatis mutandis made applicable, with due alteration wherever necessary, to the applications u/s 129D(4).

In view of the above, the order dated July 26, 2012, annexure A-3 passed by the Tribunal being legally unsustainable is hereby set aside. The substantial questions of law are answered accordingly. The appeal stands allowed. The matter is remanded to the Tribunal to decide afresh regarding sufficiency of reasons for condonation of delay in filing the appeal in accordance with law.