Commissioner of Central Excise vs UFAN Chemicals

We have heard Shri S.P. Kesarwani, learned counsel, appearing for Central Excise Department. The Central Excise Appeal Defective No. 158 of 2010 is directed against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi dated 23-2-2010, by which the appeal was dismissed as not maintainable. The Central Excise Appeal Defective No. 188 of 2010 is directed against the order dated 31-3-2010, by which the application of the Central Excise Department for recalling the order dated 23-2-2010 was rejected.

In the order dated 23-2-2010 the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, was of the opinion that the decision, by which the Committee of Commissioners had authorised the filing of the appeal, was not taken by the Committee comprising of the Commissioners on any particular day. The order was signed by the Commissioner on different dates, which shows that there was no ad idem on the issue on the same day. The Tribunal relied upon its decision in CCE, Kanpur v. LML Ltd.-2009 (92) RLT 840 : 2009 (246) E.L.T. 623 (Tribunal).

An affidavit of service was filed by Shri Ram Kripal, Superintendent, Central Excise Range-II, Division-I, Kanpur, verifying that he has served the copy on the respondent on 10-9-2010. No one has put in appearance on behalf of respondent.

Both the appeals raise common questions of law.

Shri S.P. Kesarwani, appearing for the Central Excise Department submits that an appeal may be filed u/s 35B(2) by the Central Excise Department, where the Committee of Commissioners of Central Excise is of the opinion that an order passed by the Appellate Commissioner of Central Excise u/s 55, as it stood immediately before the appointed day, or the Commissioner (Appeals) u/s 35A, is not legal or proper, by any Central Excise Officer authorized in this behalf to file the appeal to the Appellate Tribunal against such order.

Along with the recall application, the Department produced a copy of the order of the Committee of Commissioners. The order was not signed by both the Commissioners on the same day. Shri Kesarwani informs the Court that the order authorising the filing of appeal was issued by circulation. The Commissioner, Central Excise, Allahabad had signed the order on 18-1-2007, whereas the Commissioner, Central Excise, Kanpur had signed the order on 22-1-2007. The order was passed on a note, which reads as follows:-

Proceeding notes be please referred to.

In this case, the Commissioner (Appeals) has held that no penalty is imposable if duty has been paid before issue of show cause notice. However, the subject case is one of short-found raw materials and finished goods. Therefore, it was a clear case of clandestine removal, automatically involving violation of various provisions of law with an intent to evade payment of duty. In all such cases, we are now filing appeals before the CESTAT in view of the most recent order dated 25-7-2006 of Hon''ble Punjab and Haryana High Court in the case of Commissioner of Central Excise Vs. Machino Montell (I) Ltd., .

Therefore, we may file an appeal in this case also.

Shri S.P. Kesarwani submits that once an appeal has been filed with an authorisation, the Appellate Tribunal could not have rejected it on the ground that it is not maintainable for want of authorisation by the Committee of Commissioners of Central Excise. The Tribunal may u/s 35C confirm, modify or annul the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. The Appellate Tribunal in the absence of any objections taken by the party respondents acted illegally in assuming the powers to examine the validity of the decision taken by the Committee of Commissioners to file the appeal.

In the present case, the order passed by the Tribunal would show that no one had appeared on behalf of party-respondent and that there was no objection taken by any person that the decision taken by the Committee of Commissioners of Central Excise to file the appeal was not in accordance with the law.

In Collector of Central Excise, Calcutta Vs. Berger Paints India Ltd., the Supreme Court considered the object of authorisation for filing the appeal and held as follows:-

Having regard to the purpose of these rules as we conceive it, namely, to ensure that there was an application of mind to the points in respect of which the question for filing an appeal arose and that the appeal was duly authorised by the Collector, and was filed by the person authorised by the Collector in order to ensure that frivolous and unnecessary appeals are not filed, we are of the opinion that in the present context and in view of the terms of the rules and the purpose intended to be served, the appeal was competent and was duly filed in compliance with the procedure as enjoined by the rules. It has to be borne in mind that the rules framed therein were to carry out the purposes of the Act. By reading the rules in the manner canvassed by Dr. Pal, counsel for the respondent, before us which had prevailed over the tribunal, in our opinion, would defeat the purposes of the rules. The language of the relevant Section and the rules as we have noticed, do not warrant such a strained construction.

In the aforesaid view of the matter we are of the opinion that the Tribunal was in error in dismissing the appeal on the ground that it did. In the premises, the judgment and order of the Tribunal cannot be sustained. We accordingly set aside the judgment and order of the Tribunal dated 10th November, 1987. Inasmuch as, however, the Tribunal has not disposed of the appeal on merits, we remand the matter to the Tribunal for consideration of the appeal on merits and in accordance with law. The appeal herein is disposed of as aforesaid.

In the present case, the observation of the Tribunal, that the Commissioners did not take the decision on the same day and thus they were not ad idem at the same time to authorise the filing of appeal, apparently goes beyond the object of authorisation u/s 35B(2) of the Act. In order to avoid filing of frivolous appeals and unnecessary appeals, the Legislature has provided for an authorisation by the Committee of Commissioners of Central Excise. The method and manner, in which such authorisation is obtained, is not an issue on which the Tribunal could in the absence of any objection make an enquiry to arrive at a finding whether such authorisation was given in accordance with the law.

We may also observe here that there are no statutory rules, providing that the Commissioner will sit on the same day at the same time and take a decision authorising a Central Excise Officer to file the appeal. The decision would not suffer from any fatal error unless it is shown that the decision is obtained without application of mind by the Commissioners either sitting together or at different time or dates at different places.

We may also observe here that the appeal did not lack merits inasmuch as the question as to whether the penalty u/s 11AC of the Act can be levied when the duty is deposited prior to issuing show cause notice, is covered by the judgment of Supreme Court in CCE (sic) v. Rajasthan Spinning Mills -2009 (238) E.L.T. 3. In the order authorising the filing of appeal the Committee of Commissioners, Central Excise have noticed the decision of the Punjab & Haryana High Court to the same effect.

For the aforesaid reasons, we find that the order dated 23-2-2010 dismissing the appeal and the order dated 31-3-2010 dismissing the recall application suffer from gross error of jurisdiction by the Tribunal in examining the validity of the authorisation, which it did not possess. Both the appeals are allowed. The orders dated 23-2-2010 and 31-3-2010 passed by the Customs, Excise and Service Tax Appellate Tribunal are set aside. The matter is remanded to the Tribunal for a decision on merits in accordance with the law.