Case Law Details
Commissioner of Central Excise & Customs Vs Century Metal Recycling Private Limited (CESTAT Delhi)
Introduction: The case involves an appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Delhi, titled Commissioner of Central Excise & Customs vs. Century Metal Recycling Private Limited. The dispute revolves around the applicability of CBIC instructions regarding the monetary limit for filing appeals, with the respondent challenging the department’s appeal below the threshold.
Background: The Central Board of Indirect Customs (CBIC) issued instructions stipulating monetary limits for appeals to be filed before CESTAT, aiming to reduce government litigation. However, the respondent argued that the department’s appeal fell below the prescribed threshold. The case concerns 30 bills of entry pertaining to the import of aluminum scrap by Century Metal Recycling Private Limited.
Contention of the Assessee: Century Metal Recycling Pvt. Ltd. contended that the department’s appeal should be withdrawn as it fell below the monetary limit set by CBIC instructions. They argued that the threshold should be adhered to, citing various legal precedents and interpretations supporting their position.
Contention of Revenue: The Revenue Authority, represented by the Authorized Representative, argued against the withdrawal of the appeal, stating that the threshold should be determined based on the total duty involved in all the bills of entry. They emphasized the importance of providing a fair opportunity for the department to be heard.
Decision by Relevant Judiciary: The Tribunal analyzed the legality and applicability of the CBIC instructions in light of statutory provisions and judicial precedents. It held that while CBIC instructions are binding on departmental officers, they are not enforceable on the courts, including quasi-judicial authorities like CESTAT. The Tribunal emphasized the importance of ensuring the department’s opportunity to be heard and remanded the matter for fresh adjudication.
Conclusion: The case highlights the complexity of applying administrative instructions in legal proceedings and underscores the significance of upholding principles of natural justice. The decision to hear appeals below the threshold on their merits ensures fairness and equitable treatment for all parties involved. This ruling sets a precedent for similar cases and emphasizes the judiciary’s role in safeguarding procedural fairness in administrative matters.
FULL TEXT OF THE CESTAT DELHI ORDER
The present appeals have been filed by the Department. Prior the Learned Authorized Representative could begin his submissions, the Learned Counsel for the Respondent-Assessee has raised the objection that the amount involved (in the present appeal), is below the threshold limit required for filing appeals as per CBIC Instruction F. No. 390 dated 17.08.2011 amended on 30.12.2016 according to which the department is restrained to file any appeal involving an amount of less than Rs. 50.00 Lakhs, before CESTAT. It is mentioned that that there are number of appeals of Century Metal Recycling Pvt. Ltd.
Learned Counsel for Assessee has requested directions to the Department to withdraw the impugned appeal in view of the aforementioned CBIC Instructions.
2. Learned Authorized Representative while rebutting these submissions has mentioned that in the present appeals, the Respondent-Assessee has filed the cross objection and the objection of Monetary Limit was not raised therein. It is impressed upon that raising a new issue in the hearing before the bench is not permissible. Otherwise also period of 45 days as prescribed under Section 129 (A) (4) of Customs Act, 1962 is already over. Learned Authorized Representative has relied upon the decision of Lohiya Machines Limited vs. Collector reported as 1986 (25) ELT 225, with the mention that the appeal against the said decision was dismissed by Hon’ble Supreme Court. It is also mentioned that the issue of monetary limit cannot be called as question of law.
3. Learned Authorized Representative further mentioned that the threshold limit in each appeal has dropped below the requisite amount of Rs. 50.00 Lakhs as the number of appeals has increased to be equal to the number of Bills of entry filed by the importer. There were 30 bills of entries filed by one and same importer for importing the same product in relatively same period in the name of Century Metal Recycling Private Limited. Learned Authorized Representative accordingly has requested that for the purpose of monetary limit, the total amount of duty involved in all the bills of entry may be clubbed together which will be much more than the required threshold limit of Rs. 10 Lakhs.
4. It is further submitted that the Department otherwise deserves an opportunity of hearing which stands denied to the Department due to order challenged by the Department in above mentioned 30 reassessed value of the impugned goods was accepted by the AssesseeRespondent in view of Section 17 (4) of Customs Act, 1962. The importer despite depositing the differential duty based on said reassessed value had still filed an appeal before the Commissioner (Appeals). The said appeal has been allowed vide the order under challenge bearing No. 59-115/2019 dated 05.04.2019. The said order has error apparent on face of its record, being in violation of mandate of Section 128 A 2(3) of the Customs Act, 1962. It is impressed upon that due to this error the department were devoid of any opportunity of being heard. The appeal is accordingly prayed to be hearing on merits.
5. Having heard the contentions of both the parties on the preliminary issue of pecuniary jurisdiction, we observe and hold as follows:-
The Central Board of Indirect Customs (CBIC) has issued an instruction dated 17.08.2011 which was amended on 17.12.2015, 30.12.2016 and recently on 02.11.2023 fixing the monetary limits for the appeals to be filed by the Department in the Tribunal, High Court and the Supreme Court. It clarifies that the monetary limit for an appeal to be filed before CESTAT is Rs. 50.00 Lakhs and above. The perusal of said instruction reveals that instruction has been issued with an objective of reducing the number of Government Litigation. Thus foremost, we need to know as to whether the said instruction has a binding effect.
Under the Customs law, the power of issuance of these circulars/instructions can be traced to Section 151A of the Customs Act. So far as the clarification/circulars issued by the Central Government are concerned, they represent merely their understanding of the statutory provisions. Circular and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes. In this regard, Board had issued a Circular No. 1006/13/2015-CX, dated 21-9-2015 vide F. No. 96/90/2015-CX, which reiterate the binding nature of circulars/instructions and also discuss the extent of binding effect thereof. However, Hon’ble Delhi High Court in the case of Geep Industrial Syndicate Vs. CBDT (1987) 166 ITR 88 (Del) has observed as under:
“It is clear that while a circular of the Board will be binding upon an Income-tax Officer in matters relating to the general interpretation of any provisions of the statute, the circular cannot override judicial decisions rendered on the statute. In fields which are covered by judicial decisions, the circular will not be conclusive even so far as the Income-tax Officer is concerned. In the circumstances, we are of opinion that the circular issued by the Central Board of Direct Taxes dated April 3, 1982, cannot constitute a ground for this court assuming jurisdiction in respect of a matter which clearly falls within the territorial jurisdiction of the Allahabad High Court. As recently pointed out by the Supreme Court in Union of India v. Oswal Woollen Mills Ltd. [1985] 154 ITR 135 (SC), a High Court should be reluctant to interfere in matters where the territorial jurisdiction as well as the convenience of the parties render it appropriate that the assessee should move some other High Court in regard to the relief sought.”
Also, we are of the opinion that the Parliament/Legislature never speaks or explains what does a provision, enacted by it, mean. Law is what is written in the statute and also the one as declared by the Supreme Court and the High Courts. Further, it is for the Supreme Court and the High Courts to declare what a particular provision of statute say, and not for the executive. Thus, we opine that the circulars/ instructions issued by the Board (CBIC/CBDT etc.) may be binding on the officers of the department, being issued by the higher authority, however just being issued by Board, a document, be it a circular or instruction does not get legislative affirmation.
The Delhi High Court in Addl. CIT v. Mrs. Avtar Mohan Singh (1982) 136 ITR 645 (Del) had observed that the circulars of the Central Board are not binding on the court. Also that the Board cannot impose a burden on the taxpayer greater than what the statute provides except can relax the rigour of the law. Hon’ble Supreme Court also in Bengal Iron Corporation v. CTO (1993) UPTC 1312 (SC) has observed that so far as clarifications/ circulars issued by the Central Government and/or State Government are concerned, they represent merely their understanding of the statutory provision. They are not binding upon the courts. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion.
Supreme Court in the case of Catholic Syrian Bank Vs. CIT (2012) 343 ITR 270 (SC) has discussed the object behind circulars and instructions issued by the Board in following words:-
“The circulars have the force of law and are binding on the income tax authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. A circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act.”
In the light of these decisions, we hold that the circulars and notifications issued by the Department are binding on department but not on the courts including the quasi judicial authorities including the tribunal. From the above discussion, it is clear that the Instruction/Circulars are mandatory/binding vis-a-vis the Departmental Officers are concerned. However, vis-a-vis the Superior Courts including Tribunals, the objective is different. The Tribunal as well as Superior Courts have to prioritize the interest of justice. It is the mandate for the Courts to see that none shall be condemned un‑heard and that none shall be pre-judicially affected. The Courts/Adjudicating Authorities have to see whether any Circular/Instruction of the department is sufficient enough to fulfil the requisite interest of justice in the given set of circumstances.
7. Now reverting to the facts of the present case, we observe that the present appeal is with respect to one among 30 Bills of Entry arising out of common Master Bill of Lading which got split into various House Bills pertaining to the same Respondent-Assessee. Thus, it is clear that all the Bills of Entry pertain to one importer for import of same commodity i.e. Aluminium Scrap imported more or less during the same period/time.
8. We further observe that the Bills of Entries were self assessed by the importer. However, on verification of value therein, the proper officer opined it to be undervalued. He accordingly proposed the enhanced value. The importer respondent gave consent in writing for the value so proposed, paid the differential duty as per the value so enhanced and took the out of charge order. Subsequently, treating the said enhancement as the assessment order by proper officer, the importer-respondent filed 30 appeals (one for each Bill of Entry) before Commissioner (Appeals).
9. We observe that as per Section 17 of Customs Act, 1962, the proper officer was duty bound to give the correct assessment of duty in any case, the self assessment is found not done correctly. The proper officer in terms of Section 17 (4) has to re-assess the duty leviable on such goods. The self assessed value for imported goods was opined to be incorrect. In view of Section 17(4) of the Customs Act, 1962, the proper officer reassessed the same. Since the reassessed value was contrary to the self assessment done by the importer, the proper officer under Section 17 (5) of the Act is required to mandatorily pass a speaking order, the word used therein being ‘shall’. However, there is an exception in Section 17(5) of the Act itself that where importer or exporter, as the case may be, confirms his acceptance for the enhanced value in writing to the proper officer, no speaking order need to be passed by the said proper officer. The Hon’ble Supreme Court in the case of Escorts limited vs. Union of India reported as 1998 (97) ELT 2011 has clarified that no formal order of assessment can be expected from a proper officer when there is no dispute as to the classification or rate of duty.
10. The importer-respondent in the present case despite accepting the enhanced value by consent in writing and despite paying the differential amount of duty without any apparent protest still has filed an appeal. Commissioner (Appeals) vide the order dated 05.04.2019 has set-aside the value enhanced by the proper officer after reassessing the value of the imported goods. The value as was declared being self assessed by the appellant has been accepted by Commissioner (Appeals) and all the 30 Appeals filed by the importer-respondents as were filed with respect to each Bill of Entry are allowed with consequential relief, by one common order with order No. 59-115 dated 05.04.2019.
11. We observe that the said order is in sheer violation of Section 128A (3) (b) (ii) of Customs Act 1962. The provisions read as follows:-
1 ………..
2…………
3. The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks [just and proper as follows:
(a) confirming, modifying or annulling the decision or order appealed against; or
(b) referring the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely: –
(i) where an order or decision has been passed without following the principles of natural justice; or
(ii) where no order or decision has been passed after reassessment under section 17; or
(iii) where an order of refund under section 27 has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant.]
The perusal makes it abundantly clear that where no order (speaking) has been passed by the proper officer after re-assessment under Section 17 of the Customs Act, 1962, but an appeal still is being filed, the Commissioner (Appeals) has to refer the matter back to the proper officer.
12. We are of the opinion that the intention of Legislature under the said provision is that the opportunity of hearing should be equally available to the department as well. Commissioner (Appeals) has accepted the value which was self assessed by the importer by setting aside the value as was enhanced by the proper officer under Section 17 of the Customs Act, 1962. The value was enhanced without any speaking order as the proposed enhancement was fully accepted by the importer vide his consent given in writing to the proper officer. Due to this, speaking order was not required as per sub-clause 5 of Section 17 of the Act, as quoted above. In such situation, Commissioner (Appeals) had to refer the matter back to the proper officer/adjudicating authority for fresh decision/order, in terms of above quoted sub-clause (ii) of Section 128A (3) (b) of the Customs Act, 1962.
13. The absence of remanding the said matter, to our opinion, amounts to violation of principle of natural justice. As brought to notice by the Learned Authorized Representative, the Commissioner (Appeals) have been referring back the matters where the enhanced value has been accepted by the importer under Section 17(5) of Customs Act, 1962. Order-in-Appeal No. 32 to 43 of 2017 dated 29.08.2017 and Order-in-Appeal No. 44 to 99 of 2017 dated 31.8.2017 in Respondent’s own case, are perused where the Commissioner (Appeals) has remanded back the matters. The relevant findings are as under:-
“I therefore, hold that all such cases of unilateral enhancement should be re-considered by the assessing authority in respect of all the appeals for passing speaking orders, detailing all grounds of enhancement in the value as per the mandatory provisions of Section 17(5) of the Customs Act, 1962 within 30 days of communication of this order”
14. In light of entire above discussion, the order of Commissioner (Appeals) under challenge before us is held to have been passed in violation of afore discussed statutory mandate. Hence it cannot be allowed to attain finality due to Departmental Instructions or Clarifications which have to be within the four corners of parent legislation. The circular was for department to follow and not for the assessee to rely upon, especially when the self assessment of assessee is under shadow of doubt, more so when the department is being denied the proper opportunity to defend its stance. Above all, there cannot be any intention of the Department to issue any instruction which is detrimental to its own interest. As observed above, the only intention of the impugned instruction for fixing monetary limit is to reduce the Department litigation. The instruction cannot be enforced at the cost of prejudice to the issuing authority itself. Rule of law requires a fair opportunity of being heard even to Government Authorities/Department herein. Commissioner (Appeals) has wrongly relied upon the decision of Sanjivani Non-ferros Trading Pvt. Ltd. Vs. Commissioner of Customs, Jaipur 2019 (365) ELT 3 (S.C.) as in that case, the enhancement has not under Section 17 of the Customs Act, 1962.
15. We also observe that instead of counting each Bill of Entry for the purpose of calculating threshold monetary limit for filing appeal, it may be seen that all the 30 Bills of Entry pertain to one importer, namely Century Metal Recycling Private Limited for the same commodity i.e. aluminium scrap imported during more or less same period/time. Further, the Commissioner (Appeals) has passed one Order -in -Appeal for all the 57 Bills of Entry though numbered as 59- 115/2019. Against the said OIA, this appeal is filed before this Tribunal (CESTAT). Rule 6A of CESTAT Procedure Rules, 1982 provides for one appeal against such order. It reads as follows:-
“RULE 6A The number of appeals to be filed Notwithstanding the number of show cause notices, price lists, classification lists, bills of entry, shipping bills, refund claims/demands, letters or declarations dealt with in the decision or order appealed against, it shall suffice for purposes of these rules that the appellant files one Memorandum of Appeal against the order or decision of the authority below, along with such number of copies thereof as provided in rule 9.
Explanation. In a case where the (1) impugned order-in-appeal has been passed with reference to more than one orders-in-original, the Memoranda of Appeal filed as per Rule 6 shall be as many as the number of the orders-in-original to which the case relates in so far as the appellant is concerned.
In case an impugned order is in respect of more than (2) one persons, each aggrieved person will be required to file a separate appeal (and common appeals or joint appeals shall not be entertained).”
16. With these observations and in view of said Rule 6A of CESTAT Procedure Rule, 1982, we hold that the present case to be a fit case for this bench to exercise its power to not accept the CBIC instructions in this particular appeal and hold that CBIC Instruction F. No. 90 dated 17.08.2011 prescribing monetary limit for filing appeals before this Tribunal is not mandatory in view of the above discussed facts and circumstances of the present case. Consequently, we hold that the Customs Appeal No. 51 976-52003 of 2019 Customs Appeal No. 50963,51125 of 2020 Departmental Appeals shall be heard on merits. List for final hearing on 13th May, 2024.
(Order pronounced in the open Court on 21.03.2024)
Author Bio
