Case Law Details
CESTAT, NEW DELHI BENCH
Commissioner of Central Excise
Versus
KAP Cones
Final Order No. A/881 OF 2012-EX[DB]
Misc. Order No. MO/844 OF 2012
Excise COD Application No. 431 of 2011
Appeal No. E/2745 of 2011
July 25,2012
ORDER
Rakesh Kumar, Technical Member
The respondent is a proprietorship concern of Shri Deepak Duggal having two factories within jurisdiction of Central Excise Commissionerate, Delhi. First factory is situated at 449A, Udyog Vihar, Phase-V, Gurgaon and the Second factory is situated at Plot No.29, Sector-5, IMT Manesar, Gurgaon. Both the factories manufacture paper cones to wrap ice cream cones and cone biscuits, chargeable to central excise duty. A case of wrong availment of input duty credit, capital goods duty credit and clandestine removal of finished product was booked against the respondent company. The matter was adjudicated by the Commissioner vide order-in-original dated 15.7.2011, by which Commissioner disallowed the wrongly taken cenvat credit as proposed in the show cause notice and confirmed its demand invoking extended period under proviso to Section 11A(1), ordered for confiscation of the seized goods and also confirmed the duty demand in respect of the goods alleged to have been clandestinely removed. The adjudicating authority also imposed penalty of Rs.50 Lakhs on Shri Deepak Duggal, Proprietor of the respondent firm under Rule 15 of the Cenvat Credit Rules, 2004. The Commissioner’s order was received in the office of the jurisdictional Chief Commissioner on 18.07.2011. The order of the Commissioner was reviewed by the Committee of Chief Commissioners which was of the view that the Commissioner’s order is incorrect inasmuch as –
(a) Though the Commissioner confirmed the demand for wrongly taken cenvat credit and also of the duty on the goods alleged to have been clandestinely removed by invoking extended period under Section 11A(1), penalty on the respondent company under Section 11AC was not composed, which in the facts and circumstances of the case was attracted;
(b) The Commissioner has overlooked the imposition of penalty on the Manager and Accounts Manager of the respondent company under Rule 26 of the Central Excise Rules, 2002, which in the facts and circumstances of the case was attracted
1.1 Accordingly on this basis, the Committee of Chief Commissioners issued a review order No.35/2011 dated 25.10.2011 under section 35E(l) of the Central Excise Act, 1944 directing the Commissioner to file an application before the Tribunal under section 35E(4) ibid for correct determination of the points mentioned in the review order and pass order, as deemed fit in the facts and circumstances of the case. The Committee’s order was received by the Commissioner on 31.10.2011.
1.2 In pursuance of the order dated 25.10.11 of the Committee of Chief Commissioners, the Commissioner filed the application before the Tribunal under Section 35E(4) which is to be treated as an appeal by the Revenue against the Commissioner’s order. The application under section 35E(4) was filed within the prescribed time-limit of one month from the date of the communication of the review order, i.e. on 16.11.2011. However, along with this application an application for condonation of delay has also been filed for condoning 8 day’s delay in review of the Commissioner’s order dated 15.7.11 by the Committee of Chief Commissioner, as while the Commissioner’s order had been received by the reviewing authority on 18.7.2011 and the review order under Section 35E(1) was required to be within three months from the date of communication.
3. The order of the Committee of Chief Commissioners, the reviewing authority, was issued only on 25.10.11. The Commissioner, therefore, prays for condonation of 8 day’s delay in issue of the review order by the Committee of Chief Commissioner under section 35E(l) on the grounds mentioned in the application.
4. Heard both the sides.
5. Shri I. Beg, ld. Sr. Departmental Representative pleaded that there were genuine reasons for 8 days’ delay in issue of the review order under section 35E (1) by the Committee of Chief Commissioners, that in any case since the appeal has been filed within a period of 4 months of the receipt of the order-in-original dated. 15.7.2001, the delay in issue of the review order under section 35E(1) by the Committee of Chief Commissioners is condonable, that in this regard, he relies upon the judgment of the Larger Bench of the Tribunal in the case of CCE v. Monnet Ispat & Energy Ltd. 2010 (257) ELT 239 (Tri-New Delhi) (LB) and that in view of this, 8 days’ delay in issue of the review order by the Committee of Chief Commissioners may be condoned.
6. Shri Ravinder Singh, Advocate. ld. Counsel for the respondent, pleaded that during the period of dispute, the limitation period prescribed for reviewing authority, the Committee of Chief Commissioner for issuing directions to the Commissioner in respect of an adjudication order for filing review appeal to the Tribunal was three months from the date of the communication of the order, that in this case, there is no dispute that while the impugned order was received on 18.7.2011, the review order was issued after expiry of the three months period i.e. 25.10.11, that the Apex Court in the case of Collector of Central Excise v. M.M. Rubber Co. 1991 (55) ELT 289 has held that when a -. is prescribed in section 35E(1) of the Central Excise Act for review of an order, any order issued after expiry of this limitation period would be invalid and ineffective, that same view has been taken by the Hon’ble Himachal Pradesh High Court in the case of CCE v. Bhillai Wires Ltd. 2009 (236) ELT 40 that in view of this, the review order dated 25.10.11 issued by the Committee of Chief Commissioners after expiry of limitation period of three months is an invalid order, that since for filing of appeal by the revenue against an order passed by the Commissioner, review order under section 35E(1) is a prerequisite and since the review order issued in this case is invalid, the appeal itself is not maintainable and as such, there is no justification for admitting the appeal after condoning the delay.
7. We have carefully considered the submissions from both the sides and perused the records. The admitted facts in this case are that the impugned order was issued on 15.7.2011 which was received by the Chief Commissioner on 18.11.2011. The limitation period prescribed during the period of dispute for review of the Commissioner’s order by the Committee of Chief Commissioners was three months from the date of the communication of the order to the Reviewing Authority. The Commissioner’s order dated 15.07.2011 had been received by the office of the Chief Commissioner on 18.07.2011. The review order, however, has been issued on 25.10.11 after delay of 8 days i.e. after the expiry of the time-limit of three months from the date of communication of the order as prescribed under section 35E(3). There is no dispute that the appeal to the Tribunal in terms of the provisions of section 35E(4) has been filed within a period of one month from the date of communication of the review order dated 25.10.11. The dispute is only on the point as to whether 8 days’ delay in issue of review order by the Committee of Chief Commissioners can be condoned by the Tribunal.
8. Since in this case the interpretation of the provisions of section 35 E of the Central Excise Act is involved, it is worthwhile having a look at the same and the same, therefore, reproduced below:-
“Section 35E Powers of Committee of Chief Commissioners of Central Excise or Commissioner of Central Excise to pass certain orders.-
(1) The Committee of Chief Commissioners of Central Excise may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Central Excise as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Central Excise in its order.
Provided that where the Committee of Chief Commissioners of Central Excise differs in its opinion as to the legality or propriety of the decision or order of the Commissioner of Central Excise, it shall state the point or points on which it differs and make a reference to the Board which, after considering the facts of the decision or order, it is of the opinion that the decision or order passed by the Commissioner of Central Excise is not legal or proper, may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order, as may be specified in its order.
(2) The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority or any Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order.
(3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.
(4) Where in pursuance of an order under sub-section (1) or sub-section (2) the adjudicating authority or the authorised officer makes an application to the Appellate Tribunal or the Commissioner (Appeals) within a period of one month from the date of communication of the order under sub-section (1) or sub-section (2) to the adjudicating authority, such application shall be heard by the Appellate Tribunal or the Commissioner (Appeals), as the case may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of sub-section (4) of section 35B shall, so far as may be, apply to such application.
(5) Omitted”
9. From a plain reading of Section 35E, it is clear that filing of appeal against an order passed by the Commissioner or an order passed by an Adjudicating Officer lower in rank to Commissioner is a two step process. First step is the issue of an order by the reviewing authority which has to examine the adjudication order and expressing its opinion as to whether that order passed is legal and proper or not and if the reviewing authority finds that the order is not legal and proper, it has to issue an order directing the adjudicating authority to make an application to the Appellate Authority – Commissioner of Central Excise (Appeals) or the Tribunal, as the case may be, for correct determination of the point mentioned in it. This step as per the provisions of section 35E(3) has to be completed within a period of three months from the date of communication of the order of the adjudicating authority to the reviewing authority which in case of the order passed by the Commissioner is the Committee of Chief Commissioners and in respect of an order passed by an officer lower in rank to Commissioner is the Commissioner. Once the order has been passed by the reviewing authority under section 35E(1) or section 35E(2), as the case may be, within the period prescribed under section 35E(3), the concerned adjudicating authority within a period of one month from the date of communication of the review order has to file an application before the Appellate Authority – Tribunal or CCE (Appeals) as the case may be, which treats the same as if it were an appeal filed by the Revenue. Thus, for filing an appeal before the Tribunal or Commissioner (Appeals) in terms of the sub-section (4) of section 35E, an order passed by the concerned Reviewing Authority under section 35 E(1) or section 35E(2), as the case may be, is a must. The first step i.e. the issuing order passed by the Committee of Chief Commissioners or commissioner under section 35E(1) or section 35E(2) has to be completed within a period of three months from the date of communication of the order and second step i.e. filing of an application before the Tribunal on the basis of review order issued under section 35E(1) or section 35E(2) has to be completed within a period of one month from the date of communication of the review order to the adjudicating authority. The point of dispute in this case is as to whether the delay in completing the first step – issue of review order under section 35E(1) or section 35E(2) can be condoned by the Tribunal. On this point, the Apex Court in the case of M.M. Rubber Co. (supra) in para -18 of the judgment held as under:-
“18. Section 35E comes under the latter category of an authority exercising its own powers under the Act. It is not correct to equate the Board, as contended by Sri Gaurishankar Murthy, to one of the two parties to a quasi-judicial proceeding before the Collector and the Board’s right under section 35E to the exercise of the right of appeal by an aggrieved assessee from an order passed to its prejudice. The power under section 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly. Where a time is limited for the purposes by the statute, such power, as under section 33A(2) of the Indian Income-tax Act, 1922 referred to in Muthia Chettiar (supra), should be exercised within the specified period from the date of the order sought to be reconsidered. To hold to the contrary would be inequitable and will also introduce uncertainties into the administration of the Act for the following reason. There appears to be no provision in the Act requiring the endorsement, by a Collector, of all orders passed by him to the Board. If there is such a practice in fact or requirement in law, the period of one year from the date of the order is more than adequate to ensure action in appropriate cases particularly in comparison with the much shorter period an assessee has within which to exercise his right of appeal. If, on the other hand, there is no such requirement or practice and the period within which the Board can interfere is left to depend on the off-chance of the Board coming to know of the existence of a particular order at some point of time, however distant, only administrative chaos can result. We are, therefore, of the opinion that the period of one year fixed under sub-section (3) of section 35E of the Act should be given its literal meaning and so construed the impugned direction of the Board was beyond the period of limitation prescribed therein and therefore invalid and ineffective.”
10. Thus, the Apex Court in this case has held that power under section 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly and when a time limit is prescribed for exercise of this power, the same has been exercised within time-limit and an order passed beyond the period prescribed under section 35E(3) would be invalid and ineffective. When an order passed by the reviewing authority after expiry of the limitation period is invalid and ineffective and since such an order is a prerequisite for filing appeal before the Tribunal, there is no question of condonation of delay. Same view has been taken by the Hon’ble Himachal Pradesh High Court in the case of Bhillai Wires Ltd. (supra). The judgment of the Tribunal in case of Monnet Ispat & Energy Ltd. (supra) is contrary to the law laid down by the Apex Court in its judgment in case M.M. Rubber Co. (supra) which has been followed by Hon’ble Himachal Pradesh High Court in case of Bhillai Wires Ltd. (supra).
11. There is one more reason as to why the Tribunal cannot condone the delay in issue of review order under section 35E(1) by reviewing authority which is that while the Tribunal can condone the delay only in filing of appeal the Tribunal has nothing to do with the exercise of the power of superintendence to be exercised by the reviewing authority under section 35E(1) of the Central Excise Act. All the Tribunal has to see before accepting an application filed by the Commissioner under section 35E(4) as an appeal against the Commissioner’s order is as to whether the application is backed by a valid order passed by the Committee of Chief Commissioner under section 35E(l). When a time-limit is prescribed by statute for reviewing authority – Committee of Chief Commissioners for exercise of its power of superintendence and if the reviewing authority issues an order under Section 35E(1) after expiry of the limitation period, the same, as held by the Apex Court, would become invalid and ineffective and the Tribunal has no power to validate and revive such invalid and ineffective order.
12. In view of the above discussion, we do not find any merit in this application for condition of delay. Since the delay is not condonable, the appeal is also not maintainable. COD application as well as appeal are, therefore, dismissed.
