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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CENTRAL EXCISE ACT CASE NO. 56/2014
Date of decision: 3rd September, 2014
COMMISSIONER OF CENTRAL EXCISE, DELHI -I
..... Petitioner
Through: Mr. Rahul Kaushik, Advocate.
versus
SHRI RAM UDYOG & ORS.
..... Respondents
Through: Mr. Rupesh Kumar, Mr. Aditya Kumar & Mr. Parvesh Bahuguna, Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE V. KAMESWAR RAO SANJIV KHANNA, J. (ORAL):
As a limited issue arises for consideration in the present appeal, with the consent of the parties, we frame the following substantial question of law and also dispose of the appeal:-
"Whether Customs, Excise and Service Tax Appellate Tribunal was right in dismissing the appeal preferred by the Commissioner of Central Excise, Delhi-1 on account of non-compliance of Section 35B of the Central Excise Act, 1944 as the committee did not consist of two Chief Commissioners of Central Excise?"
2. An appeal against an order passed by Commissioner (Appeals) is maintainable before Customs, Excise and Service Tax Appellate Tribunal (Tribunal, for short). Section 35B of the Central Excise Act, 1944 (Act, for CEAC No. 56/2014 Page 1 of 8 short) authorises and empowers the Revenue to challenge the order in original passed by the Commissioner or an order passed in appeal by the Commissioner (Appeals) before the Tribunal. However, to control and regulate the exercise of the said right of the Revenue, sub-sections (1B) and (2) of Section 35B of the Act provide as under:-
"Section 35B. Appeals to the Appellate Tribunal-
XXXXX (1B) (i) The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) may, by notification in the Official Gazette, constitute such Committees as may be necessary for the purposes of this Act.
(ii) Every Committee constituted under clause (i) shall consist of two Chief Commissioners of Central Excise or two Commissioners of Central Excise, as the case may be.
(2) The Committee of Commissioners of Central Excise may, if it is of opinion that an order passed by the Appellate Commissioner of Central Excise under section 35, as it stood immediately before the appointed day, or the Commissioner (Appeals) under section 35A, is not legal or proper, direct any Central Excise Officer authorised by him in this behalf (hereafter in this Chapter referred to as the authorisedofficer) to appeal on its behalf to the Appellate Tribunal against such order.
Provided that where the committee of Commissioners of Central Excise differs in its opinion regarding the appeal against the order of the Commissioner (Appeals), it shall state the point or points on which it differs and make a reference to the jurisdictional Chief Commissioner of Central Excise who shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner (Appeals) is not legal or proper, direct any Central Excise Officer to appeal to the Appellate Tribunal against such order.CEAC No. 56/2014 Page 2 of 8
Explanation- For the purposes of this sub section, "Jurisdiction Chief Commissioner" means the Chief Commissioner of Central Excise having jurisdiction over the adjudicating authority in the matter."
3. Sub-section (1B) postulates and requires the Central Board of Excise and Customs to by way of notification in the official gazette constitute committees. The Committee can consist of two Chief Commissioners of Central Excise or two Commissioners of Central Excise, as the case may be. It is only upon approval granted by the Committee that an appeal can be preferred by the Revenue before the Tribunal. Sub-section (2) also deals with the situation where there is a difference of opinion between the two members of the Committee on the question whether an appeal should be preferred.
4. The Tribunal in the impugned order dated 9th October, 2013 has recorded as under:-
"3. Learned advocate Shri J.P. Kaushik appearing for the respondent has raised a preliminary objection. He submits that the provision of Section 35(B) were amended with effect from 13.09.2005 and the order passed by Commissioner (Appeals) is required to be reviewed by a committee of two Chief Commissioners of Central Excise who shall form an opinion about the legality of said order and after forming opinion may pass directions to the Central Excise Officer to file an appeal against such order before the appellant (sic) Tribunal. In as much as, the impugned order was passed on 07.09.2005 and appeal against was filed on 12 December 2005, the procedure as introduced under Section 35(B), with effect from 13.09.2005 was CEAC No. 56/2014 Page 3 of 8 required to be followed.
4. After carefully considering the above contention of the learned advocate, we fully agree with the same. As per the law prevalent on the date of filing of appeal, the order in appeal was required to be placed before a committee of two Chief Commissioners. The said committee was required to form an opinion about the said order being legal and proper and it is only after the formation of opinion, directions were to be given to the Central Excise Officer to file an appeal their against before the Tribunal. In the present case there is no review order by the Committee of Chief Commissioners and the appeal stands filed by Commissioner himself. As such, we are of the view that the same being contrary to the legal position, is not maintainable. Accordingly all the appeals of(sic) filed by the revenue are dismissed on the above short point."
5. The contention of the Revenue is that in the present case the appeal was preferred after approval of the Committee consisting of two Commissioners and not two Chief Commissioners. It is submitted that the Committee of chief Commissioners was not required to examine the question whether an appeal should be preferred before the Tribunal against the order passed by Commissioner (Appeals) as the original adjudication order was passed by the Additional Commissioner and not by the Commissioner. It is only when the original adjudication order is passed by the Commissioner, that an appeal lies to the Tribunal and an approval of the Committee of Chief Commissioners is required. In such cases, no appeal is maintainable before the Commissioner (Appeals). In fact, Commissioner CEAC No. 56/2014 Page 4 of 8 (Appeals) is a subordinate authority to the Commissioner in the hierarchy.
6. Learned counsel for the respondent-assessee accepts the said position, but submits that in the present case there was no approval even by the Committee of Commissioners.
7. The legal submission made by the counsel for the appellant-Revenue is correct. Section 35B(IA) postulates constitution of two set of Committees. Their jurisdiction and authority would depend upon the provision of the Act, the notification etc. By Notification No. 25/2005- C.E.(N.T.) dated 13th May, 2005, different committees have been constituted for Central Excise jurisdictions, including Delhi. The Committees consist of Commissioners. The area of jurisdiction of the Committees is also specified. The Committee consisting of Commissioner of Central Excise are empowered and authorised to decide whether an appeal should be preferred, when the impugned order is passed by the Commissioner (Appeals). In cases where the original adjudication order is passed by the Commissioner, then a Committee consisting of two Chief Commissioners examines whether or not an appeal should be preferred before the Tribunal. There is a separate notification which deals with jurisdiction of the Committee of Chief Commissioners, when the original adjudication order is passed by the Commissioner. The aforesaid legal position is apparent on reading of Section 35E of the Act, which for the sake of convenience is reproduced below:-
CEAC No. 56/2014 Page 5 of 8
"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, if 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."
CEAC No. 56/2014 Page 6 of 8
8. Section 35E of the Act deals with specific powers of Chief Commissioner and Commissioners. Sub-section (2) authorises the Commissioners to on their own motion, challenge the order passed by the adjudicating authority subordinate to them before the Commissioner (Appeals). Sub-section (1) to Section 35E of the Act provides, when the Committee of Chief Commissioners can call for and examine records on legality or propriety of any decision or order of the Commissioner and apply to the Tribunal for determination on specified points. The said power is exercised by the Committee of Chief Commissioners only when the order or decision is that of the Commissioner. It does not apply when the order or decision is by an officer/authority subordinate to the Commissioner. Section 35E(2) is not applicable when the order/decision is that of the Commissioner (Appeals).
9. In view of the aforesaid discussion, the reasoning in the impugned order cannot be sustained and the question of law has to be answered in favour of the appellant-Revenue and against the respondent-assessee. At this stage, we record the submission of the counsel for the respondent- assessee that in the present case, the Committee of Commissioners, i.e. two Commissioners had not granted approval for filing of the appeal before the Tribunal. The said submission is controverted and denied by the counsel for the Revenue. This is a separate matter, which if permissible and as per CEAC No. 56/2014 Page 7 of 8 law, may be raised before the Tribunal. We say no more. To cut short delay, the parties are directed to appear before the Tribunal on 1 st October, 2014, when a date of hearing will be fixed.
The appeal is disposed of.
SANJIV KHANNA, J.
V. KAMESWAR RAO, J.
SEPTEMBER 03, 2014 VKR CEAC No. 56/2014 Page 8 of 8