Calcutta High Court
Commissionerate vs M/S. Fenasia Ltd. And Anr on 17 February, 2022
OD-2 & 3
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION
ORIGINAL SIDE
IA No. GA 2 of 2021
in
CEXA 29 of 2021
PRINCIPAL COMMISSIONER OF CGST AND CENTRAL EXCISE, HOWRAH
COMMISSIONERATE
Vs
M/S. FENASIA LTD. AND ANR.
AND
IA No. GA 1 of 2021
in
CEXA 29 of 2021
PRINCIPAL COMMISSIONER OF CGST AND CENTRAL EXCISE, HOWRAH
COMMISSIONERATE
Vs
M/S. FENASIA LTD. AND ANR.
BEFORE :
THE HON'BLE JUSTICE T.S. SIVAGNANAM
And
THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
Date : 17th February, 2022
Appearance:
Mr. Somnath Ganguly, Adv.
Mr. Abhradip Maity, Adv.
...for the appellant.
Mr. Biswajit Mukherjee, Adv.
Mr. Soumyajit Mishra, Adv.
...for the respondent no.1.
Re.: IA No. GA 1 of 2021
The Court : We have heard Mr. Somnath Ganguly, learned standing
counsel assisted by Mr. Abhradip Maity, learned counsel appearing for the
appellant/revenue and Mr. Biswajit Mukherjee, learned counsel assisted by
Mr. Soumyajit Mishra, learned counsel appearing for the respondent no.1.
There is a delay of 898 days in filing the appeal. The appellant/revenue
seeks to take the benefit of the order passed by the Hon'ble Supreme Court in
SMW(C) No. 3 of 2020 and prays that the delay should be condoned. On
perusal of the relevant dates, we find that the benefit of the decision of the
Hon'ble Supreme Court cannot be extended to the appellant department as the
period of limitation for filing the appeal expired sometime during March 2019.
Having made this clear we have perused the affidavit filed in support of the
condone delay petition and we find that there is absolutely no explanation for
the inordinate delay in preferring the appeal. We also took note of the
submission of the learned counsel for the respondent/assessee that the
revenue cannot pursue this appeal on account of the national litigation policy
which states that the monetary limit for pursuing the appeals before the High
Courts is Rs.20 lakhs.
Learned counsel for the appellant/revenue would submit that in the
circular instruction issued by the CBEC dated 17.08.2011 and the subsequent
circular it has been clarified that in judgments relating to the cases where
notification/instruction/order has been held illegal or ultra vires have to be
contested irrespective of the amount involved. It is the submission of the
learned counsel for the appellant that the interpretation of the Rule 8(3A) of the
Central Excise Rules, 2002 is one of the findings rendered by the first appellate
authority and the issue is now pending before the Hon'ble Supreme Court and,
therefore, the case will fall within the exceptional clause. Since such
contention has been raised, though we are not satisfied with the reasons given
by the appellant for condonation of the inordinate delay, we exercise discretion
and condone the delay in filing the appeal.
The application being IA No.GA 1 of 2021 stands disposed of.
Re.: CEXA No.29 of 2021
This appeal filed by the revenue under Section 35B of the Central Excise
Act, 1944 is directed against the order dated 07.12.2018 passed by the learned
Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench,
Kolkata (the tribunal, in short) in order no.77064/2018. The revenue has
raised the following substantial questions of law for consideration:
a) Whether the order passed by the Learned Tribunal is preserved as the
Learned Tribunal failed to appreciate that the Department's
contention as to imposition of demand of Cenvat duty and penalty
contemplated u/s 11A(4) & 11AC of Central Excise Act, 1944 & Rule
25 of Central Excise Rules, 2002, as well as the applicability of Rule
8(3)A of the Central Excise Rules, 2002 on the assessee/Respondent
and misdirected the entire case only on the grounds of monetary
limit?
b) Whether the Ld. CESTAT dismissed the appeals filed by the appellant-
department under monetary limited holding that the amount involved
in the case is below 20 lakhs though the issue involved in the case is
stayed by the Hon'ble Supreme Court in respect of SLP against the
order of Hon'ble Gujarat High Court in the matter of M/s. Indsur
Global Ltd. V. UOI?
c) Whether the order of the Learned Tribunal is in violation of the
principles of the natural justice and without giving proper reasoning
in as much as the Learned Tribunal ignored the decisions of Hon'ble
Apex Court and justification and reasoning of the adjudicating
authority in imposing penalty upon the respondent and further
proceeding by the Department in Appeal?
We have heard Mr. Somnath Ganguly, learned standing counsel assisted
by Mr. Abhradip Maity, learned counsel appearing for the appellant/revenue
and Mr. Biswajit Mukherjee, learned counsel assisted by Mr. Soumyajit
Mishra, learned counsel appearing for the respondent no.1.
The adjudicating authority by order dated 20.12.2016 imposed a
penalty of Rs.6,33,022/- under Section 11A(10) of the Central Excise Act,
1944. Challenging the said order the assessee preferred appeal before
the Commissioner of CGST and Central Excise (Appeals)-II, Kolkata
(Commissioner of Appeals) who, by an order dated 04.12.2017, allowed
the appeal and set aside the penalty.
Aggrieved by such order, the revenue preferred appeal before the
Tribunal which has been dismissed by the impugned order. Admittedly,
the quantum of penalty which was imposed by the original authority is
far below the threshold limit fixed by the CBEC in their circular
instruction. Therefore, the appellant cannot pursue this appeal.
Learned standing counsel for the appellant submitted that the
Commissioner of Appeals has rendered certain findings touching upon
the validity of Rule 8(3)A of the Central Excise Rules and referred to
certain decisions of other Courts which struck down the rule as being
ultra vires and also referred to one of the decisions of the High Court of
Gujarat in the case of Indsur Global Limited -vs- Union of India reported
in (2014) 310 ELT (Gujarat).
The revenue has preferred appeal before the Hon'ble Supreme
Court and an order of stay has been granted. Therefore, it is submitted
that the revenue should be permitted to pursue this appeal regardless of
the fact that this is far below the monetary limit prescribed in the
circular.
In our considered view, such a course need not be adopted for more
than one reasons: firstly, as pointed out that there is no dispute to the
fact that the circular instruction issued by the CBEC would prevent the
department from pursuing the appeal as the penalty imposed was
Rs.6,33,022/-. That apart, we find that the subject-matter of challenge
before the authority as well as the tribunal was only with regard to the
imposition of penalty. It may be true that certain observations have been
made by the first appellate authority as regards the validity of Rule 8(3)A
and also quoted certain decisions of the various High Courts which have
struck down the rule. Thus, considering the factual scenario, we are of
the view that if the legal issue with regard to the validity of Rule 8(3)A is
left open, then the interest of the revenue will stand protected and at the
same time if we hold that the appeal cannot be pursued by the revenue
on account of the low tax effect, the interest of the assessee would also
be safeguarded.
In the light of the above, the appeal filed by the revenue is
dismissed on the ground that the amount of penalty imposed is lesser
than the threshold limit fixed in the circular instruction by CBEC as part
of the national litigation policy.
However, we make it clear that whatever observations made by the
appellate authority touching upon the validity of Rule 8(3)A is left open.
The application being IA No.GA 2 of 2021 for stay also stands
dismissed.
Let affidavit of service filed in Court today be kept with the records.
(T.S. SIVAGNANAM, J.)
(HIRANMAY BHATTACHARYYA, J.)
s.pal/pkd.
