Delhi High Court

Commissioner Of Central Excise, ... vs Shri Ram Udyog & Ors. on 3 September, 2014

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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

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.

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

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

(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:-

"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."

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