DECISION OF COMMITTEE OF COMMISSIONERS, IN REGARD TO FILE OF APPEAL BY THE DEPARTMENT, IS BINDING ON CHIEF COMMISSIONER

[Mr. M. GOVINDARAJAN]

The indirect tax laws provides for filing appeal against the order of the authorities concerned.   Section 86 of Chapter V of Finance Act, 1994 provides for filing appeal before the Tribunal against the order of Commissioner (Appeals).   Certain procedures are to be adopted by the Department to file appeal before the Tribunal.  Section 86 (2A) provides that the Committee of Commissioners if they object to any order passed by the Commissioner of Central Excise (Appeals) under Section 85 can direct any Central Excise Officer to prefer an appeal on its behalf to the Appellate Tribunal.  Therefore an appeal lies against the Commissioner (Appeals) passed under Section 85 only in the event of Committee of Commissioners objecting to the correctness of the said order.   If there is no objection from any of the members if they accept the said order as correct, the question of preferring an appeal against the order passed under Section 85 by the Commissioner (Appeals) would not arise.   It is only when they object where the said decision to object is unanimous or there is difference of opinion among the Commissioners to constitute the Committee, then, they shall state the point of or points on which they differ and make a reference to the jurisdictional Chief Commissioner, who shall, after considering the facts of the order if he is of the opinion that the order passed is not legal, direct any Central Excise Officer to prefer an appeal to the appellate jurisdiction against the order.   Similar provisions are also available in the Central Excise Act, 1944.   The said proposition of the facts is illustrated through the following case laws:

In ‘Commissioner of Central Excise, Tuticorin V. Madurai Coats Private Limited’ – 2007 (2) TMI 517 - CESTAT, CHENNAI  the Tribunal held that once the Review Committee has taken a decision not to file the appeal before CESTAT, then in such circumstances, they become functus officio.   The facts of the case clearly disclose that the Chief Commissioner was aggrieved with the Review Committee’s order and he has prevailed upon the Review Committee to review the position.  Section 35B does not mandate that the review once done cannot be reopened or revised.   The Section 35B of the Central Excise Act, 1944 does not provide any remedy for reopening the Review Committee’s decision.  There is no provision in law to enable any other authority to sit over the review committee’s decision.  It is clear from the record that the Chief Commissioner has played a role in influencing the said Commissioners to recall their order passed as Review Committee Members dropping the matter and to accept the Commissioner (Appeals) impugned order.   Thus the order is not free from bias.  There is no provision in the Act to reopen or review the Review Committee’s order.

In ‘Commissioner of Central Excise & Service Tax (LTU), Bangalore V. Dell Intl. Services India P. Ltd’ – 2014 (33) STR 362 (Kar) the assessee claimed refund under Notification No.12/2005-ST, dated 19.4.2005 which was rejected by the Department on the ground that the assessee has not complied with legal requirement.   The Commissioner (Appeals) confirmed the order of the lower authority.   The Tribunal allowed the appeal filed by the assessee and remanded the matter for a de novo decision on merits.  The Commissioner heard the matter and set aside the order passed by the Adjudicating Authority and held that the assessee is eligible for grant of rebate of taxes paid on eligible input services which do fall within the definition of input services used for providing output services exported. 

The said order was received by the Committee of Commissioners on 4.3.2008 and after getting through the order, they decided to accept the same on 29.5.2008.  The Chief Commissioner, on his own, felt that the acceptance of the order by the Committee of Commissioners is not proper in view of the fact that the issue was pending before the Tribunal.   Consequent to the decision of Chief Commissioner a second review was undertaken by the Committee of Commissioners on 31.7.2008.   In the second review there was a difference of opinion between the Commissioners.   Thereafter the Chief Commissioner decided to file an appeal before the Tribunal. 

Before the Tribunal the assessee contended that once the Review Committee of Commissioners decided to accept the order the matter ends there.   There is no legal provision of law enabling them to sit in judgment over the decision of the Review Committee and therefore the appeal filed by the Revenue was not maintainable.  The Tribunal held that the second review is not possible and dismissed the appeal.

Against the order of the Tribunal the Department filed appeal before the High Court.   The Revenue contended that there is no prohibition in law for the members of the Review Committee to review the decision taken by them earlier.  The decision taken by them at the second review is valid and as there was difference of opinion among the members at the time of second review the Chief Commissioner has jurisdiction to take a decision to prefer an appeal and therefore the appeal is valid and the Tribunal was not justified in dismissing the appeal as not maintainable.   The assessee contended that in the absence of expression provision in the Act providing such a second review the decision to prefer an appeal, taken for the second time is one without the authority of law and therefore the appeal is not maintainable.

The High Court analyzed the provisions of Section 85.  It held that under the scheme of the Act it is clear that even if the Committee of Commissioners differ in their opinion and wants an appeal to be filed and sets of points on which they differ the jurisdictional Chief Commissioner to whom the reference is made is not bound to act on such reference.  Only if it is of the opinion that the order passed is not legal or proper he may direct to file an appeal.   The intention of the legislature in enacting the provision is manifest.   It is to avoid frivolous appeals.  In the scheme of the things the Legislature has not provided any provision for reviewing the decision once taken by the Committee of Commissioners or the Chief Commissioner.   It is settled law that the power of review cannot be implied.   It is the power which should be expressly provided under the statute. Merely because there is no prohibition under the Act for any authority to exercise the power of review, the authority would not get jurisdiction to review its own orders.   The Chief Commissioner is not vested with any power to call upon the Committee of Commissioners to take a second look to review the order so that he could take the decision to prefer an appeal.   Such a procedure is not contemplated under the law.  The substantial question of law is answered in favor of the assessee and against the revenue.