ORDER ISSUED BY COMMITTEE OF CHIEF COMMISSIONERS AFTER EXPIRY OF PRESCRIBED PERIOD OF LIMITATION IS INVALID AND INEFFECTIVE

[Mr. M. GOVINDARAJAN]

Section 35E of the Central Excise Act, 1944 gives powers to the Committee of Chief Commissioners of Central Excise or Commissioner of Central Excise to pass certain orders. Section 35E(1) provides that the Committee of Chief Commissioner 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 Commissioner of Chief Commissioners of Central Excise in its order.

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.

Section 35E (3) provides that every order shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.

In ‘Commissioner of Central Excise V. M.M. Rubber Co’- 1991 (9) TMI 71 - SUPREME COURT OF INDIA the Supreme Court decided on the question as to whether a review order issued under Section 35E(1) of the Central Excise Act, 1944 after the expiry of limitation period under Section 35E is invalid.   The Supreme Court held that where a time is limited for the purposes by the statute, such order should be exercised within the specified period from the date of the order sought to be reconsidered. The Supreme Court was of the opinion that the period fixed under Section 35E(3) 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.

Similar powers are given to the Committee of Chief Commissioners in Customs Act also.   Section 129D of the Customs gives powers to the Committee of Chief Commissioner to pass certain orders. Section 129D(1) provides that the Committee of Chief Commissioners of Customs may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Customs 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 Customs in its order.

Where the Committee of Chief Commissioners of Customs differs in its opinion as to the legality or propriety of the decision or order of the Commissioner of Customs, 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 passed by the Commissioner of Customs, if is of the opinion that the decision or order passed by the Commissioner of Customs 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.

Section 129D (3) provides that every order shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.

In ‘Commissioner of Central Excise, Delhi – III V. Bharat Cereals Private Limited’ – 2013 (291) ELT 123 (Tri. Del) the respondent exported a consigned declared to be Basmati rice. The goods on examination were found to be inferior quality of rice other than basmati whose export was not permitted. The Commissioner, on 23.5.11 ordered confiscation of the goods with option to be redeemed on payment of redemption fine of Rs. 2,50,000/- and imposed penalty of Rs. 50,000/- under Section 114 of the Customs Act.  The Committee of Chief Commissioners examined the above said order and was of the view that the redemption fine and penalty, looking to the gravity of the contravention, is too low.   The Committee, vide its order dated 3.11.2011 under Section 129D(1) of Customs Act directed the Commissioner to file an appeal before the Tribunal for correct determination of the points mentioned in the order.

The Commissioner filed an appeal before the Tribunal.  The Department contended the following:

• The limitation period of 3 months is counted from the date of communication of the order, that from the records, it is not clear as to what is the date of communication of the order;
• In any case the reason for the delay in review was that one of the Chief Commissioners was in Delhi and the other Chief Commissioner was at Chandigarh;
• The Tribunal has powers to condone the delay in exercise of the powers by the reviewing authority under Section 35(1) of the Central Excise Act which are in pari materia with Section 129D(1) of the Customs Act, 1962.
  

The assessee contended that-

• The review under Section 129D(1) of the Customs Act had been taken beyond the limitation period prescribed under Section 129D(1) of the Customs Act;
• As under Section 129D(3) the Committee of Chief Commissioner shall make the order within a period of three months from the date of communication of the decision or order of the adjudicating authority;
• In this case the date of order is 23.5.11 and the review order was passed on 3.11.11 after the expiry of the limitation period;
• Therefore the appeal filed by the department is not maintainable.

The Tribunal found that the impugned order was passed on 23.5.11. From the noting on the copy of the order it is seen that it has been received by Assistant Commissioner (Judicial) on 25.5.11. The review order under Section 129D (1) was passed on 3.11.2011 long after the limitation period of three months from the date of communication of the order.  Therefore, the Tribunal held that no question of condoning by the Tribunal of the delay in exercise of the power by the Committee under Section 129D (1) as any order issued by the Committee after expiry of limitation period prescribed in Section 129D (3) is invalid and ineffective.