TMI Blog2015 (7) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... t the decision of an administrative, quasi- judicial or even a judicial authority should not represent an “inscrutable face of a sphinx”. Therefore, while one cannot but agree with the proposition that there should be material on record which reflects the reasons as to why the Revenue wishes to prefer an appeal, what does not flow from that, is that, the Committee of Commissioners should necessarily give their own reasons if they otherwise agree with the reasons already on record. In the facts of the case, the record itself shows, to which, we have made a reference above, as to why the Revenue was desirous of preferring an appeal. The reasons set out were cogent and substantial. As to whether the reasons recorded would finally persuade the Tribunal to hold in favour of the Revenue is not what concerns the Committee of Commissioners. This is so as it is an unilateral administrative decision of an aggrieved party i.e., the Revenue. As the administrative decision of the kind involved, as indicated above, requires the Committee of Commissioners to look at errors of fact and / or law in the order passed by the adjudicating authority only from the point of view of the Revenue i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AD (Delhi) 733 (hereinafter referred to as LR Sharma-I) and Commissioner of Central Excise, Delhi-1 Vs. Kundalia Industries, 2012 (279) E.L.T. 351 (Del). 1.1 Accordingly, a larger bench was constituted. The questions of law, referred to us for consideration, are extracted hereinbelow for the sake of convenience :- ..(1). Whether the Custom, Excise and Service Tax Appellate Tribunal (CESTAT) in an appeal under Sub-Section (2) and (2A) of Section 86 of the Finance Act, 1994 read with applicable provisions of the Central Excise Act, 1944, can examine and go into the question of application of mind on merits by the Committee of Chief Commissioners or Commissioners? (2). In case the aforesaid question is answered in affirmative, i.e., against the Revenue and in favour of the assessee, then, whether the decision of the Committee of the Chief Commissioners or Commissioners should be treated as null and void if they have appended signatures to the elaborated notes and objections prepared by the subordinate officers, before the file is put to the Chief Commissioners or Commissioners for examination ?. . 2. The reference made to the larger bench arises in the backgro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) during the period 2008-2009; (ii). that it had wrongly availed CENVAT Credit on services which were not used for providing taxable output services; (iii). there was non-payment of service tax on excess baggage; and (iv). lastly, it had failed to provide information and data with respect to value of air tickets purchased prior to 01.05.2006 which, in fact, were used on or after 01.05.2006. 2.9 The said show cause notice was adjudicated upon by Commissioner of Service Tax, Delhi vide order dated 28.12.2012. A copy of which was despatched, it appears, to the respondent /assessee on 31.12.2012. 3. The adjudication order dated 31/28.12.2012 was reviewed, according to the Revenue, by the Committee of Chief Commissioners, as mandated under the provisions of Section 86(2) of the Finance Act, 1994 (in short the Finance Act). Post, the review, a decision was taken to file an appeal before the Tribunal. 4. Broadly, the grounds articulated by the Revenue, in the review notes, to establish reasons as to why an appeal was required to be instituted, were as follows:- (i). First, the adjudicating authority had imposed a nominal penalty of ₹ 5,000/- evenwhile returning a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Committee of Commissioners, appended its signatures, on the note sheet, on 26.04.2013. 4.5 Apart from the above, there is on record, a Review Order no.24/2013 dated 26.04.2013. This is a typed note, which bears, the signatures of both Mr. B.K. Bansal, Chief commissioner of Central Excise (Delhi Zone) and Mr. P.S. Pruthi, Chief Commissioner of Central Excise (Chandigarh Zone). A copy of this note has been placed on record both by the Revenue as well as by the respondent/assesse. 5. Therefore, when the appeal was moved before the Tribunal, a preliminary objection was taken by the respondent / assessee that it was not maintainable, as there was no application of mind by the Committee of Chief Commissioners (which comprised of Mr. B.K. Bansal and Mr. P.S. Pruthi) in considering the draft review order, which recommended, institution of the appeal against the adjudication order. 6. As noted above, the Tribunal accepted the objections raised by the respondent / assessee even while recording that an elaborate note culminating in a recommendation for review, was prepared by subordinate officers, which was placed before the aforenamed Chief Commissioners, who were charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Vs. LR Sharma, 2014 (4) AD (Del) 733; LR Sharma Vs. Commissioner of Service Tax, SLP 14544/2014 and 14545/2014; LR Sharma Vs. Commissioner of Service Tax, Review Petition No.2521 and 2522/2014 and LR Sharma Vs. UOI, 2011 (22) STR 269 9. On the other hand, Mr. Mittal argued that the reference had to be answered against the Revenue. It was the submission of the learned counsel that, as rightly found by the Tribunal, the two Chief Commissioners, who formed the Committee (which had taken a decision to institute the appeal before the Tribunal), had never met. 9.1 The learned counsel submitted that there were in fact three separate review orders passed in the matter. According to the learned counsel, the first review order culminated with the signatures of the Chief Commissioner of Central Excise (Delhi Zone), who appended his signature on the note sheet on 15.04.2013. Similarly, the second review order, the learned counsel stated, culminated with the signatures of Mr. P.S. Pruthi, Chief Commissioner, Central Excise (Chandigarh Zone); who appended his signatures on 26.04.2013. The learned counsel contended that thereafter, a third review order was prepared. In so far as this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore we proceed further, it may be relevant to extract the provisions of Section 86 (2) of the Finance Act, under which, the Committee of Commissioners, is said to have exercised its power to institute the appeal in the Tribunal. ..86. (1). Any assesse aggrieved by an order passed by a Commissioner of Central Excise under section 73 or section 83A or an order passed by a Commissioner of Central Excise (Appeals) under section 85, may appeal to the Appellate Tribunal against such order within three months of receipt of the order (1A)(i). The Board may, by notification in the Official gazette, constitute such Committees as may be necessary for the purposes of this Chapter. (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 Chief Commissioners of Central Excise may, if it objects to any order passed by the Commissioner of Central Excise under section 73 or section 83A, direct the commissioner of Central Excise to appeal to the Appellate Tribunal against the order. Provided that where the Committee of Chief Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioners. Sub-clause (ii) of sub-section (1A) of Section 86 provides that the Committee so constituted shall either comprise of two Chief Commissioners of Central Excise or two Commissioners of Central Excise, as the case may be. 10.3 Where, however, the Committee of Commissioners differs in its opinion qua the order of the Commissioner of the Central Excise, it is required to state the point or points of difference and place the same by way of a reference before the Board which, after considering the facts of the order, can direct, the Commissioner of Central Excise to prefer an appeal to the Tribunal if, it is of the opinion that the order of Commissioner of Central Excise, is not legal or proper. 10.4 Under sub-section (2A) of Section 86, an identical methodology is provided where the Committee of Commissioners objects to any order passed by the Commissioner of Central Excise (Appeals), under Section 85 of the Finance Act. 10.5 Beyond this, the Section does not state as to the manner in which Committee of Commissioners have to arrive at a decision as to whether an appeal should be preferred against the order of Commissioner of Central Excise. As is abundantly clear, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by superior courts. The decision rendered by the Committee of Commissioners, in our view, does not have the attributes of a quasi-judicial function. 10.10 Furthermore, the instruction issued by the Revenue, is largely pivoted on the decision of the Division Bench of this court rendered in Kundalia Industries s case, which in any event, is the subject matter of the instant reference. For the reasons that we would give hereafter, it would be clear that the approach commended in Kundalia Industries case does not find favour with us. 11. Therefore, having regard to the above, which is, that in our opinion, the decision rendered by the Committee of Commissioners is an administrative function, it would, to our minds, therefore, not require the members of the Committee to meet, consult and give independent reasons, as contended before us by Mr. Mittal. 11.1 In our view, a meeting and / or consultation is not mandatory so long as each member of the Committee has the requisite material placed before him prior to a decision being taken as to whether or not an appeal is to be preferred. It may be a wholesome circumstance to have a meeting and consultation between the members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority in reaching its conclusion. The principle has been summed up in the case of Alexander Machinery (Dudley) Ltd. Vs. Crabtree, 1974 LCR 120 that the decision of an administrative, quasi- judicial or even a judicial authority should not represent an inscrutable face of a sphinx . 12.1 Therefore, while one cannot but agree with the proposition that there should be material on record which reflects the reasons as to why the Revenue wishes to prefer an appeal, what does not flow from that, is that, the Committee of Commissioners should necessarily give their own reasons if they otherwise agree with the reasons already on record. In the facts of the case, the record itself shows, to which, we have made a reference above, as to why the Revenue was desirous of preferring an appeal. The reasons set out were cogent and substantial. As to whether the reasons recorded would finally persuade the Tribunal to hold in favour of the Revenue is not what concerns the Committee of Commissioners. This is so as it is an unilateral administrative decision of an aggrieved party i.e., the Revenue. 12.2 Therefore, having regard to the above, should the decision of the Committee of Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, to examine, as to whether, a decision has been taken by the officers, who ought to form part of the Committee of Commissioners. Once, the record shows that a decision has been taken to file an appeal then, in our opinion, it is beyond the remit of the Tribunal to either examine the sufficiency of the material or the appropriateness / desirability of instituting the appeal ; as these are aspects with respect of which, responsibility has been placed on the Committee of Commissioners. 12.7 The Tribunal, while acting as an appellate authority, in our view, has no jurisdiction whatsoever to strike down a decision taken by the Committee of Commissioners on the administrative side. As indicated above, the only aspect that the Tribunal can examine is, as to whether or not there is on record a decision of the Committee of Commissioners to institute an appeal. Once, such a decision is shown to have been taken then, the Tribunal, will entertain the appeal and adjudicate upon the same on merits; albeit in accordance with law. 12.8 The view that we have taken above is also the view that has been taken by a Division Bench of this court in L.R. Sharma-1 s case, of which, one of us (S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an application of mind to the points in respect of which the question for filing an appeal arose and that the appeal was duly authorised by the Collector, and was filed by the person authorised by the Collector in order to ensure that frivolous and unnecessary appeals are not filed, we are of the opinion that in the present context and in view of the terms of the rules and the purpose intended to be served, the appeal was competent and was duly filed in compliance with the procedure as enjoined by the rules. It has to be borne in mind that the rules framed therein were to carry out the purposes of the Act. By reading the rules in the manner canvassed by Dr. Pal, counsel for the respondent, before us which had prevailed over the tribunal, in our opinion, would defeat the purposes of the rules. The language of the relevant Section and the rules as we have noticed, do not warrant such a strained construction. 8. The reason for the introduction of Section 86(2), rather than permitting the filing of appeals by lower officers themselves, is to ensure that frivolous and unnecessary appeals are not filed. Indeed, in this case, as in all cases, the merits of the case will be dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench in LR Sharma-1, the matter was carried to the Supreme Court, which dismissed the Special Leave Petition in limine vide order dated 07.07.2014, passed in SLP No.14544-14545/2014. As a matter of fact, a review petition bearing no.2521-2522/2014, was also preferred, which was dismissed, once again, in limine, on 27.11.2014. 13. As noticed above, in LR Sharma-1 s case, a Division Bench of this court had noticed, inter alia, a decision rendered by another Division Bench of this court in Kundalia Industries s case as also the judgment of the Division Bench of the Allahabad High Court in Ufan Chemicals. The decisions both in Kundalia Industries as well as Ufan Chemicals pertain to Section 35B(2) of the Central Excise Act, 1944 (in short the Central Excise Act). The two decisions have taken, a diametrically, opposite view. While in Kundalia Industries s case, the Revenue s appeal was rejected on the ground that the Committee of Commissioners had only appended their signatures to a note prepared by subordinate officers, which, articulated a need for filing an appeal before the Tribunal, the Division Bench of the Allahabad High Court, allowed the appeals of the Revenue despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assailed, the Supreme court repelled the challenge based on the rationale that such authority was given to the Collector to ensure that frivolous and unnecessary appeals were not filed. The Supreme Court ruled, that as long as there was an application of mind (by which it did not mean separate reasons) in respect of the issue qua which the appeal arose and due authority was given by the Collector, the appeal was competent. On these grounds, the Supreme Court reversed the judgment and order of the Tribunal. 14. Having regard to the judgment rendered in Berger Paints s case (which has been followed by a Division Bench of this court in LR Sharma-1 s case, as also, by the Division Bench of the Allahabad High Court in Ufan s case), we are bound to hold that the decision in Kundalia Industries case is not consistent with a view taken by the Supreme Court. 14.1 It is for this very reason that we respectfully differ from the view taken by a Division Bench of the Punjab and Haryana High Court in : B.E. Office Automation Products Pvt. Ltd. Accordingly, the two judgments of the Tribunal cited by Mr. Mittal i.e in V.S. Exim Pvt. Ltd. and Super Cassettes Industries Ltd., in our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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