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Commissioner of Central Excise, Delhi-III, Gurgaon Versus M/s. Kap Cones

2015 (7) TMI 893 - SUPREME COURT

Condonation of delay - Revenue appeal - eight days delay in issue of the review order under Section 35-E(1) by the Committee of Chief Commissioners - Denial of CENVAT Credit - Clandestine removal of goods - Invocation of extended period of limitation - Confiscation of seized goods - Held that:- Sub-section (4) of Section 35-E(4) provided that appeals should be filed within a period of three months from the date of communication of the order under sub-section (1) or (2) to the adjudicating author .....

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the amendment made by the Finance Act, 2008, the Committee of Chief Commissioners was required to pass an order within three months from the date of communication of the decision or the order. This period of three months is identical to the period of three months stipulated in Section 35-B of the Act. - As per the scheme of the Act, sub-section (4) of Section 35-B(5) of the Act authorises the appellate tribunal to admit an appeal or permit filing of memorandum of cross-objections after expi .....

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be appropriate to restrict and bar an application of the provisions of sub-section (4) of Section 35-E to the period after passing of an order under sub-sections (1) and (2) of Section 35-E of the Act - Full Bench decision of the tribunal in the case of Monnet Ispat & Energy Ltd. (2010 (8) TMI 50 - CESTAT, NEW DELHI) endorsed and held has correct - Decided in favour of Revenue. - Civil Appeal No. 5432 of 2015, (@ SLP(C) N. 27746 of 2014) - Dated:- 20-7-2015 - Dipak Misra And Prafulla C. Pant,JJ. .....

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against the firm for filing of input duty credit, capital goods duty credit and further clandestine removal of the finished product. On 15.7.2011, the Commissioner adjudicated the matter and disallowed the Cenvat credit taken and confirmed the demand as indicated in the show cause notice at the time of commencement of the proceeding invoking the extended period under the proviso to Section 11A(1) of the Central Excise Act, 1944 (for brevity, "the Act") and directed for confiscation of .....

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e Commissioner was fallacious inasmuch as he had not imposed penalty under Section 11A(1) which was imposable; and that the Commissioner had overlooked the imposition of penalty on the Manager and Accounts Manager of the respondent firm under Rule 26 of the Central Excise Rules, 2006, which was required in the facts and circumstances of the case. The review order no. 35 of 2011 was issued on 25.10.2011 under Section 35-E(1) of the Act and a direction was issued to the Commissioner to file approp .....

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along with an application filed under Section 35-E(4), an application for condonation of delay was filed for condoning 8 days delay that occurred in review of the order of the Commissioner by the Committee of Chief Commissioners, for the Commissioner's order had been received by the reviewing authority on 18.7.2011 and the review order which was required to be passed within three months from the date of communication was passed after eight days of expiry of the period. 4. It was contended b .....

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bunal rendered in CCE v. Monnet Ispat & Energy Ltd. [2010 (257) ELT 239 (Tri-New Delhi) (LB))]. 5. On behalf of the assessee it was urged that the period of limitation prescribed for reviewing authority, the Committee of Chief Commissioner for issuing directions to the Commissioner in respect of adjudication of order for filing an appeal to the tribunal was three months from the date of communication of the order and there was no dispute that the impugned order was received on 18.7.2011and r .....

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before the tribunal or the commissioner (appeal) in terms of sub-section (4) of Section 35-E an order passed by the concerned reviewing authority under Section 35-E (1) or 35E (3) as the case may be, is imperative. The tribunal opined that filing of an application before the tribunal on the basis of the review order issued under Section 35-E (1) or 35 (2) has to be completed within the period of one month from the date of communication of the review order to the adjudicating authority and on th .....

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e conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly and when a time limit is prescribed for exercise of this power, the same has been exercised within time-limit and an order passed beyond the period prescribed under section 35E(3) would be invalid and ineffective. When an order passed by the reviewing authority after expiry of the limitation period is invalid and ineffective and since such an order is a prerequis .....

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ition to the aforesaid reasoning the tribunal ascribed another reason that it cannot condone delay in filing as appeal as it has a duty to see before accepting an application filed by the a Commissioner under Section 35E(4) as an appeal against the Commissioner's order is backed by valid order passed by the Chief Commissioner under Section 35E (1). The tribunal held so inasmuch as it has formed the opinion that when a time limit is prescribed by statute for reviewing authority, i.e., that is .....

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h Court after enumerating the facts referred to paragraph 10 and 11 of the tribunal judgment and opined thus:- "A due consideration of relevant statutory provisions of Section 35(E)(i) and (ii) of the Act reveals that the Tribunal has no jurisdiction to condone delay in an order passed by the Committee of Chief Commissioner's, asking the Commissioner to file an appeal. The power to condone delay relates to filing the application." Being of this view, the High Court has affirmed the .....

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ed in the authority in M.M. Rubber (supra) whether tribunal has jurisdiction to condone the delay in such a circumstance. We need not have to address the extent of delay and sufficiency of the cause stated in the application for condonation of delay, for the centripodal issue that has arisen for consideration in singularity is whether the tribunal has the jurisdiction or authority to condone the delay. 10. To appreciate the controversy, first we shall refer to the legislative history of Sections .....

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ise, or, as the case may be, the other party preferring the appeal. (4) On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order appealed against and such memorandum shall be dispose .....

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own motion, call for and examine the record of any proceeding in which a Collector 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 collector 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 Board in its order. (2) The Collector of Centr .....

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rder. (3) No order shall be made under sub-section (1) or sub-section (2) after the expiry of two years from the date of the decision or order of the adjudicating authority. (4) Where in pursuance of an order under sub-section (1) or sub-section (2) the adjudicating authority or the authorized officer makes an application to the Appellate Tribunal or the Collector (Appeals) within a period of three months from the date of communication of the order under sub-section (1) or sub-section (2) to the .....

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b-section (3) of Section 35E whereby the time limit was reduced to one year from two years, and the rest of the provisions remained the same. Vide the amendments in 1995, the words "Collector of Central Excise" in Section 35B were substituted with "Commissioner of Central Excise"; whereas in Section 35E, the word "Collector" was substituted with "the Commissioner" and in sub-section (1) at the place of words "such collector" the words "Commi .....

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g authority." 14. Thereafter vide Finance Act, 2005, amendments were brought in Section 35E. At the place of "Board", "Committee of Chief Commissioners of Central Excise" was added. In sub-section (2), the words "such authority" were replaced with "such authority or any Central Excise Officer subordinate to him". 15. Section 35E of Central Excise Act, 1944 (after amendment vide Finance Act, 2008) reads as follows:- "(1) The Committee of Chief Com .....

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as may be specified by the Committee of Chief Commissioners 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 Ce .....

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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. (3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the .....

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se may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of sub-section (4) of section 35B shall, so far as may be, apply to such application." 16. By the said Act, amendments were made to sub-section (3) and sub-section (4) restricting the period for passing of order under sub-section (1) or sub-section (2) to three months from the date of communication of the .....

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instant case is governed by the 2008 amendments. We have referred to 2014 amendment, as by the said amendment it has been stipulated that the Board has power to extend the time for passing an order under sub-sections (1) and (2) by a period of 30 days. We shall overt to the impact of the same at a later stage. 19. At this juncture, it is necessary to state that the Appellate Tribunal has been conferred power under sub-section 5 to admit an appeal after the expiry of the period referred to in su .....

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e said case, it was contended before the tribunal by the assessee that the relevant date of the Collector's (adjudicating authority) order for the purposes of Section 35E(3) should be taken as November 28, 1984, the date when the order was passed and not December 21, 1984 when it was received by the Department and on that basis the order of the Board under Section 35E(1) of the Act should be held as beyond the period of one year from the date of decision or order of the adjudicating authorit .....

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e private respondents are to be treated equally as aggrieved persons for the purposes of calculating the time for making the direction under Section 35E(3) of the Act. The Court scanned the anatomy of Section 35 especially Section 35E and proceeded to interpret the words "from the date of decision or order". In that context, the Court referred to number of authorities and proceeded to state thus:- "12. It may be seen therefore, that, if an authority is authorised to exercise a pow .....

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he ceases to have any locus paetentiae. Normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the party whose rights are affected is not the relevant date for purposes of determining whether the power has been exercised within the prescribed time. 13. So far as the party who is affected by the order or decision for seeking his remedies against the same, he should be made aw .....

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lement which must be satisfied before the decision can be said to have been concluded and binding on him. Otherwise the party affected by it will have no means of obeying the order or acting in conformity with it or of appealing against it or otherwise having it set aside." After so stating, the Court proceeded to hold thus:- "18. Thus if the intention or design of the statutory provision was to protect the interest of the person adversely affected, by providing a remedy against the or .....

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ction may also be founded on the principle that the government is bound by the proceedings of its officers but persons affected are not concluded by the decision." 21. After so stating, the three-Judge Bench opined that Section 35-E comes under the latter category of an authority exercising its own powers under the Act. It is not correct to equate the Board, as contended by the revenue, to one of the two parties to a quasi-judicial proceeding. The Court further held that the power under Sec .....

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or exercise of such a power, that should be exercised within specified period from the date of the order sought to be reconsidered. After so observing, the Court proceeded to state thus:- "...To hold to the contrary would be inequitable and will also introduce uncertainties into the administration of the Act for the following reason. There appears to be no provision in the Act requiring the endorsement, by a Collector, of all orders passed by him to the Board. If there is such a practice in .....

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owever distant, only administrative chaos can result. We are, therefore, of the opinion that the period of one year fixed under sub-section (3) of Section 35-E 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." 22. The said decision has to be understood in its proper context. The core issue that arose for consideration was to the relevant date for t .....

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hin a period of three months from the date of communication of the order under sub-section (1) or (2) to the adjudicating authority. The Court has taken note of the fact that period that was given by the legislature to the revenue was one year which is more than adequate to take appropriate action in proper cases in comparison with the much shorter period within which the assessee has to exercise his right of appeal. The Court gave emphasis on the administrative chaos that would result if a furt .....

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wever, grants right and authorises the adjudicating authority or adjudicating officer to file an appeal within a period of one month from the date of the decision or the order. The provision also stipulates that if such an application is made against the decision or order, the provisions of the Act inclusive of a provision of the sub-section (4) of Section 35 so far as may be shall apply to such applications. We may note with profit that the stipulation as to the applicability of sub-section (4) .....

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thin that period. As stated earlier, the power under sub-section (4) of Section 35-B has been made applicable to appeals preferred following the administrative procedure prescribed under Section 35-E of the Act. The statutory position as it existed in 1984, as we find, has undergone a change by the amendment made under the Finance Act, 2008. Under the changed circumstances, it would not be appropriate to restrict and bar an application of the provisions of sub-section (4) of Section 35-E to the .....

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n to the Board or the Committee of the Chief Commissioners which could be two years or one year. The said extended period or concession granted to the Board or the Committee of Chief Commissioners was withdrawn by the Finance Act, 2008. The only concession available to the revenue is the additional period of one month. The postulates regarding approval, as we perceive, is in favour of the assesses as the mandate is that the Committee of Chief Commissioners would apply its mind before recommendin .....

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be no scintilla of doubt that an order passed or decision taken under Section 35-E by the Board/Committee of Chief Commissioners is the date of the order or decision. It is not a quasi-judicial order determining a dispute or rights of parties, for there is no adjudication. We have already referred to the proviso that has been added to sub-section (3) to Section 35-E by Finance Act, 2014 wherein it is stipulated that the Board has the power to extend the time for passing an order under sub-secti .....

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ferred by the assessee and the other preferred by the revenue. The only thing is that the appeal preferred by the revenue has to be after satisfaction of conditions mentioned in Section 35-E of the Act. It is difficult to conceive that after the amendment brought in by the Finance Act, 2008 that the legislative intent is to put the revenue or the State at a disadvantage. It is not the intention of the legislature to deny and prevent the revenue from preferring an appeal which is barred by limita .....

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ance Act, 2014. The said proviso has a different purport. It empowers the Board to extend the time of passing of an order under sub-sections (1) and (2) by a period of 30 days.Once an order has been passed by the Board in exercise of the said power under the proviso, there would be no need and necessity to file an application seeking condonation of delay for the periods specified, which cannot exceed 30 days. The insertion of the said proviso by Finance Act, 2014 does not negate and is not contr .....

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further period for filing of a reference, it had been held that the period is not extendable but absolute and in that context it had been held Section 5 of the Limitation Act would not be applicable. Thus, the authority in the said case is distinguishable. Be it noted, the said situation having changed by inserting sub-section3A in Section 35-H of the Central Excise Act w.e.f. 1.7.1999. 27. At this juncture, we think it appropriate to refer to the Full Bench decision of the tribunal in Monnet I .....

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