TMI Blog2008 (12) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ree appeals were filed by Revenue against order dated 12-11-2007 passed by learned Commissioner, Dibrugarh dropping the charges levelled by show cause notice dated 13-9-2006 against the Respondents M/s. Khushi Aromatics and M/s. Kothari Products Ltd. finding that these two Respondents were not related persons in terms of Section 4(3) of Central Excise Act, 1944 (hereinafter referred to as 'the Act') and the proceeding was time-barred without the extended period being invocable in absence of essential ingredients of proviso to Section 11A of the said Act. He also dropped the charges made by the Show Cause Notice against the Respondent M/s. Kothari Products Ltd. and Shri Mitesh Kothari. A common order of adjudication was passed by the learned Adjudicating Authority to deal with the following allegations against the Respondents :- (i) The respondent M/s. Khushi Aromatics having three partners were all related to each other (See: para 19 at page 13 of order in original) and members of Kothari family, were the promoters and major share holders of the Respondent Kothari Products Ltd., engaged in the manufacture of odoriferous substance and mixtures. It had unlawfully availed benefit un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty resorting to under valuation of two products namely Compound No. 956-N and Compound No. 1978-N, Cleared vide invoice Nos. 50 and 51 both dated 22-3-2005 to M/s. Kothari Products Ltd. Jorhat declaring assessable value less than the cost of the product. Total amount of Central Excise duty and Education Cess evaded by resorting to undervaluation of the two items was Rs. 28,16,640/- and Rs. 56,333/- respectively. (vi) The Respondent M/s. Khushi Aromatics had paid total amount of Rs. 4,05,94,887/- as excess duty of Central Excise under Section 3 of the Central Excise Act, 1944 read with Section 4 of the Central Excise Act, 1944 as duty of Excise on the clearance effected by it to the Respondent M/s. Kothari Products Ltd. during the period from 26-12-2002 to 26-2-2005 and availed refund of the excess duty of excise under the exemption Notification No. 32/99-C.E., dated 8-7-1999 to facilitate availment of excess Cenvat Credit by their related unit, whose products were not eligible for the exemption by way of refund under Notification No. 32/99-C.E., dated 8-7-1999 as their product Pan Masala containing tobacco is not a specified item for exemption under the said Notification by reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lationship between M/s. Khushi Aromatics from the jurisdictional Central Excise officer and exaggerated the assessable value of the products cleared by them to M/s. Kothari Products Ltd. and paid excess duty of excise and availed refund of the excess duty of excise under Notification No. 32/99-C.E., dated 8-7-1999. 3. Hearing the Respondents and considering their reply as well as sub-missions, learned Adjudicating Authority framed following issues in para B at page, 26 and 27 of order of adjudication which read as under:- (a) Whether M/s. Khushi Aromatic M/s. Kothari Products Ltd. are related concerned under the Act, 1944? (b) Whether the Show Cause Notice which relates to the period from 26-12-2002 to 26-2-2005 is time-barred and extended period of five years is invocable under Section 11A of the Act? (c) Whether Rules 9 and 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 are applicable in determination of the value and duty payable in respect of the goods sold to M/s. Kothari Products Ltd. by M/s. Khushi Aromatic? (d) Whether refund of Rs. 4,05,94,887/- refunded to M/s. Khushi Aromatics under Notification No. 32/99-C.E., dated 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the sole consideration for the sale was transaction value. Therefore, the allegation brought against the Respondent M/s. Khushi Aromatics that Central Excise duty collected in excess and were deposited in Government exchequer is not sustainable because whatever the duty was charged was deposited in the Government account. (g) There was no evidence to prove that Shri Mithesh Kothari was personally involved or had suppressed the relationship between M/s. Khushi Aromatics and M/s. Kothari Products Ltd., if any, with an intent to evade Central Excise duty. Therefore, the charge brought against Shri Mitesh Kothari was untenable. 5. Being aggrieved by aforesaid decisions of the learned Adjudicating Authority, Revenue came in appeal in terms of review order passed on 15-2-2008 by Shri H.K. Saran, learned Chief Commissioner of Central Excise of Shillong Zone and Shri Amar Singh, learned Chief Commissioner of Central Excise Ranchi Zone holding that the order of adjudication dated 12-11-07 was neither legal nor proper in terms of the reasons stated in paras 6.1 to 6.8 of review order and raised following questions: (i) Whether the Commissioner's order holding that M/s. Khushi Aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge of Shillong Chief Commissionerate and there was no Notification to fill the vacancy of that post of Chief Commissioner of Shillong after transfer of Shri A.S. Nair. (5) That the Tribunal following its earlier final order dated 4-9-2008 passed in CCE, Kol-III. v. Naffar Chandra Jute Mills Ltd. , held in one of the present Respondent's case viz. Kothari Products Ltd. in Ex. App. 403-407/2008 disposed by a common order dated 26-9-2008 that when the reviewing authorities are not validly appointed by appropriate Notification in the Official Gazette to exercise power of review as an appropriate statutory authority, any appeal filed on the basis of review done by such authority makes Revenue's appeal fatal not being maintainable. Therefore, Revenue's Appeals are liable to be dismissed. (6) It has also been held in the above cases that Authorities failed to be appointed by the process known to law lack jurisdiction to exercise powers under the law and this frustrate objects of the statute under which they are expected to exercise powers. 7. Learned counsel Shri Anand appearing for all the Respondents raised aforesaid preliminary objections while moving early hearing appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute as to the said proposition but that is not to say that the Tribunal cannot factually ascertain whether there is compliance with the statutory requirement of sub-section (2) of Section 35-B of the Act namely fulfilment of the mandatory pre-requisite condition before an appeal is lodged with the Tribunal. He further submitted that the decision of Delhi Bench of Tribunal in Bhushan's case was per incuriam for the reason that the said decision was rendered on 21-10-2008 while decision by Kolkata Bench in Naffar Chandra Jute case (supra) were available on 4-9-2008 and decision in one of the present Respondent's own case was available on 26-9-2008. None of the parties in Bhushan's case brought the ratio of above decisions made by Kolkata Bench to the notice of Delhi Bench while Bhushan's case was decided. It was decision of Kolkata Bench in above cases that Revenue's appeal when suffers from legal infirmity, it has no locus standi. Such a ratio has also been followed consistently. Learned Counsel for Appellant relied on following decisions to submit that per incuriam orders are unsustainable. He further submitted that there should be a decision on mandatory pre-requisite of law befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Coalfields Ltd. vide order No. M/295/A-1081/08 on 16-10-2008. 13. We have already held in the case of Nafar Chandra Jute Mills Ltd. reported in 2008 (230) E.L.T. 244 that an authority is appointed and vested power in the manner known to the law through an Official Gazette. Any deviation thereto makes the appointee powerless and he becomes incompetent to exercise jurisdiction under law. Failure to appoint an authority in the manner know to law does not confer jurisdiction on that Authority. It was also held that Gazette Notification being mandatory is an evidence of appointment of a public authority, which cannot be dispensed with. Thus authorities lack power if they are not appointed in the manner prescribed by law. 14. We may reiterate that following principles of law have been dealt by us in the appeals of Naffar Chandra Jute Mills Ltd. (supra):- (1) Appointment by Notification by Official Gazette is mandatory [See : Nazir Ahmed v. King Emperor, AIR 1936 PC 253 (II)]. (2) If no valid appointment of an authority is made according to process known to law, all his acts done are ab initio void [See : Income-tax Officer v. M.C. Ponnoose (1970) 75 ITR 174 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested with statutory powers under law and acts done by such authority shall be nullity. 16. Similarly the Customs Act, 1962 has its implementing machinery through Sections 3 and 4 of that Act. Who are all different classes of officers are specified in Section 3 of that Act. For exercising powers under these statutes, appointment of the Central Excise officers and officers of Customs are made through Notifications. Notification itself is a pointer to the fact that for the purpose of exercising statutory functions under one provision or other, the Officer concerned notified is invested with power under those provisions. Vesting of power by public Notification being an essential procedure known to law. 17. Section 3(39) of the General Clauses Act, 1897 defined the term 'Official Gazette' which means the Gazette of India or the Official Gazette of a State. A Gazette is generally understood as an Official Government Journal containing public Notices and other prescribed matters Legal Glossary (1983 Edition) issued by the Legislative Deptt. of Ministry of Law, Justice and Company Affairs, Govt. of India defines Gazette as "Official Newspaper containing list of Government appo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Municipal Corporation of Delhi v. Gurnam Kaur - 1989 (1) SCC 101; AIR 1989 S.C. 38. The Delhi Bench while deciding Bhushan's case has not at all considered the principles laid down in Naffar Chand case or in one of the present respondents case M/s. Kothari Products Ltd. (cited supra). It would be proper to reproduce para 11 of the Apex Court judgment in Municipal Corporation of Delhi's case reported in AIR 1989 SC 38 for appreciation of the doctrine of per incuriam and principles of sub silentio: "Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case (Writ Petition Nos. 981-982 of 1984) and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivered without argument, without reference to the relevant provisions of the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavements or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnore the statutory mandate of compliance of Section 35B(2) of the Act nor it can direct the authorities to dispense with the compliance to the said provision. Learned counsel relied on the decision of Apex Court in the case of Collector of C.E. Chandigarh v. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 (S.C.) to submit that the authorities functioning under the Act are bound by the provisions of the Act. We have no disagreement with this proposition of law. He also relied on the judgment of Apex Court in the case of Union of India v. Kirloskar Pneumatic Company - 1996 (84) E.L.T. 401 (S.C.) and submitted that the power conferred by Constitution is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act in accordance with law. No power can be invoked for directing the authorities to act contrary to law. In particular, the Customs authorities, who are the creatures of the Customs Act, 1962 cannot be directed to ignore or act contrary to the mandate of the Statute. Tribunal cannot sanction action of the authorities who have acted in defiance of the law and the Chief Commissioners not appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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