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Can CESTAT condone delay in order passed by Committee of Chief Commissioners?

DDT in Limca Book of Records - Third Time in a rowTIOL-DDT 2645
21 07 2015

THIS was the issue in a case decided by the Supreme Court yesterday. A little recap on the statutory position:

This is how Revenue has to appeal if it is aggrieved by an order of a Commissioner of Central Excise.

1. As per Section 35E(1), the Committee of Chief Commissioners has to examine the order for the purpose of satisfying itself as to the legality or propriety of the decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal.

2. The Order of the Committee directing the Commissioner has to be passed within a period of three months from the date of communication of the decision or order of the Commissioner. (By an amendment in 2014, the Board was given the power to extend this period by another thirty days)

3. The Commissioner has to make an application within a period of one month from the date of communication of the order of the Committee.

What happens if the Committee passes an order after the stipulated three months? Can the CESTAT condone this delay.

The facts in the present case were:

Date Event
15.07.2011 Commissioner passed his Order in Original
18.07.2011 Order is received by the Chief Commissioner
25.10.2011 Committee of Chief Commissioners pass the review order (after 8 days of the stipulated time limit)
31.10.2011 Commissioner receives the order of the Committee
16.11.2011 Commissioner files application before CESTAT

Here the Commissioner had filed the appeal within one month of receiving the Committee's order, but the Committee's order itself was delayed by 8 days. Can the Tribunal condone this delay?

The Tribunal followed the decision of the Supreme Court in the case of Commissioner of Central Excise Vs. M.M. Rubber Co. - 2002-TIOL-111-SC-CXwhere it was held that - ‘when a time limit is prescribed in Section 35E (1) of the Central Excise Act for review of an order, any order issued after expiry of this limitation period would be invalid and ineffective'. The Tribunal held that 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 pre-requisite for filing appeal before the Tribunal, there is no question of condonation of delay. 2012-TIOL-1301-CESTAT-DEL

Interestingly there was a decision of the Larger Bench of the Tribunal in CCE v. Monnet Ispat & Energy Ltd. - 2010-TIOL-1133-CESTAT-DEL-LB, wherein the Tribunal held that it had ample power to condone the delay in filing the appeal including the one filed under Section 35E(4).

The Single Member who decided the present case held that the decision of the Larger Bench was contrary to the law laid down by the Apex Court in the case M.M. Rubber Co. Ltd. And so dismissed the application for condonation as well as the appeal.

The High Court, on appeal by Revenue, confirmed the order of the Tribunal dismissing the condonation petition.

Revenue took the matter to the Supreme Court. The Supreme Court agreed with the analysis of the Larger Bench,

"The Tribunal has ample power to condone the delay in filing the appeal including the one filed under Section 35E(4) of the said Act. The period which can be condoned in relation to filing of the appeal under Section 35E(4) of the said Act would include the period availed by the review committee in terms of Section 35E(1) or 35E(2) of the said Act. As regards the appeals by the Department in terms of Section 35E(4), the same should be filed within one month from the date of communication of the order under sub-section (1) or sub-section (2) of the said section but not beyond four months from the date of communication of order of the adjudicating authority to the review committee. In case there is any delay in this regard, the same can be condoned in exercise of powers under Section 35B(5), on being satisfied about sufficient cause for such delay and power to condone the delay would include the period availed under Section 35E(1) or (2) by the reviewing committee to decide about filing of the appeal."

Supreme Court allowed the Revenue Appeal and remanded the matter to the Tribunal to hear the Condonation of Delay petition on its merits.

While allowing the Revenue appeal Supreme Court passed mild strictures on the Tribunal - "the members deciding the lis by the impugned order should have kept themselves abreast to the Full Bench decision of the tribunal so that there would not have been two views as regards the same proposition."

Perhaps nobody informed the Supreme Court that the Tribunal Member was very much aware of the Larger Bench decision and he did not follow it as he thought that the LB Decision was contrary to the Supreme Court decision on the subject.

Twist in the Tale: while reporting the Single Member decision in 2012-TIOL-1301-CESTAT-DEL, we concluded with:

Judicial discipline & LB decision? - Interestingly, the present decision is passed by a Single Member Bench who has observed that the LB decision is contrary to the law laid down by the apex court in M.M Rubber (supra). Incidentally, in the proceedings before the LB, the Revenue representative had relied on the Apex Court decision in M.M.Rubber (supra) to which the Larger Bench remarked - "The background and the circumstances in which the said decision was arrived at, no more exist, apart from the total change in the statutory provision on the relevant aspect. M.M. Rubber's case, therefore, is of no help in the case in hand. [para 22]."

We bring you this judgement today. Please see Breaking News

Mystery of Confusing, Complicated and Controversial Notifications

YESTERDAY'S DDT covered the three complicated notifications, the essence of which read as:

If the said excisable goods are manufactured from inputs or capital goods on which appropriate duty of excise leviable under the First Schedule to the Excise Tariff Act or additional duty of customs under section 3 of the Customs Tariff Act, 1975 (51 of 1975) has been paid and no credit of such excise duty or additional duty of customs on inputs or capital goods has been taken by the manufacturer of such goods (and not the buyer of such goods) under rule 3 or rule 13 of the CENVAT Credit Rules, 2004.";

This buyer of such goods is a stranger in excise exemption notifications.

What was the Board's intention?

In a recent case of SRF Ltd and ITC Ltd - 2015-TIOL-74-SC-CUS, the Supreme Court had allowed the benefit of exemption in CVD on imported goods, based on excise exemptions. The appellant had imported Nylon Filament Yarn and claimed exemption from CVD based on Excise Notification. No. 6/2002, which had a condition that no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002, has been taken in respect of the inputs or capital goods used in the manufacture of these goods. It was alleged that since the importer cannot take CENVAT credit, he has not fulfilled the condition. The Supreme Court had held, "For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon."

Selective leaks from the CBEC suggest that the Government had brought in these amendments to undo the Supreme Court judgement - for the benefit of the domestic manufacturer against the importers. If this is tru, they have not undone the Supreme Court order, but just created hundreds of cases.

After all the evils of the world were released from Pandora's box, there was still one creature that could not get out - which also Pandora released later and that is HOPE. We hope the Board releases that clarification soon.

Validation of tax-returns through Electronic Verification Code - CBDT Order

THE Central Board of Direct Taxes ('CBDT') vide Notification No. 41/2015 dated 15.04.2015 in cases of categories of 'persons' specified, has introduced Electronic Verification Code ('EVC') as one of the modes for validation of return of income which are filed electronically on or after 01.04.2015.

In case of returns of income pertaining to Assessment Years 2013-2014 and 2014-2015 filed electronically (without digital signature certificate) between 01.04.2014 to 31.03.2015, time-limit for submission of ITR-V to the CPC Bengaluru has already been extended till 31.10.2015 vide Notification No. 1/2015 dated 10.07.2015.

In order to facilitate the process of validation of such returns, CBDT, has directed that the taxpayer can validate such returns of income within the said extended time through EVC also.

CBDT F.No.225/141/2015/ITA.II., Dated July 20, 2015

It's Open House in JN Customs - quality assessment while ensuring trade facilitation

THE Jawaharlal Nehru Customs, Nhava Sheva in a Facility Notice States:

1. All the Addl./Joint Commissioners of Customs in charge of Appraising Groups of NS- I to NS- V Commissionerates, shall hold an ‘Open House Meeting' on every Monday between 11:00 hrs to 12:00 hrs in their respective office chambers for redressal of the grievances of the trade in respect of queries raised by Assessment Group.

2. Similarly, all the Addl. Commissioners of Customs in charge of Import Docks of NS- I to NS- V Commissionerates shall have an Open House on every Monday morning between 12.00 to 13.00 hrs in their respective office chambers to redress problems of the trade regarding any Bill of Entry, pending in the Docks.

3. All the Deputy/Asstt. Commissioners of Customs in charge of Import Docks of NS- I to NS- V Commissionerates shall have an Open House between 11.00 to 12.00 hrs in their respective office chambers on Monday/Wednesday/Friday to deal with any queries relating to any pending Bill of Entry in the Docks.

4. Importers, Customs Brokers and the members of the Trade may participate in appropriate Open House in case of any difficulties on account of queries raised at the time of assessment or examination or on any other related matter.

JN Customs Facility Notice No. 55/2015., Dated July 20, 2015

Relieve those transferred officers - CBEC

ON 9.6.2015, the CBEC transferred 66 Additional/Joint Commissioners who were asked to report to their new places latest by 15.06.2015. The Chief Commissioners were required to send compliance reports to the Board latest by 19.06.2015.

On 17.6.2015, the Board transferred 198 Assistant/Deputy Commissioners who were asked to report to their new places latest by 24.06.2015. The Chief Commissioners were required to send compliance reports to the Board latest by 29.06.2015.

It has come to the notice of the Board that some of the officers have not yet been relieved.

Board requests that all such officers must be relieved by Friday i.e. 24.07.2015 failing which the respective controlling authority will owe an explanation for not relieving the officers transferred in the AGT-2015 and disciplinary action will also be initiated against the concerned officers, in case of non-compliance of the directions by the given date of 24.07.2015.

Board wants a compliance report by fax latest by 1700 hrs. of 24.07.2015.

Will they extend this date? Every year Board writes this kind of threatening letters, but nobody really bothers.

CBEC F.No. A-22013/15/2015-Ad.II, Dated: July 20 2015

Until Tomorrow with more DDT

Have a nice day.

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