By TIOL News Service

CHANDIGARH, APR 03, 2014: THE respondent is a registered manufacturer of excisable goods chargeable to CE duty under Ch. 85 of the CETA, 1985. They import inputs and claim exemption from custom duty under notification No.25/05-Cus. It is the case of the jurisdictional Central Excise authorities (!) that since the respondents have given a false description in the import documents they are not entitled for the aforesaid exemption.

Accordingly, a SCN was issued seeking to deny the exemption notification and demanding Customs duty amounting to Rs.4.25 Crores u/s 28(1) of the Customs Act, 1962 read with Rule 8 of the Customs (Import of Goods at concessional rate of Duty for manufacture of Excisable goods) Rule, 1996 along with interest, penalty and seeking confiscation of the imported goods.

The CCE, Delhi-III vide o-in-o dated 28.02.2011 dropped the proceedings and, therefore, the department is aggrieved inasmuch as the learned Committee of Chief Commissioners passed a review order on 31.05.2011 u/s 35E(1) of the CEA, 1944, but an appeal based on this Review order came to be filed only on 01.8.2011.

To get over this delay, along with the appeal, the Revenue filed an application for condonation of delay of 63 days.

The Revenue representative submitted that the 'review' order was passed within the limitation period of 3 months and it is only the procedural part of filing the appeal before the Tribunal that was delayed as the file was misplaced. It was also submitted that since the application filed under Section 35E(4) of the CEA, 1944 in pursuance of the review order is to be treated as an appeal by the Tribunal, all the provisions relating to appeals filed before the Tribunal under Section 35B would apply and, therefore, the Tribunal has powers to condone the delay of 63 days in filing of the Revenue appeal. The LB decision in the case of CCE, Raipur vs. Monnet Ispat & Energy Ltd. (2010-TIOL-1133-CESTAT-DEL-LB) is cited in support.

The assessee countered the aforesaid Revenue plea and submitted that there is no provision for condonation of delay in view of the LB decision in CCE, Mumbai Vs. Azo Dye Chem (2002-TIOL-448-CESTAT-DEL-LB).

The CESTAT adverted to the LB decision in Azo Dye Chem [supra] and after dismissing the application filed by the Revenue for condonation of delay rejected the Revenue appeal.

We reported this order as 2012-TIOL-1318-CESTAT-DEL.

Not at all happy with this decision of the CESTAT, the CCE, Delhi-III, Gurgaon preferred an appeal before the Punjab & Haryana High Court claiming the following substantial questions of law:-

i) Whether the Tribunal has power to condone the delay under Section 35B(5) of the Central Excise Act, 1944 in case of Departmental Appeal filed after Review Committee decision under Section 35E ibid?

ii) Whether the divisional bench of the Tribunal was bound by larger bench decision in the case of   CCE Raipur v. Monet Ispat & Energy Limited (2010-TIOL-1133-CESTAT-DEL-LB) or it could have taken different view without referring the matter to the larger bench?

iii) Whether the divisional bench of the Tribunal was justified in relying on the earlier decision of the Tribunal in the case of   CCE, Mumbai vs. Azo Dye Chem. (2002-TIOL-448-CESTAT-DEL-LB) which was based on a totally different statutory provisions as were applicable at that time as clearly observed by the larger bench in the case of CCE, Raipur v. Monet Ispat and Energy Limited?

iv) Whether the aforesaid impugned order of the Hon'ble Tribunal needs to be set aside in view of Supreme Court decision in the case of   Thakker Shipping Pvt. Limited v. Commissioner of Customs (General), (2012-TIOL-105-SC-CUS)?"

The High Court inter alia observed -

"5. It may be noticed that Section 35E(4) of the Act is parimateria to section 129D(4) of the Customs Act, 1962 (in short, "the 1962 Act”) whereas Section 35B(5) of the Act and Section 129A(5) of the 1962 Act are similar. The Hon'ble Apex Court in Thakker Shipping Pvt. Limited's case (supra) held that Section 129A(5) of 1962 Act stands incorporated in Section 129D(4) of 1962 Act by way of legal fiction and has to be given effect to and in such circumstances, it could not be said that the Tribunal had no power to condone the delay …"

Noting that the judgment in Azo Dye Chem's case (supra) was overruled by the Apex Court [in paragraph 12], the order dated 26.7.2012 passed by the Tribunal was held as being legally unsustainable and set aside.

The substantial questions of law were answered accordingly. The appeal was allowed and the matter was remanded to the Tribunal to decide afresh regarding sufficiency of reasons for condonation of delay in filing the appeal in accordance with law.

(See 2014-TIOL-416-HC-P&H-CX)