Pathology writ large in Departmental Adjudication Drafting of Adjudication Orders Requires Training
08.10.2014
Wednesday
BEFORE loyal stalwarts of the Department ready their armoury against me for the above unpardonable remarks, let me hasten to clarify that those are not my remarks - I only quote from a recent judgement of the CESTAT in which a Commissioner was castigated for his perverse order and the Tribunal even imposed a cost of Rs. 2500/-.
In an order running into 33 paras, paras 1 to 29 chronologically enumerated the facts relating to initiation of proceedings, contentions of the assessee, the case of the Department and the defence by the assessee along with material marshaled and the precedents cited by the assessee. The contribution of the learned Adjudicating Authority to the adjudication process was confined to paras 30 to 32. The tribunal noticed that there was no material contribution, in terms of analyses or reasons. The Tribunal observed,
1. In an adjudication order, verbiage and prolixity is no substitute for quality.
2. The conclusions recorded are bereft of any reasons.
3. The impugned order is wholly perverse and a sub-standard exhibit of adjudication.
4. Despite valiant efforts, learned AR was unable to identify even a scintilla of reason by the Adjudicating Authority, for predicating the bald conclusions set out in the impugned order.
5. Adjudication and drafting of adjudication orders requires training.
6. Incompetent departmental adjudication ill serves the interests of the State.
7. Apart from accentuating the appellate docket load, such casual orders contribute to faith deficit in the process of departmental education and imperil the due process of law.
8. The appropriate authorities may consider this pathology writ large in departmental adjudication.
A copy of the judgement is marked to the CBEC and Revenue Secretary.
Will NACEN arrange a special course for adjudicators? One thing that perhaps the CESTAT has not understood is that rarely does a Commissioner write his own adjudication orders. He instructs a Superintendent to confirm the demand and many adjudicators don't even bother to read the draft orders put up to them. One adjudicating Authority told us that a particular para in his order, which came to be adversely commented upon by a High Court, was put there by his Superintendent and it could have been avoided!
No amount of strictures, no amount of costs will deter the Tax Authorities from passing such orders as long as they are determined to pass orders in favour of Revenue, come what may. “Why should I take the risk? I will never get punished for passing an order in favour of Revenue is the attitude.” Departmental Adjudication and appellate mechanism has become a farce and is converted into a mockery of the judicial system. The only remedy is to remove the adjudication and appellate machinery from Departmental officers and they should be handed over to an independent agency or court. Maybe we should have a sub-CESTAT, which will decide all the Original matters.
We bring you this interesting CESTAT Order today. Please see Breaking News
No Retro Exemption for Gums, Waxes, Soap Stocks and Fatty Acids produced during the course of manufacture of refined vegetable oil - CBEC
AS per Section 11C of the Central Excise Act, if the practice is or was that excise duty was not being levied on a particular product, the Government can direct that such duty need not be paid. This is a sort of retrospective benefit when goods are not exempted for a particular period. But the issue of a Section 11C notification is a complicated and time consuming affair.
In early 2012, the Board floated a survey to decide the issue of allowing the benefit of Section 11C exemption to by products like Gums, Waxes, Soap Stocks and Fatty Acids produced during the course of manufacture of refined vegetable oil, which is exempt.
The survey revealed that a majority of manufactures were paying duty on these by products. Thus a general practice of non-levy of central excise duty on these products is not established.
Further, the Supreme Court has dismissed the Civil Appeals (and also the review petitions) filed by the parties affected by the decision of the CESTAT in the case of CCE, Jalandhar v/s A.G. Fats Limited and others, where it was inter alia held that the by-products like Gums, Waxes, Soap Stocks and Fatty Acids have not been shown to be of no value or negligible value and hence, are not eligible for exemption as waste under notification no. 89/95-CE dated 18.05.1995.
So, the Board has rejected the request of the Solvent Extractors' Association of India for benefit of Section 11C and also its request for issue of an order under Section 37B of the Central Excise Act, 1944 declaring these byproducts as waste.
CBEC Letter in F. No. 103/03/2012-CX.3, Dated: January 03, 2014
What happened to Inspections in CBEC?
TAX Consultant Radha Arun recently posted a message in our Message Board, "Inspections seem to be dying out as a management tool in the department. This is the reason for blatant flouting of instructions at the field level."
Central Excise is perhaps the only department in the country where offices are not regularly inspected. This is also a blatant flouting of instructions. All the officers from Chief Commissioner to Assistant Commissioner are expected to inspect their subordinate offices at least once in a year. Inspection proformae and records are prescribed. Over the years, all the officers have individually and severally ensured that Inspection as a tool is destroyed. Now, nobody knows what is happening in his subordinate office. The officers are all busy with no time for silly tools like inspections. They have converted it into such a farce that inspected officers write the inspection reports and the inspecting officers simply sign them. Some of the inspection reports will reveal that some records dispensed with 35 years ago are still shown as maintained. It is a miracle that a hierarchical system can run without supervision and periodical inspection. Now the only concern is reports and more reports. An inspection is mutually beneficial to the senior officer as well as his subordinate. When was the last time that a Board Member or a Chief Commissioner visited a Range Office or a Divisional Office? Inspection by a senior officer will at least ensure that the office is kept reasonably clean!
Jurisprudentiol - Thursday's cases
Central Excise
Refund - Categorical finding of fact recorded by Commissioner (A) that respondent assessee has collected duty of excise as per commercial invoice and have not collected higher duty as indicated in excise invoice - Refund admissible, Revenue appeal dismissed: CESTAT
THE respondent is engaged in the manufacture of generic and patent & proprietary medicaments and clearing the same to M/s Phyto Marketing Pvt. Ltd. Some of the Directors of the respondent company and of the said Phyto Marketing Pvt. Ltd. were relatives. The respondent paid duty on the value at which the goods were sold by Phyto Marketing Pvt. Ltd. in the market as per their own appreciation of law. In the commercial invoice of even date (which contains reference of the excise invoices) the goods have been valued at the actual sale price and thereupon have added Sales Tax.
Subsequently, the respondent on its understanding and so advised that it has wrongly determined the assessable value at a higher amount and have paid excess excise duty, filed refund claim with the Revenue.
Income Tax
Whether insurance premium paid by one brother on life of other can be considered as legitimate business expenditure when brothers execute common power of attorney in favour of each other, mutually authorizing other to, in his absence, take care of business activity - NO: ITAT
THE assessee is engaged in the business of manufacturing of cloth in his proprietary concern. His brother runs his proprietary business in the same trade from the same business premises. Both the brothers executed a (common) power of attorney in favour of each other, mutually authorizing the other to, in his absence, take care of the business activity, including acts incidental thereto. Keyman Insurance policy stood taken by each on the life of the other, treating him as an invaluable resource (person) for and a 'deemed employee' of his business, claiming the same as 'business expenditure'. In view of the Revenue, however, the two brothers were running their independent businesses, with no business connection with that of the other.
The issue before the Bench is - Whether insurance premium paid by one brother on the life of other can be considered as legitimate business expenditure when the brothers execute a common power of attorney in favour of each other, mutually authorizing the other to, in his absence, take care of business activity. And the verdict goes against the assessee.
Service Tax
On reimbursements of Courier, fax and telephone charges, electricity charges and stationery charges, packing material, Genset and cool room expenses, service tax is payable along with interest as these charges have been incurred as part of C&F agency function: CESTAT
THE appellant entered into a C&F agency agreement and also a warehousing service agreement with M/s. Abbot India Ltd. The warehousing agreement was for storage of goods and the clearing and forward agency agreement was for the purpose of handling, carrying forwarding and shipping of the products. Service tax liability was discharged on the warehousing rent and also on the C&F agency charges.
In addition to the above, the appellants made certain payments on behalf of the service recipient by way of freight charges, octroi, sales tax and licensing fees, courier charges and telephone charges, electricity charges, DFC unloading charges and statutory charges, packing material, octroi, etc., Genset and cool room expenses and they got reimbursement of the expenses incurred from M/s. Abbot India Ltd.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice time.
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