CX - Principle of 'comity of courts' - By no stretch can an overlap even be contemplated in jurisdiction of officials entrusted with task of collection of central excise: CESTAT
By TIOL News Service
MUMBAI, JAN 31, 2017: A CE duty demand of Rs.23,12,213/- was confirmed and penalty of Rs.20 lakhs was imposed on the appellant by Additional Commissioner of Central Excise, Mumbai-V and this order was upheld by the Commissioner(A).
The appellant is, therefore, before the CESTAT.
The period involved is 1 st April 1999 to 31 st March 2000.
The facts are - M/s Shakthi Insulated Wires Pvt. Ltd manufactured 'enamelled copper wire' as job-worker from 'wire rods' supplied by appellant. Since they (M/s Shakthi Insulated Wires Pvt. Ltd) claimed the benefit of notification no. 214/86-CE dated 25th March 1986, they did not pay any CE duty.
While job-workers are, indeed, exempt from payment of duties of central excise at their option, such exemption is subject to discharge of duty liability by the principal manufacturer and on undertaking to that effect furnished to the authority having jurisdiction over the job-worker.
In the present case, proceedings were initiated against the job-worker by the jurisdictional Additional Commissioner as the appellant herein was alleged to have used the 'enamelled copper wire' in manufacture of 'electric motors' of which some were used by another division of the appellant for production of 'pumps' which were exempt from duty.
Apparently, as this was not in conformity with the condition of duty payment on the resultant product, the 'enamelled copper wire' was held to be liable for duty.
However, the original authority viz. Additional Commissioner of Central Excise, Mumbai-V ,in addition to fastening duty liability on the job-worker, also confirmed duty liability on the appellant for the same goods that were held to be liable in the hands of the job-worker besides imposing penalty, as narrated earlier.
The appellant is apparently flabbergasted with this order and is before the CESTAT making the primary plea of the impropriety of the original authority in having transgressed his jurisdictional limits to confirm the demand on them.
It is claimed that the appellant is registered as an assessee in the jurisdiction of Mumbai-II Commissionerate which precludes officers of Mumbai-V Commissionerate from exercising the powers of 'proper officer' u/s 11A of CEA, 1944.
The CESTAT observed that the above aspect was brought to the notice of the first appellate authority who was disinclined to accept this plea on the ground that 'comity of courts' suffices to confer jurisdiction on the adjudicating authority.
Distinguishing the decisions relied upon by the lower appellate authority, the Tribunal further added that the issue agitated is one of issue of notice and confirmation of demand u/s 11A of CEA, 1944 and although there does exist an overlap in Customs territory in the matter of jurisdiction of the Directorate of Revenue Intelligence and the Preventive Commissionerates and which may require application of the principle of 'comity of courts', but by no stretch can such an overlap even be contemplated in the jurisdiction of officials entrusted with the task of collection of central excise.
It was, therefore, held that it is only the assessing Commissionerate that can exercise power of assessment and demand duty that has been short-paid or not-paid.
Extracting the remarks of the Tribunal in the case of RamnarainBiswanath v. Collector [Order no. 97/1987-129, dated 10 June 1987] , thus -
'…In fact if the Collector starts disregarding the action taken by another, chaotic conditions will prevail and a citizen would never be at rest. This could not be the intention of the legislature or the Government or even the Department of Revenue itself for the matter.'
the Bench concluded -
| "10. …, we have no option but to hold that the demand of duty from, and imposition of penalty upon, the appellant is beyond jurisdiction and must fail. We, therefore, do not propose to examine whether the appellant is liable to duty for non-compliance with the exemption notification." |
The impugned order was set aside and the appeal was allowed.
In passing: In Mamleshwar vs. Kanahaiya Lal AIR 1975 SC 907, Krishna Iyer, J., speaking for the Supreme Court, observed:
'Certainty of the law, consistency of rulings and comity of Courts all flowering from the same principle, converge to the conclusion that a decision once rendered must later bind like cases.'
(See 2017-TIOL-284-CESTAT-MUM)
