Custom, Excise & Service Tax Tribunal
Cce, Kanpur vs M/S Lml Ltd on 3 January, 2008
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COURT NO.II
E/Appeal No.2876/2005-SM
(Arising out of order in appeal No.164/CE/Appl/KNP/2005 dated 28.2.2005 passed by the Commissioner (Appeals), Customs & Central Excise, Ludhiana)
For approval and signature:
Honble Mr.P.K. Das, Member(Judicial))
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy
of the Order ?
4. Whether Order is to be circulated to the
Departmental authorities?
______________________________________________________
CCE, Kanpur Appellant
(Rep. by Shri A.K. Rastogi, DR)
Vs
M/s LML Ltd Respondent
(Rep. by Shri R. Santhanam, Advocate) Coram: Honble Mr P.K. Das, Member(Judicial) Date of Hearing: 3.1.2008 Order No. Per P.K. Das:
The Revenue filed this appeal against the order in appeal No. 164-CE/Appl/KNP/2005 dated 28.2.2005 passed by the Commissioner of Central Excise(Appeals), Kanpur.
2. The learned Advocate on behalf of the respondent raised a preliminary objection against the appeal filed by the Revenue. He submits that the Revenue has not submitted the opinion of the Committee of Commissioners of Central Excise (in short the Committee) that the order passed by the Commissioner (Appeals) is not legal or proper and authorization of the Central Excise officer to file appeal before this Tribunal in terms of Section 35-B(2) of Central Excise Act, 1944 He submits that the appeal is not maintainable and liable to be rejected. The Revenue filed Miscellaneous Application opposing the preliminary objection and the respondent also filed objection against the Miscellaneous Application
3. The learned Advocate submits that the appeal filed by the Revenue is not maintainable for the reasons as given below:-
a) No opinion of Committee of Commissioners was filed with the appeal;
b) No authorization of the Committee of Commissioners was filed with the appeal;
c) The appeal has been signed by one Commissioner on 23rd August, 2005 as Commissioner of Central Excise Kanpur who was not the commissioner of Central Excise, Kanpur at the relevant time;
d) The Commissioner of Central Excise, Kanpur at the relevant date, had not signed the appeal, hence it is invalid.
e) It is contended that the two Commissioners signed in the note sheet; neither of them signed the appeal.
4. He further submits that the copy of note sheet filed by the Revenue with their application cannot be substituted by the opinion of the Committee of Commissioners as required under Section 35-B of the Act. He relied upon the decision of the Honble Bombay High Court in the case of Bombay Chemicals Ltd Vs Union of India reported in 2006(201) ELT 167 (Bom.). Without prejudice of the aforesaid submission, the learned Advocate submits that the opinion of the Committee has not been reflected in the note sheet of the Departments file and he relied upon the larger Bench decision of the Tribunal in the case of CCE Mumbai Vs Bombay Switchgear reported n 2001 (134) ELT 658 (Tri.-LB). He also submits that the Tribunal in series of cases held that the appeal filed by the Revenue in violation of the provisions of Section 35-B(2) of the Act is not maintainable, as under:-
a) CCE Belapur Vs Coromandol Fertilizers Ltd 2007 (83) RLT 544 CESTAT
b) CCE Bhubneshwar-I Vs Indian Plastics Ltd & Another 2007 (81) RLT 391
c) CCE Bangalore-I Vs. ITC 2007 (79) RLT 251
d) CCE, Coimbatore Vs Shree Karthik Papers Ltd 2006 (206) ELT 384
e) CCE Coimbatore Vs L.G. Balak 2007 (211) ELT 248 (Trib. Chennai)
f) CCE Delhi Vs. Bhawani Pigments Ltd 2006 (141) 323 (Trib.)
5. The learned DR on behalf of the Revenue, strongly opposed the objection raised by the learned Advocate for the respondents. He submits that it is revealed from the note sheet of File enclosed with the Miscellaneous Application that the Committee of Commissioners directed to file appeal. He further submits that Commissioner of Central Excise, Kanpur himself filed the appeal and therefore, no authorization is required.
The learned DR submits that the Commissioner of Central Excise, Kanpur has signed the appeal on 23.8.2005 and the submission of the learned Advocate is without any basis. In any event, he submits that it is a curable defect as held by the larger Bench of the Tribunal in the case of CCE Indore Vs Llyold Insulation (India) Ltd reported in 2007 (216) ELT 201 (Trib.LB). He further submits that note sheet of the Departments file in respect of the opinion of Committee of Commissioners is to be taken into account as held by the larger Bench of the Tribunal in the case of CCE Mumbai Vs Bombay Switchgear reported in 2001 (134) ELT634, which has been followed by this Tribunal in the case of CCE Jaipur Vs Autolite India Ltd reported in 2007 (218) ELT 259(Trib).
6. After hearing both the sides and on perusal of the record, the relevant portion of Section 35-B(2) of Central Excise Act, 1944 is reproduced below:-
[The Committee of Commissioners of Central Excise may, if it is]of opinion that an order passed by the Appellate [Commissioner of Central Excise] under section35, as it stood immediately before the appointed day, or the [Commissioner (Appeals)]under section 35-A, is not legal or proper, direct any Central Excise officer authorized by him in this behalf (hereinafter in this Chapter referred to as the authorized officer) to appeal (on its behalf) to the Appellate Tribunal against such order. On a plain reading of the provisions of Section 35-B(2) of the Act, it appears that the Committee shall give its opinion and direct any Central Excise officer to file the appeal I find that the proviso to Section 35-B(2) provides the constitution of Committee. The word opinion according to the Concise Oxford English Dictionary means judgement or belief based on grounds of short of proof. It is a formal statement of professional advice. Thus, the Committee shall form an opinion that the Order of the Commissioner (Appeals) is not legal or proper and direct the Central Excise officers to appeal on their behalf to the Appellate Tribunal against such order. So, it is a direction to Central Excise officer to file appeal. The learned Counsel submits that the provision of Section 35-B(2) is mandatory provision and not directory Mitras Legal and Commercial Dictionary, Sixth Edition by Tapash Gan Choudhury defined the words Directory provisions mean Statutes are either mandatory or directory; if mandatory, they prescribe, in addition to requiring the doing of things specified, the result that will follow if they are not done, whereas, if directory, their terms are limited to what is required to be done. If the provision is directory and a substantial compliance with the requirement will be sufficient. In the present case, Section 35-B(2) provides the terms of the filing of appeal before the Appellate Tribunal and what is required to be done by the Revenue and therefore, the provisions is directory nature. In any event, the power of the Committee under Section 35-B(2) is discretionary power. The Honble Supreme Court in the case of S.G. Jaisinghania Vs Union of India AIR 1963 1427 held that discretion when conferred upon the executive authorities, must be confined within clearly defined limits. It means sound direction guided by law. It must be governed by rule, not by humour; it must not be arbitrary, vague and fanciful. Thus, if the discretionary power of the Committee is not exercised properly, resulting in abuse of process of law and causing injury to another person. The Tribunal in the case of CCE Raipur Vs Aero Agro Chemicals Industries Pvt Ltd reported in 2007 (217) ELT 396 (Trib) observed that provisions for review by Committee of Commissioners were introduced to bring about qualitative improvement in process and to prevent frivolous appeals. Therefore, the filing of appeal by the Revenue and compliance of provision of Section 35-B(2) would be looked into seriously. The learned DR produced the copy of the note sheet of the Departments file. I find that the Honble Bombay High Court in the case of Bombay Chemical Ltd (supra) held as under:-
It is true that in the Government Departments files mover upwards with the notes made by the officers at the different levels for approval. Sometimes even after approval, on reconsideration, orders are not actually issued and communicated to the concerned. In the Government Departments policy and administrative decisions are taken which may always be reconsidered and changed. Even a decision taken by the Minister heading the Department, may be reconsidered by the Cabinet taking into consideration all the pros and cons of the matter. Not only this, sometimes, even cabinet decisions, are reconsidered. Therefore, merely because certain notings are approved at certain levels in the Government, it can not be said that the order is passed. Only after the formal orders are issued for information of public or communicated to the concerned party, such orders become final and binding.
7. In view of the decision of the Honble Bombay High Court in the case of Bombay Chemicals Ltd (supra), note sheet of the departments file cannot be accepted as opinion passed by the Committee unless authorization with the opinion are filed with the appeal of the Revenue. In the present case, it is seen that Revenue have not filed this authorization with opinion under Section 35-B(2) of the Act. The Larger Bench of the Tribunal in the case of CCE Vs Lloyd Insulation (India) Ltd (supra) held as under:-
Further, in these cases, if at all the filing of the appeals directly by the Commissioner was a defect, it was ;only a purely procedural defect and the Tribunal should have pointed out that defect at the time of receipt of the appeals. If that had been done, the appellant would have been able to cure the defect. For the failure of the Tribunal or its office to do the same, revenue can not be made to suffer. The position is well settled. In view of the above decision of the larger Bench, the Revenue should be given an opportunity to rectify the defects by way of filing the authorization with opinion and therefore, there is no need to discuss the case laws of the Tribunal cited by the learned Advocate.
8. In view of the decision of the Honble Bombay High Court in the case of Bombay Chemicals Ltd (supra), the note sheet of the Departments File cannot be accepted. However, the larger Bench of the Tribunal in the case of Lloylds Insulation (India) Ltd (supra) held that it is curable defect and therefore, the Revenue is directed to file the proper authorization with opinion of Committee of Commissioners in terms of Rule 35-B(2) of the Central Excise Act, 1944 within three weeks otherwise the appeal will be dismissed as not maintainable. It is noted that Revenue shall also examine the allegations made by the learned Advocate regarding signature of the Appeal by the Commissioner of Central Excise, Kanpur.
The matter to come up for compliance on 28th January, 2008.
(Order dictated and pronounced in the open Court).
(P.K. Das)
MPS* Member(Judicial)