Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Falcon Tyres Ltd. on 29 October, 1996
Equivalent citations: 1997(91)ELT649(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. Respondent is absent in spite of notice of hearing, but has sent a request for disposal of the appeal on merits.
2. The matter arises on two refund claims preferred by the respondent for a total amount of Rs. 37,026.68. Claim arises in relation to the duty paid for the period 1-11-1980 to 11-11-1980. According to the respondent, certain post manufacturing expenses were wrongly included in the assessable value and if these were deducted from the assessable value, the refund would be due. The Assistant Collector allowed the claim to the extent of Rs. 23,643.00. The Collector of Central Excise directed the Assistant Collector (Legal) under Section 35E(2) of the Central Excise Act, 1944 (for short, the Act) to apply to the Collector (Appeals) for determination of the points arising out of the decision of the Assistant Collector. Accordingly, Assistant Collector (Legal) filed an application which by virtue of Section 35E(4) was required to be treated as an appeal. The Collector (Appeals) dismissed the appeal holding that the order of the Collector directing application to be filed was barred by time and the authority granted to the Assistant Collector who was not the adjudicating authority was not valid. Collector (Appeals) did not go into the merits. This order is now challenged.
3. The view taken by the Collector (Appeals) that application filed before him under Section 35E(4) of the Act was barred by time stipulated under Section 35E(3) of the Act does not appear to be correct. The adjudication order was passed on 9-12-1982. The Collector passed order directing the Assistant Collector to file an application before the Collector (Appeals) under Section 35E(4) of the Act. The Collector (Appeals) was of the opinion that since order of the Collector passed under Section 35E(2) of the Act was passed beyond the time stipulated under Section 35E(3) the application before the Collector (Appeals) was not maintainable. As Section 35E(3) of the Act stood on the date when the Collector (Appeals) passed the impugned order, the period stipulated for the Collector to pass the impugned order under Section 35E(2) of the Act was only one year from the date of adjudication order. The period mentioned in the original provision was two years and that was reduced to one year by Finance Act, 1984. However on the day the Collector passed the order under Section 35E(2) of the Act, the period stipulated under Section 35E(2) of the Act was two years and he had passed the order within the period stipulated two years.
4. Collector (Appeals) has taken the view that under Section 35A of the Act he could not demand an assessee to repay an amount erroneously refunded unless the assessee is given notice within the time limit specified under Section 11A of the Act and since the appellate authority had issued notice to the assessee on 26-12-1983 which was received by the assessee on 27-12-1983, the notice was not issued within the time limit of six months stipulated under Section 11A of the Act and therefore the application under Section 35E(4) of the Act was barred by time. The reasoning of the Collector (Appeals) indicates considerable degree of confusion in the understanding of the provisions in Sections 35 and 35A of the Act.
5. Section 35 enables any person aggrieved by any decision or order passed under the Act by a Central Excise officer lower in rank than a Collector of Central Excise to appeal to the Collector of Central Excise (Appeals) within three months from the date of communication to him of the decision or an order. Section 35A deals with procedure in appeal filed under Section 35. Collector (Appeals) shall give opportunity to the appellant to be heard, if he so desires. Appellant may be allowed to go into any grounds not specified in the grounds of appeal if the Collector (Appeals) is satisfied that the omission was not wilful or reasonable. The Collector (Appeals) may pass such order as he thinks fit against the order appealed or may refer the case back to adjudicating authority with appropriate directions as indicated in Sub-section (3) of Section 35A. This Sub-section has two provisos. According to the first proviso an order enhancing a penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the refund amount shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order. This proviso give a jurisdiction to the Collector (Appeals) to pass an order which is not within his jurisdiction ordinarily. In an appeal preferred by an assessee ordinarily the question of enhancing the penalty or the like would not arise. But the first proviso gives such power to the Collector (Appeals) subject to the appellant been given a reasonable opportunity of showing cause against the proposed order.
5A. The second proviso to Sub-section 35A(3) reads thus :
"Provided further that where the Collector (Appeals) is of opinion that any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, no order requiring the appellant to pay any duty not levied or paid, short levied, or short paid or erroneously refunded shall be passed unless the appellant is given notice within the time limit specified in Section 11A to show cause against the proposed order".
This proviso also invests the Collector (Appeals) with power which an appellate authority would not normally have. In any appeal preferred by the assessee ordinarily the question of the appellate authority directing the appellant to pay any duty not levied or paid or short levied or short paid erroneously refunded would not arise. In an appeal filed by the assessee ordinarily either he is given the relief prayed for in the appeal or the relief is denied and there would be no question of the appellate authority going into other aspects not arising in the case and finding that appellant had not paid duty or short paid duty or had received refund erroneously. The proviso also requires that the appellate authority cannot pass such an order unless the appellant is given notice within the time limits specified under Section 11A to show cause against the proposed order. That is because in passing such order, the appellate authority would be passing an order within the scheme of Section 11A of the Act. Under Section 11 A, an order can be passed only by a Central Excise officer within a particular time frame. The appellate authority could exercise the power under Section 11A subject, of course, to the condition in Section 11A regarding the requirement of a notice within the stipulated time frame. The second proviso to Section 35A(3) of the Act does not mean that for disposal of an appeal or application filed by the department involving relief being granted to the department against the assessee, notice must be given within the time limit stipulated in Section 11A of the Act. An application preferred by the department under Section 35E(4) of the Act must of course be treated as an appeal and disposed of as such, which would mean that the procedural formalities governing disposal of the appeal must be followed in such a case also. In the case of an application or appeal filed by the Department, the question of nonpayment of duty, non-levy of duty or short levy or short payment of duty by the appellant, namely, Department or duty erroneously refunded to the appellant namely, department would not arise. Such a situation will arise only in an appeal preferred by assessee. Therefore the second proviso to Section 35A(3) can be invoked only in an appeal preferred by the assessee where going beyond the ambit of the appeal the appellate authority proposes to pass an order against the appellant-assessee. In such a case the appellate authority is required to issue a notice within the time limits specified in Section 11A. Second proviso cannot apply to an appeal filed by the department.
6. The other ground which found favour with the Collector (Appeals) is that the Collector under Section 35E(2) of the Act could not have issued a direction to the Assistant Collector (Legal), an officer other than the adjudicating authority, to file an application before the Collector (Appeals) under Section 35E(4) of the Act.
7. Section 35E of the Act deals with power of Board or Collector of Central Excise to pass certain orders. Sub-section (1) enables the Board to call for and examine the record of any proceeding in which a Collector as an adjudicating authority has passed an order under the Act to satisfy itself as to the legality and propriety of any such order. The Board may pass an order directing such Collector to apply to the Appellate Tribunal for determination of such points arising out of order as may be specified in the order. We may take note of the fact that by virtue of the Central Excise Rules, 1944, "Collector of Central Excise" would include "Additional Collector of Central Excise" also.
8. Sub-section (2) of Section 35E reads thus :-
"(2) The Collector of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order."
Under Sub-section (2) a power similar to that vested in the Board under Sub-section (1) is vested in Collector of Central Excise. He may call for and examine the record of any proceeding in which an officer subordinate to him had passed an adjudication order to satisfy himself as to the legality and propriety of such order and in an appropriate case may by order direct "such authority" to apply to the Collector (Appeals) under Sub-section (4). This proviso would apparently indicate that the Collector can issue a direction only to "such authority" i.e. the authority which passed the adjudication order.
9. Sub-section (4) of Section 35E of the Act reads thus :
"(4) Where in pursuance of an order under Sub-section (1) or Sub-section (2), the adjudicating authority or the authorized officer makes an application to the Appellate Tribunal or the Collector (Appeals) within a period of three months from the date of communication of the order under Sub-section (1) or Sub-section (2) to the adjudicating authority, such application shall be heard by the Appellate Tribunal or the Collector (Appeals), as the case may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of Sub-section (4) of Section 35B shall, so far as may be, apply to such application".
10. The language used in Sub-section (4) indicating the identity of the authority enabled to file an application under Sub-section (4) before the Collector (Appeals) is different from the language used in Sub-section (2). While Sub-section (2) states that Collector can direct "such authority" to apply to the Collector (Appeals), Sub-section (4) contemplates an application being filed before the Tribunal or the Collector (Appeals), as the case may be, by "the adjudicating authority or authorised officer". If the words "such authority" in Sub-section (2) are to be understood in a restricted sense as indicating only the officer who actually passed the adjudicating order, the question of an "authorised officer" other than adjudicating authority filing an application under Sub-section (4) would not arise. There is an apparent conflict between the language used in Sub-section (2) and the language used in Sub-section (4). Generally literal interpretation of statutory provisions is favoured but where literal interpretation leads to an absurdly or conflict with another statutory provision, the interpretative process must try to achieve harmonious understanding of the provisions. No provision can be understood in isolation i.e. without reference to the other relevant provisions. The meaning and content of any statutory provision can be understood and appreciated only in the context of the scheme and other provisions of the Act. There is no specific provision in Section 35E enabling the adjudicating authority or the Collector of Central Excise to authorise an officer to make an application to the Tribunal. Sub-section (2) speaks of directing "such authority" to apply to the Collector (Appeals). Sub-section (4) speaks of adjudicating authority or authorised officer making an application. After receipt of direction, evidently the adjudicating authority can authorise another officer to file an application; if so we fails to see why the directing authority namely, the Collector instead of issuing direction to the adjudicating authority, cannot issue direction to any other officer, if the circumstances justify such step. Harmony between the two provisions requires that Sub-section (2) is understood in this manner as enabling Collector of Central Excise to issue direction either to the adjudicating authority or to any other proper officer.
11. We have to refer to two decisions of the Tribunal. The first is Collector of Customs v. Merah Exports Pvt. Ltd. - 1987 (29) E.L.T. 401 where the Additional Collector was adjudicating authority and the Board under Section 129D(1) of the Customs Act, 1962, a provision parallel to Section 35E(1) of the Act, directed the Collector to make an application before the Tribunal under Section 129D(4) of that Act and the Collector made the application. The Judicial Member held that the Board could not have given direction to any officer other than the adjudicating authority. One of the Technical Members took a contrary view holding that the Board can issue direction either to the Collector or to the adjudicating authority to make an application. The Third Member agreed with this view.
12. In Sun Export Corporation v. Collector of Customs - 1989 (42) E.L.T. 308 (Tribunal) the original order was passed by the Deputy Collector of Customs (Appraising) and the Collector of Customs under Section 129D(2) of the Customs Act directed the Assistant Collector (Group D) to apply to the Collector (Appeals) under Section 129D(2) of that Act. It was argued before the Bench that the Collector could have issued the direction only to the adjudicating authority, the Deputy Collector. The Bench rejected this contention with the following observations:
"This in our opinion is too narrow a view and arises out of consideration of the provisions of Section 129D(2) in isolation, for Section 129E(4) clearly lays down that any one of the Customs officers authorised by the Collector of Customs is also competent to file the application before the Collector (Appeals). A harmonious construction of the provisions of the two Sub-sections 129D(2) and 129D(4) would indicate that in cases where the adjudicating authority is unavailable for being directed if reasonable to conclude that the direction can be fulfilled by any customs officer authorised by the Collector although he may not be the officer who adjudicated the case."
13. In the circumstances, we are of opinion that Section 35E(2) of the Act requires a broad interpretation, reading it in harmony with Section 35E(4) of the Act. Collector can issue direction to the adjudicating officer or any other officer for relevant reasons. Where direction is issued to a particular officer, the officer so directed can, for relevant reasons, authorise another officer to file the application. The officer directed by the Collector or an officer authorised by the latter can file the application. Collector (Appeals) was in error in holding that the Collector could not validly direct an officer who was not the adjudicating authority to file the application.
14. The Collector (Appeals) did not consider the merits of the appeal filed before him. Therefore the case has to go back to the jurisdictional officer for fresh disposal on merits.
15. We set aside the impugned order and remand the case to the jurisdictional Collector (Appeals) for decision afresh in accordance with law. Appeal is allowed.