Madras High Court
India Pistons Limited vs Assistant Collector Of Central Excise, ... on 23 September, 1986
Equivalent citations: 1987(12)ECC243, 1987(27)ELT651(MAD)
Author: S. Mohan
Bench: S. Mohan
JUDGMENT
1. Admit.
2. The petitioner is a company incorporated under the Companies Act, 1956. It engaged inter alia in the manufacture of motor vehicle parts and accessories falling under Tariff Item No. 34A of the Central Excise Tariff.
3. In the annual stock taking conducted by the first respondent (Assistant Collector of Central Excise, Madras-II Division) in the petitioner company in the year 1981 certain alleged shortages and excesses were noticed. Consequent to this detection of shortages, the first respondent issued a show cause notice to the petitioner company on 25-5-1983 calling upon them to shows cause as to why duty on shortages in Pistons, Rings, Gudgeon Pins totalling about Rs. 2,16,681.94 should not be demanded under Rule 223-A of the Central Excise Rules, 1944 and further calling upon the petitioner as to why a penalty should not be imposed on the petitioner under Rules 223-A and 226 of the Central Excise Rules. The petitioner filed a reply on 25-5-1983 stating inter alia that the demand made by the first respondent was carried under the provisions of Section 11-A of the Central Excise Act. It was further contended that the discrepancies noticed were only due to wrong entries posted in their accounts and due to human error in physical handling. The petitioner requested that the show cause notice be dropped as the alleged shortages could be set off against the excess in respect of similar products. After a personal hearing the first respondent by order dated 24-8-1984 held that the petitioner was liable to pay Duty of Rs. 1,60,623.12 and further imposed a penalty of Rs. 2,000/- under Rule 223-A of the Central Excise Rules.
4. Against this order, an appeal was preferred by the petitioner to the second respondent, viz., the Appellate Authority (Collector of Central Excise (Appeals), Madras-34). The Collector by his order dated 6-12-1984 allowed the appeal of the petitioner and permitted the petitioner to adjust the shortages against excesses. The penalty imposed on the petitioner was also set aside.
5. At this stage it requires to be stated that the petitioner's other three appeals relating to the years 1980 and 1984 were allowed by the Collector of Central Excise (Appeals) dated 6-12-1984 and 3-1-1985 respectively. In all the four appeals the petitioners were permitted to adjust the shortages against excesses and the first respondent was directed to examine the issue afresh. The third respondent (Collector of Central Excise, Nungambakkam, Madras) acting under the powers vested in him under section 35-B(2) of the Central Excises and Salt Act, directed the Superintended of Central Excise to prefer appeals before the fourth respondent against the decisions of the second respondent mentioned above. Accordingly, appeals were preferred. The petitioner herein filed a Memorandum of Cross-objections before the 4th respondent, inter alia contending that the appeal before the Tribunal was not maintainable, in view of the amendments to the Central Excises & Salt Act by the Finance Act, 1984. It was stated that any appeal in respect of loss of goods or shortage of goods in the factory or in transit will have to be filed before the Government of India and not before the Tribunal. On merits it was also urged that the proceedings initiated by the Department against the petitioner were time barred in view of section 11-A of the Act. By the impugned order of the Tribunal it was held :-
"On a proper construction and interpretation of the expression 'loss of goods' occurring in clause (a) in proviso to Section 35-B of the Act, we are of opinion that the proper forum which would be competent to entertain an appeal of this sort is only the Central Government in terms of Section 35-EE of the Act. We also note that by mistake the appeals have been filed before the Tribunal, of course, within the time limit and the appeals have also been inadvertently numbered by the Registry and were kept ending in the Tribunal till this day. In such a situation in our opinion justice and fair play demand that the appeals would be made over to the appropriate and competent authority, viz., the Central Government for disposal according to law."
6. At this juncture the writ petitioner objected that once the Tribunal came to the conclusion that there is no jurisdiction on its part to hear and decide the appeals, the only order that could be passed would be either to reject or to dismiss the appeals. But, this contention was overruled and ultimately the case was made over to the competent revisional authority having regard to the fact that the appeals were filed within time before the Tribunal and they continued to be pending in the registry of the Tribunal for a considerable length of time. Seeking to quash this part of this order and for a further direction to forbear 5th respondent (Government of India) from entertaining the appeals transferred to it, this writ petition has been filed.
7. Learned counsel for the petitioner urges that in view of Proviso (a) to Section 35(b) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), no appeal would lie to the Tribunal in the case of loss. Once that finding is arrived at, it is not open to the Tribunal to transfer, in the interest of fair play and justice. There is a total lack of jurisdiction in this case. The Tribunal cannot order a transfer to the file of the Government of India stating that the appeals were filed in time before the Tribunal and it was proceeded in a wrong forum and therefore in the interests of justice it could transfer so. The question is whether the Tribunal has jurisdiction or not ? Once it was found that the appeals before the Tribunals are incompetent, the proper course for the Tribunal would be to return the papers and not to direct the transfer. Had the papers been returned to the appellant before the Tribunal to present the case before the proper forum, it would have been possible for the petitioner to raise the plea of limitation, which undoubtedly is a valid plea. That valuable opportunity is deprived of, besides lack of jurisdiction on the part of the Tribunal to transfer the appeals. For these reasons, it is prayed, that part of the order has to be quashed.
8. Learned Standing Counsel for the Department would contend that the finding of the Tribunal is not definite that it had no jurisdiction. It says that the question relating to jurisdiction is debatable. The Excise Department is prejudiced by such a finding, because the question of jurisdiction to deal with the appeal will have to be categorically found. If that has not been found, then the order of transfer is otiose.
9. As regards the jurisdiction of the Tribunal, Rule 41 of the Customs Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 is wider in its comprehension. Therefore, the order of transfer is unexceptionable. In this case, having come to the conclusion that the appeals had been filed in time before the Tribunal by the Department and were pending before the Tribunal, for no fault of the Department, the order of transfer has come to be made. This submissions is made without prejudice to the earlier submission, about the lack of jurisdiction on the part of the Tribunal, whether it is a case of loss of goods falling under proviso (a) of Section 35(b) of the Act.
10. In order to appreciate the respective contentions, let me extract the relevant portions of the order of the Tribunal, against which alone the petitioner is aggrieved and has come up to this court. I have already extracted as to how the Tribunal has found that on a proper interpretation of the expression 'loss of goods' the proper forum would be the Central Government in terms of Section 35-EE of the Act. Therefore, according to the Tribunal, the Department has by mistake filed the appeals before the Tribunal, of course within the time limit and the appeals have been inadvertently numbered by the registry and were kept pending in the Tribunal till this day. In such a situation, justice and fair play demand the appeal to be made over to the appropriate and competent authority, viz., Central Government for disposal according to law. For my part I am totally unable to appreciate as to what exactly the Tribunal means by saying that the appeals should be made over. I should think having regard to what has been said in the succeeding portion of the order, it means transfer. The Tribunal tried to draw inspiration from the procedure in the civil courts. In all cases in civil matters, when a suit or an appeal is filed in a wrong forum, what requires to be done is merely return of the papers to the party concerned, be he the plaintiff or the appellant, for proper presentation to the forum having jurisdiction. That is the only order that is possible. If that is the procedure with regard to ordinary forums, the Tribunal cannot clothe itself with higher powers of transfer. It should be remembered in this connection that the Tribunal itself is a creature of the statute. It derives its power only from the statute and the rules made thereunder. My attention has not been drawn to any Rule conferring specifically a power of transfer. However, learned counsel for the Department would press into service Rule 41 of the Customs Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982.
11. That rule is extracted below :-
"41. Orders and directions in certain cases :-
The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice."
To my mind this obviously means, in such cases where the Tribunal has jurisdiction to pass orders it may pass corollary orders to see that the orders are rendered effective. It may also see prevention of abuse of its process. It may also see that the ends of justice are secured. But the ends of justice is not a panacea for all laches for the Tribunal to invest itself within the power of transfer, on an assumption that it is warranted in the interest of fair play and justice.
11. Now look at the position of the petitioner. A valuable plea of limitation is denied to him. Section 35-EE of the Act provides for a revision. Does the Tribunal mean that the appeal filed before it be treated as a revision before the Central Government ? Again under sub-section (2) of Section 35-EE of the Act it is stated :
"(2) An application under sub-section (1) shall be made within three months from the date of the communication to the applicant of the order against which the application being made :
Provided that the Central Government may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the aforesaid period of three months, allow it to be presented within a further period of three months."
Admittedly the appeal before the Tribunal was filed on 11-3-1985. The impugned order came to be passed on 22-1-1986. Therefore, this has been pending for nearly nine months. If one has to have regard to sub-section (2) of Section 35-EE of the Act, a revision before the Central Government beyond the period of six months would be obviously time barred. What the Tribunal does is to circumvent and deprive the petitioner of the valuable plea of limitation, which undoubtedly causes immense prejudice to the petitioner.
12. As regards Rule 41, it cannot confer any power on the Tribunal to transfer to over-ride section 35-EE(2) of the Act. Therefore, I uphold the arguments of Mr. Krishna Srinivas, learned counsel for the petitioner.
13. Learned counsel for the department states that the Tribunal itself had entertained a doubt as to the lack of jurisdiction on the part of the Tribunal because it reads :-
"In this connection, we should also like to observe that the question relating to jurisdiction has also been a debatable point and the question as to whether shortages found out during stock taking in the present case would be covered by clause (a) of the proviso to section 35B of the Act is itself a matter for interpretation, not free from doubt."
Therefore, according to him, the impugned order may be set aside and the case be remitted to the Tribunal for fresh consideration on the point of jurisdiction. I find there are three great hurdles in the way of the learned Counsel for the Department for succeeding in this contention :
(i) Firstly, the petitioner is aggrieved only against that part of the finding in relation to the order of transfer to the Central Government. In his writ petition, I do not know how the Department could be granted relief. If such a relief is granted the petitioner is worse of and he is thrown into fire from frying pan.
(ii) Secondly, the earlier part of the order, which I have extracted above, clearly shows that the Tribunal has come to a definite conclusion that in view of Section 35-B [proviso clause (a)] the proper forum would be only the Central Government in terms of Section 35-EE of the Act.
(iii) Thirdly, if really the Department is aggrieved of the order of the Tribunal that it had not rendered a specific finding as to lack of jurisdiction on the part of the Tribunal, it should have independently questioned that order instead of requiring the petitioner to take the chestnut out of fire.
For these reasons, I reject this argument of the learned counsel for the Department.
14. In the result, the offending part of the order directing the transfer of the matter before the file of the Central Government as done under the impugned order of the Tribunal alone is quashed. This obviously means that the 5th respondent cannot hear the revision any more. In view of the finding rendered by the Tribunal that the proper forum is the Central Government under Section 35-EE of the Act, the appeal papers filed before the Tribunal by the department will be returned to the department for proper presentation, before the forum having jurisdiction, if so advised.
15. Accordingly the writ will stand allowed. No costs.