Madras High Court
M/S.C.P.Aqua Culture (India) Pvt. Ltd vs The Customs on 28 November, 2014
Bench: R.Sudhakar, Pushpa Sathyanarayana
In the High Court of Judicature at Madras
Dated: 28.11.2014
Coram
The Honourable Mr.JUSTICE R.SUDHAKAR
and
The Honourable Mrs.JUSTICE PUSHPA SATHYANARAYANA
Civil Miscellaneous Appeal No.1070 of 2008
& M.P.No.1 of 2008
M/s.C.P.Aqua Culture (India) Pvt. Ltd.,
No.104, GNT Road,
Nallur and Vijayanallur Village,
Sholavaram Post,
Chennai - 600 067. .... Appellant
Vs.
1. The Customs, Excise & Service Tax Appellate Tribunal,
South Zonal Bench, I Floor,
Shastri Bhavan Annexe,
Haddows Road, Chennai 600 006.
2. The Commissioner of Customs
Custom House, 60 Rajaji Salai,
Chennai - 600 001.
3. The Commissioner of Central Excise,
Chennai II Commissionerate, MHU Complex,
Nandanam, Chennai - 600035.
.... Respondents
APPEAL under Section 130 of the Customs Act against the order dated 12.03.2007 made in Final Order No.230 of 2007 on the file of the Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench, Chennai.
For Appellant : Mr.T.Ramesh
For Respondents : Mr.K.Mohanamurali - R2 & R3
J U D G M E N T
(Delivered by R.SUDHAKAR,J.) This Civil Miscellaneous Appeal filed against the order dated 12.03.2007 made in Final Order No.230 of 2007 passed by the Customs, Excise and Service Tax Appellate Tribunal was admitted by this Court on the following substantial questions of law:
"1) In the facts and circumstances of the case, whether the 1st respondent was correct in remanding the matter to the Commissioner of Central Excise, after setting aside the order of the Commissioner of Customs, on the ground that the 2nd respondent had passed the adjudication order without jurisdiction?
2) In the facts and circumstances of the case, when the Commissioner of Customs had passed the adjudication order which was appealed against before the 1st respondent, whether, the 1st respondent was having any legal authority under Section 129B of the Customs Act to remand the matter for denova proceedings to the some other authority viz., Commissioner of Central Excise who was not the authority who passed the adjudication order?
3) In the facts and circumstances of the case, whether the 1st respondent has got any authority to confer any jurisdiction on the authority when the jurisdiction to adjudicate was not assumed by such authority, viz., the Commissioner of Central Excise, despite the fact that the Show Cause Notice was originally issued by the Office of the Central Excise Department?
4) In the facts and circumstances of the present case, when the Commissioner of Central Excise was not a party in the appeal before the 1st respondent, whether, the 1st respondent was correct in remanding the matter to the Commissioner of Central Excise?"
2. The appellant/assessee, debonded its unit from 100% EOU status on 31.3.2003, are engaged in the manufacture of shrimp/prawn feed falling under the schedule to Central Excise Tariff sub-heading 2301.10 of Central Excise Tariff Act, 1985. The assessee besides exporting the manufactured shrimps feed are also exporting shrimps processed through their job workers. The removal of goods to the domestic tariff area should be only after payment of appropriate duty in PLA. It appears that the assessee while clearing the goods, viz., prawns and shrimps feed in the DTA during the month of March, 2003, had availed certain amount of cenvat credit and adjusted the cenvat credit amount towards payment of duty for clearances effected during the month of March, 2003. The credit availed and utilised by the assessee as 100% EOU unit for the clearances effected from March, 2003 appears to be contrary to Rule 17 of Central Excise Rules 2002 as it does not have provision to adjust the cenvat credit by the 100% EOU. On breach of this Rule, despite intimation by the Range Officer, show cause notice dated 20.6.2003 was issued by the Superintendent of Central Excise, Ponneri Range, Ponneri in OC.No.273/2003, the relevant portion of which reads as follows:
"Hence the assesseess are required to show cause to the Deputy Commissioner, Chennai V division, Koyambedu, Chennai - 600 107 as to why (1) the cenvat credit amount of Rs.57,66,223/- (Rupees fifty seven lakhs sixty six thousand two hundred and twenty three) availed and utilized irregularly by the assessees should not be denied under Rule 12 of cenvat credit Rules 2002 and the same amount should not be demanded from them under rule 17 of the Centrl Excise Rules 2002 read with section 11A of CEA 1944 along with interest in terms of section 11AB of central excise Act 1944.
(2) Penalty should not be imposed on them under section 11 AC of the central excise Act, 1944 as they have willfully availed the cenvat credit and utilized the same towards payment of duty for the DTA clearances in order to evade payment of duty and got the financial accommodation as against the instruction given by the Ranger Officer.
(3) Penalty should not be imposed under rule 25 of central excise rules 2002 for violating Rule 17 of central excise Rules, 2002.
The assessees are further directed to produce at the time of showing cause all the evidence upon which they intend to rely in support of their defence. The assessees should also indicate in their written reply whether they wish to be heard in person before the case is adjudicated, failing which it will be construed that they do not want a personal hearing.
If no cause is shown against the action proposed to be taken within 30 days from the date of receipt of this notice or having shown cause they do not appear before the Adjudicating Authority when the case is posted for personal hearing, the case will be decided EXPARTE based on the evidences available on the records.
This notice is issued without prejudice to any other action or further action contemplated against the assessees under central excise act or the rules made thereunder or any other law for time being in force in India."
3. Thereafter, the assessee has submitted its reply on 24.7.2003 and the case was adjudicated by the Commissioner of Customs (Imports) in his Order-in-Original No.3941 of 2005 dated 14.6.2005. In that order, the Commissioner held that the cenvat credit utilised for payment of duty on removal of goods from 100% EOU to DTA was impermissible and as a result, the following order was passed:
"(i) I hold that M/s.C.P.Aquaculture (India) Pvt. Ltd., No.104, GNT Road, Nallur & Vijayanallur village, Sholavaram Post, Redhills, Chennai - 600 067 was a 100% EOU during the peirod upto 31.03.2003, the date of final debonding order. Since utilization of CENVAT Credit for payment of duty on removal of goods from a 100% EOU to the DTA was impermissible in terms of Rule 17 of the Central Excise Rules 2002, and since Cenvat credit was so wrongly utilised, I confirm the demand for the amount of duty of Rs.57,66,223/- (Rupees fifty seven lakhs sixty six thousand two hundred and twenty three only) demanded under Section 11A of the Central Excise Act, 1944 read with Rule 17 of the Central Excise Rules, 2002 and Rule 12 of the CENVAT Credit Rules, 2002 along with interest in terms of Section 11AB of the Central Excise Act, 1944 M/s.C.P.Aquaculture (India) Pvt. Ltd. shall pay the said amount of duty alongwith interest.
(ii) I impose a penalty of Rs.6,00,000/- (Rupees six lakhs onlyl) on M/s.C.P.Aquaculture (India) Pvt. Ltd., No.104, GNT Road, Nallur & Vijayanallur village, Sholavaram Post, Redhills, Chennai -600 067 under Rule 25(1)(a) of the Central Excise Rules, 2002."
4. As against the said order of the Adjudicating Authority, the appellant has preferred an appeal before the Tribunal challenging the order both on merits as well as on the issue of jurisdiction of the Commissioner of Customs, who passed the order of adjudication.
5. The Tribunal took up the primary objection raised by the appellant/assessee and came to the conclusion that there was no dispute that on an after 31.3.2003, the assessee was no longer an 100% EOU and in respect of the violation alleged, a show cause notice was issued in June, 2003 when admittedly the assessee was a DTA unit. The Tribunal was of the view that consequent to the debonding of the unit, it went out of the administrative control of the Commissioner of Customs and came under the jurisdiction of Central Excise administration. The Tribunal held that the show cause notice proposed to deny cenvat credit utilised for payment of duty on removal of goods from 100% EOU to DTA was a primary issue, but since the unit was not a 100% EOU when the show cause notice was issued, the power of adjudication would be with the Commissioner of Central Excise and not the Commissioner of Customs. Accordingly, the Tribunal set aside the order of the Adjudicating Authority and allowed the appeal with a direction to the Commissioner of Central Excise, Chennai-II to take over the records from the Commissioner of Customs (Imports) and adjudicate the case after giving the party an effective opportunity of being heard.
6. Aggrieved by the order of the Tribunal, the appellant/assessee is before this Court contending that the Tribunal has no jurisdiction to remand the matter to a different authority than the original authority under Section 129B of the Customs Act.
7. Heard learned counsel appearing for the assessee and the learned Standing Counsel appearing for the Department and perused the materials placed before this Court.
8. It is to be noticed herein that the appellant herein fairly states that it is not the case of the appellant that the Commissioner of Customs has jurisdiction. If we accept their plea that Section 129B of the Customs Act should be given effect to in that manner, it should be remanded to the very same authority, who passed the original order. If that be the case, the issue that arises for consideration on the various substantial questions of law raised is that whether the remand order by the Tribunal to the Commissioner of Central Excise would be correct on an interpretation to Section 129B of the Customs Act.
9. Learned counsel appearing for the appellant relied upon a Division Bench judgment of this Court, (in which both of us are parties) dated 28.10.2013 made in W.P.No.28745 and 28746 of 2013. The decision rendered by us is in relation to Section 21 of the Recovery of Debts due to Banks & Financial Institutions Act. In the said decision, we observed that the Tribunal cannot exercise the power more than what the statute prescribes. The relevant portion of the said decision reads as follows:
"8. This Court, on going through the provisions of Section 21 of the Recovery of Debts due to Banks & Financial Institutions Act, finds no ground to accept the plea as made by the petitioner that power is available to the Appellate Tribunal to grant extension of time. All that provio to Section 21 provides is for passing an order either for waiver or reduction of the amount to be made as pre-deposit for entertaining an appeal. The proviso to Section 21 does not speak of extension of time or such other relief. The statute has to be interpreted in its plain and simple form. When the conditional order has not been complied with, the appeal came to be dismissed. Therefore, this Court finds no ground to interfere with the said order. There is no basis to challenge the proceedings alleging that it is not in accordance with the provision to Section 21 as pleaded by the learned counsel for the petitioner. No other point was canvassed."
10. We have no difficulty in accepting the proposition made by the learned counsel appearing for the appellant, but Section 2(1) of the Customs Act defines "Adjudicating Authority", which reads as follows:
"(1) adjudicating authority means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal"
11. Section 129B of the Customs Act speaks about the power of the Tribunal to pass orders as it thinks fit. Section 129B of the Customs Act reads as follows:
"SECTION 129B. Orders of Appellate Tribunal. (1) The Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary.
(1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing :
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.
(2) The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Customs or the other party to the appeal :
Provided that an amendment which has the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the other party shall not be made under this sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard.
(2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed :
Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 129A, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order :
Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated.
(3) The Appellate Tribunal shall send a copy of every order passed under this section to the Commissioner of Customs and the other party to the appeal.
(4) Save as otherwise provided in section 130 or section 130E, orders passed by the Appellate Tribunal on appeal shall be final.
(emphasis supplied)
12. The power of the Tribunal to remand the case back to the Authority would mean the Authority prescribed under Section 2(1), ie., the competent authority. In this case, it is not disputed by either side that the competent Authority is Commissioner of Central Excise. The primary objection before the Tribunal by the appellant on jurisdiction issue is that the competent authority is not the Commissioner of Customs, but Commissioner of Central Excise.
13. A conjoint reading of Section 129B with Section 2(1) of the Customs Act makes it clear that the order should be passed only by a competent authority who has jurisdiction to pass an order and therefore, the Tribunal, if it found an error in the order passed by an authority, is justified to remand the case back to the competent authority. Section 129B does not restrict the power of the Tribunal to remand the matter back to the competent authority having given a ruling thereon. We find no error in the order of the Tribunal.
14. Yet another factor which we find in favour of the Department is that the show cause notice was issued by the Superintendent of Central Excise, which Department had jurisdiction to initiate proceedings and the order of adjudication on being set aside by the Tribunal for lack of jurisdiction, the original show cause notice survives and therefore, that has to be adjudicated only by a competent authority in terms of Section 2(1) of the Customs Act. When such being the case, the competent adjudicating authority alone has jurisdiction to adjudicate the issue on the subsisting show cause notice. We find no error in the order of the Tribunal. Accordingly, the questions of law are answered in favour of the Revenue and against the assessee.
15. In the result, this Civil Miscellaneous Appeal stands dismissed. No costs. Consequently, M.P.No.1 of 2008 is also dismissed.
Index :Yes/No (R.S.,J) (P.S.N.,J)
Internet:Yes/No 28.11.2014
sl
To
1. The Customs, Excise and Service Tax Appellate Tribunal,
South Zonal Bench, Chennai.
2. Commissioner of Customs (Imports), Custom House Chennai
Chennai - 600 001.
3. The Commissioner of Central Excise,
Chennai II Commissionerate, MHU Complex,
Nandanam, Chennai - 600035.
R.SUDHAKAR,J.
AND
PUSHPA SATHYANARAYANA,J.
sl
C.M.A.No.1070 of 2008
& M.P.No.1 of 2008
28.11.2014