Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Blue Star Spinning Mills Ltd. on 16 December, 2004
Equivalent citations: 2005(98)ECC759, 2005(182)ELT125(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this Appeal, filed by Revenue, the issue involved is whom the Commissioner, Central Excise can empower to file an Appeal after reviewing the Adjudication Order under Section 35E(2) of the Central Excise Act.
2. Shri D.N. Choudhary, learned Senior Departmental Representative, mentioned that a show cause notice was issued by Joint Commissioner for denying the benefit of Notification No. 8/99-CE dated 28.2.1999 to M/s. Blue Star Spinning Ltd.; that the Additional Commissioner, under Order-in-Original No. 36/2000 dated 31.3.2001, extended the benefit of Notification to the Respondents; the Commissioner, Central Excise reviewed the said Adjudication Order under Section 35E(2) of the Central Excise Act and Directed the Deputy Commissioner, Central Excise to file Appeal before the Commissioner (Appeals) against the said Order-in-Original; that the Commissioner (Appeals), under the impugned Order, has dismissed the Appeal filed by the Department, being not maintainable since the appeal was not filed by the Additional Commissioner who had passed the Order being appealed against, relying upon the decision of the Supreme Court in CCE v. M.M. Rubber Co., 1992 (37) ECC 16 (SC): 1991 (55) ELT 289 (SC); Dhampur Sugar Mills v. CCE, Meerut, 1999 (30) ELT 539 (CEGAT) and CCE, Nagpur v. Llyods Metals & Engineering Ltd., 2003 (59) RLT 225 (CEGAT).
3.1 The learned Senior Departmental Representative submitted that Sub-section (2) and Sub-section (4) of Section 35E of the Central Excise Act have to be read harmoniously; that no doubt the expression "such Authority" has been used in Sub-Section (2) whom the Commissioner may direct to apply to the Commissioner (Appeals) for determination of points arising out of the decision passed by an Adjudicating Authority subordinate to the Commissioner; that Sub-section (4) on the other hand uses the expression "the Adjudicating authority or the Authorized officer" which goes to show that in addition to the Adjudicating Authority, authorized officer may also make an application to the Appellate Tribunal or the Commissioner (Appeals) in terms of Section 35E of the Act. He relied upon the decision in the case of CC, Bombay v. Mirah Exports (P) Ltd., 1987 (29) ELT 401 (T) wherein it has been held by the Tribunal that a harmonious construction of Sub-sections (1) and (4) of Section 129 D would warrant an interpretation that under Sub-section (1), the directive may be given by the Board to the Collector of Customs, even when the Order in Adjudication has been passed by an Additional Collector of Customs by virtue of the function allocated to him by the Collector of Customs under Section 2 (34). Any interpretation contrary to this will be too narrow a view, not in conformity with the intention of Section 129 D, and will create anomaly between these two Sub-sections. The very object of Section 129 D will then be defeated. Reliance has also been placed on the decision in the case of Sun Export Corporation v. Collector of Customs, 1989 (22) ECC 329 (T): 1989 (42) ELT 308 (T) wherein the Tribunal has held as under:
"A further contention has been that the direction under Section 129-D(2) by the Collector has to be to the Adjudicating Authority who in this case is the Deputy Collector and no such direction has been given. This is our opinion is too narrow a view and arises out of a consideration of the provisions of Section 129 D(2) in isolation. For, Section 129 D(4) clearly lays down that an officer of Customs authorized in this behalf 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 129 D(2) and 129 D(4) would indicate that in cases where the Adjudicating Authority is for any reason unavailable for being directed, it is reasonable to conclude that the directive can be fulfilled by any Customs officer authorized by the Collector although he may not be the officer who had adjudicated the case."
3.2 The learned Senior Departmental Representative has also relied upon the decision in CCE, Bangalore v. Falcon Tyres Ltd., 1997 (91) ELT 649 (T) wherein the Tribunal has held that "Section 35 E(2) of the Act requires a broad interpretation, reading in harmony with Section 35 E(4) of the Act. Collector can issue direction to the Adjudicating officer or any other officer for relevant reasons." He also referred to the decision in the case of CC & CE, Nagpur v. D.C.L. Polyester Ltd., 2003 (160) ELT 932 (T). He also mentioned that in Dhampur Sugar Mills and Llyods Metals & Engineering Ltd. only Sub-section (2) of Section 35 E of the Act was considered and the languages used in Sub-Section (4) of Section 35E has not been considered.
4. Countering the arguments, Shri Alok Arora, learned Advocate, submitted that as per provisions of Sub-Section (2) of Section 35 of the Central Excise Act, only the Additional Commissioner who had adjudicated the matter could have been authorized by the Commissioner to file Appeal before the Commissioner (Appeals); that in all the decisions relied upon by the learned Senior Departmental Representative, facts are different and as such these decisions are not applicable to the facts of the present matter; that the Tribunal has clearly held in CCE, Nagpur v. Llyods Metals & Engineering Ltd., 2003 (59) RLT 225 (CEGAT) wherein also the Commissioner had directed the Assistant Commissioner to file Appeal against Order-in-Original passed by the Additional Commissioner, the Tribunal has held that the Appeal filed by Revenue was not maintainable. The learned Advocate has also relied upon the decision in the case of Dhampur Sugar Mills Co. Ltd. v. CCE, 1999 (30) RLT 539 (CEGAT) wherein the Tribunal has held that "there is no provision under that sub-section" [Sub-Section (2) of Section 35E] "for giving the direction to any other Authority to make an application to the Collector (Appeals),
5. We have considered the submissions of both the sides. Relevant provisions of Section 35E of the Central Excise Act read as under:
"(2) The Commissioner 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 Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order."
"(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 Commissioner (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 Commissioner (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."
6. Section 35E deals with the power of Board or Commissioner of Central Excise to examine the record of any proceeding in which an Adjudicating Authority has passed any decision or order for the purpose of satisfying itself as to the legality or propriety of such decision or order and to issue direction to apply to the Appellate Tribunal/Commissioner (Appeals) for the determination of points arising out of the decision or order, Sub-section (1) empowers the Board; Sub-Section (2) empowers the Commissioner; Sub-Section (3) prescribes the time limit within which an order has to be made under Sub-section (1) or Sub-section (2); Sub-Section (4) provides the time limit within which the application is to be made to the Tribunal/Commissioner (Appeals) by the Adjudicating authority or the authorized persons; Sub-Section (4) also provides that such application shall be heard as an Appeal. Thus, the intent of Section 35E is to provide an opportunity to the Department to examine the legality or propriety of decisions /orders passed by the subordinate officers and to file an Appeal in the appropriate Appellate Forum.
7.1 In the present matter, the Order-in-Original was passed by the Additional Commissioner whereas the Commissioner has directed the Assistant Commissioner under Section 35E(2) to file an application before the Commissioner (Appeals). The Commissioner (Appeals) has held the application as not maintainable as under Section 35E(2), the Additional Commissioner should have been authorised to file Appeal and should have filed it. The reason for arriving at this view is the use of expression "such Authority" in Sub-section (2) of Section 35E of the Act. He has also relied upon certain decisions which have been reiterated by the learned Advocate for the Respondents. On the other hands, the learned Senior Departmental Representative has requested for an harmonious construction of Sub-Sections (2) and Sub-section (4) of Section 35 E in view of the fact that Sub-section (4) speaks of application made by "the Adjudicating Authority or the authorised officer". We find substantial force in the submissions made by the learned Senior Departmental Representative which are duly supported by a number of decisions of the Tribunal starting from the decision in Mirah Exports P. Ltd., supra, wherein the Tribunal has interpreted the similar provisions contained in Sub-section (1) and Sub-section (4) of Section 129D of the Customs Act. The Tribunal has held that "A harmonious construction of Sub-sections (1) & (4) of this Section would, therefore, warrant an interpretation that under Sub-section (1) the directive may be given by the Board to the Collector of Customs even where the Order-in-Adjudication has been passed by an Additional Collector of Customs." The Tribunal has referred to various judgments of the Supreme Court in respect of harmonious interpretation of the statute. One of the case is Management, Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. v. S S Railway Works Union, AIR 1969 SC 513 wherein the Apex Court has held:
"In the light of these principles, we ought, therefore, give a literal meaning to the languages used by Parliament unless the languages or its literal sense gives rise to an anomaly or results in something which would defeat the purpose of the Act."
The Tribunal has also referred to the decision in Chet Ram v. Amin Lal, AIR 1983 P&H 50 wherein the High Court has held that statute has to be read as a whole and a harmonious meaning in consonance with other provisions has to be given to each section and where two constructions are possible, the one which is likely to lead to the possibilities of such anomalous results is necessarily to be avoided.
7.2 The Appellate Tribunal observed in Mirah Exports that "An isolated and literal interpretation of Sub-section (1) of Section 129D creates anomaly between Sub-sections (1) and (4) of this Section". The plain meaning of Sub-section (4) of Section 129D, which is para materia with Sub-section (4) of Section 35E, according to the decision in Mirah Exports, "is that either the Adjudicating Authority or an officer of Customs duly authorized in this behalf by the Collector of Customs can apply to the Tribunal."
7.3 If the contention of the Respondent is accepted and a literal interpretation is made of Sub-section (2) of Section 35 E, the two sub-sections become inconsistent and it will defeat the purpose of Section 35 E. It will render Sub-section (4) devoid of any meaning or application in certain situations. The decision in Dhampur Sugar Mills has not considered the provisions of Sub-section (4) of Section 35 E at all. Infact the decision in the case of Mirah Exports was not referred to the Bench which decided, the Appeal in Dhampur Sugar Mills case. The decision in the case of Llyods Metals has been passed by Single Member Bench only. On the other hand, the Tribunal again in the case of Sun Exports Corporation has applied harmonious construction and has held that the directive can be fulfilled by any Customs officer authorized by the Collector although he may not be the officer who had adjudged the case. In Falcon Tyres, the Tribunal has held that harmony between Sub-section (2) and Sub-section (4) of Section 35E of the Central Excise Act, "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." In the case of M.M. Rubber Co., the issue involved relates to the period of limitation, that is whether the one year period shall run from the date of signing of the decision or from the date of communication. This is evident from the opening paragraph of the judgment which reads as follows:
"The short question of law that arises for consideration in this Appeal is as to what is the relevant date for the purpose of calculation of the period of one year provided under Section 35E (3) of the Central Excises & Salt Act, 1944."
7.4 In para 5 and 6 of the judgment, the Supreme Court has set out the provisions relating to "Appeals" and while setting out these provisions has mentioned that the direction to file an Appeal under Sub-sections (1) and (2) of Section 35 E, by the Board and the Collector is to the very Adjudicating Authority who would otherwise be bound by his own order and not expected to be aggrieved by the same. The issue before the Supreme Court in that case was not regarding the authority whom the directions to file Appeal can be issued. This is apparent from the decision as the Supreme Court has held that Section 35E is a power of superintendence conferred on a superior Authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly and where a time is limited for the purpose by the statute, such power should be exercised within the specified period from the date of the order sought to be reconsidered.
8. Accordingly we hold that the Commissioner of Central Excise can issue the directions to the Adjudicating Authority or any other officer for making an application to the Commissioner (Appeals). The Appeal filed by Revenue is allowed and matter is remanded to the Commissioner (Appeals) for deciding the same on merit.