Custom, Excise & Service Tax Tribunal
Cce Mumbai Ii vs M/S. Hindustan Petroleum Corporation ... on 17 April, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Excise Appeal No. 2925 of 2006
(Arising out of Order-in-Original No. 18/2005 dated 31.08.2005 passed by the
Commissioner of Central Excise, Mumbai-II)
Commissioner of Central Excise , Mumbai-II Appellant
9th Floor, Piramal Chambers, Jijibhoy Lane,
Lalbaug, Parel, Mumbai 400 012.
Vs.
M/s. Hindustan Petroleum Corporation Ltd. Respondent
Mahul, Mumbai 400 074.
Appearance:
Shri Bhilegaonkar Deepak, Additional Commissioner, Authorised Representative for the Appellant Shri M.H. Patil, Advocate, for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Date of Hearing: 17.04.2023 Date of Decision: 17.04.2023 FINAL ORDER NO. 85728/2023 PER: SANJIV SRIVASTAVA This appeal filed by revenue is against impugned Order-in- Original No.18/2005 dated 31.08.2005 by which Commissioner Central Excise, Mumbai-ll has dropped the proceedings initiated against the Respondent-assessee vide SCN dated 05.11.2003.
2. This order was reviewed by the committee of Chief Commissioner vide their order date 04.08.2006. Based on the said review order, the present appeal has been filed by Dept. in Form EA-5 praying for setting aside the impugned order and remanding the case back to Commissioner for fresh determination based on the following grounds:
that once there is shortage and no tangible explanation is forthcoming, although shortage was first noticed by assessee's internal audit team, duty on shortage is payable 2 E/2925/2006 that HPCL has falsified/forged the source documents on the basis of which production & stock register/account were maintained that Order-in-Original relying upon on personal diary which is not a statutory document, is not permissible that the difference in stock has occurred due to false reporting of production figures by the concerned employees to keep the fuel and oil loss below 7% is totally baseless inasmuch as even after considering the revised production figures submitted by the assessee, the fuel and oil loss still remains below 7% and thus taking disciplinary action against the employees has no bearing on payment of central excise duty.
3.0 As per the directions contained in the Hon'ble Supreme Court decision in the case of ONGC [1994 (70) ELT 45 (SC)]approached Committee on Disputes (CoD, for short), for permitting to pursue the appeal before Tribunal. However, CoD declined permission to CBEC to pursue the appeal before CESTAT, as decided by CoD in its meeting held on 12.02.2008, vide Circular No. COD/08/2008 dated 04.03.2008 (Item No.21).
The relevant text of Hon'ble Supreme Court decision is reproduced below:
"2. The relevant portion of the memo referred to in the course of this Court's order dated 11th October, 1991 reads :
"It is in this context that the Cabinet Secretariat has issued instructions from time to time to all Departments of the Government of India as well as to Public Undertakings of the Central Government to the effect that all disputes, regardless of the type, should be resolved amicably by mutual consultation or through the good offices of empowered agencies of the Government or through arbitration and recourse to litigation should be eliminated."
(emphasis supplied)
3. The purpose of setting up this High Power Committee was to ensure that as far as possible, the controversies between a Ministry and a Ministry of the Government of India, a Ministry and a Public Sector Undertaking of the Government of India and 3 E/2925/2006 between Public Sector Undertakings themselves are resolved by recourse to the High Power Committee and that time consuming and expensive litigation is avoided.
4. There are some doubts and problems that have arisen in the working out of these arrangements which require to be clarified and some crease ironed out. Some doubts persist as to the precise import and implications of the words and recourse to litigation should be avoided". It is clear that order of this court is not to effect that --- nor can that be done---so far as Union of India and its statutory corporations are concerned, the statutory remedies are effaced. Indeed, the purpose of the constitution of the High Power Committee was not to take away those remedies. The relevant portion of the order reads:
"We direct that the Government of India shall set up a Committee consisting representatives from the Ministry of Industry, the Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India; Ministry and Public Sector Undertaking of the Government of India and Public Sector Undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the Committee and its clearance for litigation. Government may include a representative of the Ministry concerned in a specific case and one from the Ministry of finance in the Committee. Senior Officers only should be nominated so that the Committee would function with status, control and discipline."
(emphasis supplied) It is abundantly clear that the machinery contemplated is only to ensure that no litigation comes to Court without the parties having had an opportunity of conciliation before an in-house Committee.
It is also clarified that even the pending matters before any court or Tribunal should also be the subject matter of the deliberations of the High Power Committee. All the matters pending as on today either instituted by the Union of India or any of the Public Sector Undertakings shall within one month from today be referred by the appellant or the petitioner, as the case may be, to the High Power Committee. The High Power Committee will 4 E/2925/2006 deal with these matters most expeditiously and endeavour to resolve the matters.
5. Accordingly, there, should be no bar to the lodgement of an appeal or petition either by the Union of India or the Public Sector Undertakings before any court or tribunal so as to save limitation. But, before such filing every endeavour should be made to have the clearance of the High Power Committee.
However, as to what the court or tribunal should do if such judicial remedies are sought before such a court or tribunal, the order of 11th October 1991 clarifies :
"It shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the Committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with."
6. Wherever appeals, petitions etc. are filed without the clearance of the High Power Committee, so as to save limitation, the appellant or the petitioner as the case may be, shall within a month from such filing, refer the matter to the High Power Committee with prior notice to the Designated Authority in Cabinet Secretariat of Government of India authorised to receive notices in that behalf. Sri. K.T.S. Tulsi, learned Additional Solicitor General, stated that in order to coordinate these references of the High Power Committee the Government proposes to nominate the Under Secretary (Coordination) in the Cabinet Secretariat as the nodal authority to coordinate these references. The reference shall be deemed to have been made and become effective only after a notice of the reference is lodged with the said nodal authority. The reference shall be deemed to be valid if made in the case of the Union of India by its Secretary, Ministry of Finance Department of Revenue, and in the case of Public Sector Undertakings by its Chairman, Managing Director or chief Executive, as the case may be. It is only after such reference to the High Power Committee is made in the manner indicated that the operation of the order or proceedings under challenge shall be suspended till the High Power Committee resolves the dispute or gives clearance to the litigation. If the High Power Committee is unable to resolve the 5 E/2925/2006 matter for reasons to be recorded by it. It shall grant clearance for the litigation.
7. The High Power Committee shall submit a half yearly report-
-- instead of quarterly report as earlier indicated---to this Court as to the number of matters referred to it and the manner in which they were dealt with and disposed of. The report for the half-year ended 31st December, 1993 shall be lodged before 31st January, 1994 and for every half year thereafter within one month of the expiry of the half year."
4.0 The first question thus agitated before us is with regards to maintainability of this appeal when the permission to pursue the appeal has been declined by the COD vide its decision dated 12.02.2008, vide Circular No. COD/08/2008 dated 04.03.2008 (Item No.21);
5.0 Constitution Bench of Hon'ble Supreme Court in the case of Electronics Corporation of India Ltd. v/s. Union of India [2011 (265) ELT 11 (SC)] (ECIL, for short), held as follows:
"6. Learned Attorney General has submitted that the above Orders have outlived their utility and in view of the changed scenario, as indicated hereinafter, the aforestated Orders are required to be recalled. We find merit in the submission made by the Attorney General of India on behalf of the Union of India for the following reasons. By Order dated 11-9-1991, reported in 1992 Supp (2) SCC 432 (ONGC and Anr. v. CCE) [1992 (61) E.L.T. 3 (S.C.)], this Court noted that "Public Sector Undertakings of Central Government and the Union of India should not fight their litigations in Court". Consequently, the Cabinet Secretary, Government of India was "called upon to handle the matter personally".
7. This was followed by the order dated 11-10-1991 in ONGC-II case (supra) where this Court directed the Government of India "to set up a Committee consisting of representatives from the Ministry of Industry, Bureau of Public Enterprises and Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry and public sector undertakings of the Government of India and public sector undertakings between themselves, to ensure that no litigation comes to Court or to a 6 E/2925/2006 Tribunal without the matter having been first examined by the Committee and its clearance for litigation".
8. Thereafter, in ONGC-III case (supra), this Court directed that in the absence of clearance from the "Committee of Secretaries" (CoS), any legal proceeding will not be proceeded with. This was subject to the rider that appeals and petitions filed without such clearance could be filed to save limitation. It was, however, directed that the needful should be done within one month from such filing, failing which the matter would not be proceeded with. By another order dated 20-7-2007 (ONGC- IVth case) this Court extended the concept of Dispute Resolution by High-Powered Committee to amicably resolve the disputes involving the State Governments and their Instrumentalities.
9. The idea behind setting up of this Committee, initially, called a "High-Powered Committee" (HPC), later on called as "Committee of Secretaries" (CoS) and finally termed as "Committee on Disputes" (CoD) was to ensure that resources of the State are not frittered away in inter se litigations between entities of the State, which could be best resolved, by an empowered CoD. The machinery contemplated was only to ensure that no litigation comes to Court without the parties having had an opportunity of conciliation before an in-house committee. [see : para 3 of the order dated 7-1-1994 (supra) Whilst the principle and the object behind the aforestated Orders is unexceptionable and laudatory, experience has shown that despite best efforts of the CoD, the mechanism has not achieved the results for which it was constituted and has in fact led to delays in litigation. We have already given two examples hereinabove. They indicate that on same set of facts, clearance is given in one case and refused in the other. This has led a PSU to institute a SLP in this Court on the ground of discrimination. We need not multiply such illustrations. The mechanism was set up with a laudatory object. However, the mechanism has led to delay in filing of civil appeals causing loss of revenue. For example, in many cases of exemptions, the Industry Department gives exemption, while the same is denied by the Revenue Department. Similarly, with the enactment of regulatory laws in several cases there could be overlapping of jurisdictions 7 E/2925/2006 between, let us say, SEBI and insurance regulators. Civil appeals lie to this Court. Stakes in such cases are huge. One cannot possibly expect timely clearance by CoD. In such cases, grant of clearance to one and not to the other may result in generation of more and more litigation. The mechanism has outlived its utility. In the changed scenario indicated above, we are of the view that time has come under the above circumstances to recall the directions of this Court in its various Orders reported as (i) 1995 Supp (4) SCC 541 dated 11-10-1991, (ii) (2004) 6 SCC 437 dated 7-1-1994 and (iii) (2007) 7 SCC 39 dated 20-7-2007."
6.0 CBEC issued Circular No 390/R/262/09-JC dated 24.03.2011 stating as follows:
Subject: Settlement of Disputes between one Govt. Dept. and another and one Govt. Dept. and a Public Enterprise and one Public Enterprise and another - Regarding.
Please refer to D.O.F. No. 275/68/91-CX.8A (Pt.), dated 17.- 1.1992 addressed by the Member (Central Excise) to all Principal Collectors, and to all Collectors of Customs and Central Excise vide which a copy of Cabinet Secretariat's O.M. No. 53/3/6/91-
Cab. dated 31.12.1991 was circulated pertaining to constitution of a committee to give clearance to the disputes between the Government Department and another and one Government Department and a Public Sector Enterprises and Public Enterprises themselves before these are agitated in a Court/ Tribunal. Reference is also invited to subsequent O.Ms issued by the Cabinet Secretariat and the Circulars/ Instructions issued by the Board from time to time on this issue.2.
2. In a recent judgment dated 17.02.2011, the Constitution Bench of the Hon'ble Supreme Court, while deciding the S.L.P. No. 2538 of 2009 in the case of Electronics Corporation of India Ltd. Vs. Union of India and other matters reported in 2011 (265) ELT 11 (S.C.) has recalled the directions given by the Court in its various orders reported as below:-
I. 1995 Suppl. (4) SCC 541 (ONGC v. CCE) dated 11.10.1991 II. 2004 (6) SCC 437 (ONGC v. CCE) dated 07.01.1994 8 E/2925/2006 III. 2007 (7) SCC 39 (ONGC v. City & Industrial Development Corpn.) dated 20.07.2007
3. In view of the above there is no requirement of obtaining approval of the Committee on Disputes for pursuing litigations as was being done. Field formations may now pursue their appeals in the respective Tribunals/ Courts without obtaining clearance from the Committee on Disputes. Proposals which have already been sent to the Committee and no decisions have been taken till 17.02.2011 shall be deemed to be covered by the decision of the Hon'ble Court dated17.02.2011, i.e. COD permission is not required in those cases.
4. The foregoing instructions may be brought to the notice of all concerned for guidance and compliance.
7.0 In case of Hindustan Steelworks [2022 (61) GST 513 (SC)] Hon'ble Supreme Court has held "5. A perusal of the impugned order would reveal that the Division Bench of the Jharkhand High Court has agreed with the proposition that in view of the law laid down in Electronic Corporation of India Ltd. (supra), the matters which were refused permissions by the CoD to pursue the appeal cannot be reopened. However, it is observed that everything will depend on the peculiar facts and circumstances of each case.
6. It has been found that in the peculiar facts and circumstances of the case, the CoD had granted an opportunity to the Revenue to challenge and refused the permission to the respondent-assessee."
8.0 In case Burn Standard - 2012 (286) ELT 125 (T.LB) held as follows:
"This matter has been referred to the Larger Bench consequent to the order passed in Appeal No. E/165/2008 titled Burn Standard v. CCE, Kolkata dated 12-1-2012 [2012 (280) E.L.T. 420 (Tri. - Kolkata)]. Relevant portion of the order reads thus :-
"8. After hearing both sides and the Bar at length, we find that the issue involved is of greater public importance. We find force in the argument of the learned AR (Commissioner) that the Hon'ble Supreme Court in ECIL's case (supra) has observed that the mechanism of obtaining COD permission has outlived its 9 E/2925/2006 utility. This observation of the Hon'ble Apex Court, in our opinion, indicates that though in its initial period the said mechanism had been useful and catering to the needs of all concerned, but subsequently, it has lost its value and significance owing to various factors. Therefore, continuation of such a mechanism becomes irrelevant in the present times. However, we find that a Co-ordinate Bench of this Tribunal at Mumbai has recorded a different opinion on the said observation of the Hon'ble supreme Court and allowed the Revenue's plea and restored the Appeal where permission to litigate was rejected by COD earlier i.e. before 17-2-2011. They observed at para 6 as follows :-
"6. Referring to the said para, it was sought to be contended on behalf of the respondent-assessee that the circular nowhere states that the decision of the Apex Court would apply retrospectively. Once the law has been clarified, it is not necessary for the Board further to clarify that the same would be effective right from the day on which the orders were passed which have been recalled. Considering the same, the contentions sought to be raised on behalf of the assessee are not sustainable. Once it is apparent that merely on the ground of refusal of the permission by the Committee on Disputes, the appeal could not have been dismissed and yet the appeal was dismissed solely on the said ground, as rightly pointed out on behalf of the department, such an order deserves to be recalled. In fact, similar such orders have been recalled on some other matters also".
9. We are unable to persuade ourselves to be in agreement with the said observation of the Mumbai Bench. Therefore, we direct the registry to place the following question of law before the Hon'ble President to refer the matter to a Larger Bench to resolve the same :-
"Whether in view of the ECIL's judgment (supra), instances where COD permission was not allowed in the past i.e. before 17-2-2011 to pursue the litigation before CESTAT, be treated as not relevant, and such Appeals either rejected or pending rejection by Tribunal for want of COD permission, be restored or be listed for hearing as the case may be".
10 E/2925/2006
2. We have heard both the parties. The issue under reference came up before the High Court of Delhi in the matter of Commissioner of Income Tax v. Gas Authority of India Ltd., C.M. No. 21493/2011 and the High Court vide its order dated 13-2- 2012 have answered the issue as under :-
"We are not inclined to accept the contention of the Revenue. The Supreme Court in Electronics Corporation of India Ltd. (supra) has held that the Committee of Disputes as a mechanism, had failed and was causing/leading to delay in litigation. It had outlived its utility. The Committee of Disputes was only to decide, whether or not government authority/public sector undertaking should be permitted to proceed with the appellate proceedings. In the present case, in fact, the Revenue had sought permission, but the same was declined in November, 2009. The said decision was accepted by the Revenue. We do not think that Electronics Corp. of India (supra) can apply to the facts of the present case as the request for permission to file appellate proceedings was declined by the Committee of Disputes. The decision taken by the Committee of Disputes;
dated 12th November, 2009, is not undone and has not become a nullity. If the contention of the Revenue is accepted, then in all case in which the Committee of Disputes had declined permission to prefer appeal/legal proceedings, during the period from 1994 onwards, can now be reopened. The matters which have been considered and decided by the Committee of Disputes and permission specifically denied cannot be reopened in the manner suggested and submitted".
3. On reading of the above, it is evident that the question raised by the DB vide reference has already been answered by the High Court of Delhi which finding is binding on the Tribunal. Therefore, there is no need to further dwell on the issue. The matter is remitted back to the concerned DB for deciding the matter in terms of the above noted order of High Court."
9.0 In case of Kudremukh Iron Ore [2013 (292) ELT 427 (T)], HPCL & IOCL Order No M/1330-1333/13/EB/CII dated 18.06.2013 & HPCL Order No.M/1906/13/EB/CII dated 20.08.2013. It has been held that either parties cannot pursue the appeals pertaining the period prior to 17.02.2011, without 11 E/2925/2006 clearance from CoD, as ECIL's judgment would not apply for closed matters. Although the some of these orders above have been challenged before Hon'ble Bombay High Court being Appeal No. CEXA/271/2013 & CEXA/278/2013, stay has not been granted by High Court.
10.0 In view of the above settled position of law on the issue by various judicial fora including Apex Court in Hindustan Steelworks [2022 (61) GSTL 513 (SC)], revenue is barred from pursuing this appeal for the reason that CoD has already considered and decided the matter and permission specifically denied.
11.0 In view of the above taking note of the COD decision declining permission to revenue to pursue this appeal before CESTAT we are of the this appeal is not maintainable.
12.0 Appeal is dismissed.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) tvu