Customs, Excise and Gold Tribunal - Calcutta
Commissioner Of C. Ex. And Cus. vs Gupta Steels Pvt. Ltd. on 19 April, 2007
ORDER Chittaranjan Satapathy, Member (T)
1. These two appeals have been filed by the Department against the impugned order of the lower appellate authority. In the ground of appeal filed by the Revenue, it is argued that the lower appellate authority having confirmed the order of demand should have also imposed penalty under Rule 57-1(4) of the Central Excise Rules, 1944.
2. Shri P.K. Das, ld. JDR appearing for the Revenue supports the Departmental's appeals and states that the lower appellate authority is not justified in setting aside the penalty.
3. Shri Kartik Kurmy, ld. Advocate appearing for the respondents, on the other hand, supports the order passed by the lower appellate authority and challenges the appeals filed by the Revenue on the following grounds:
(i) The authorization to file the present appeals has been signed by only one Commissioner and not by a Committee of Two Commissioners as required under Sub-section (2) of Section 35B of the Central Excise Act, 1944 and therefore the said authorization is not valid, and hence the appeals should be dismissed;
(ii) The Commissioner, who has signed the authorization, has not applied his mind to come to a conclusion that the order passed by the lower appellate authority is not legal and proper, but has merely approved the note put up by the office.
(iii) In the second round of litigation, no penalty is imposable, when in the first round of litigation, there was no prayer by the Revenue before the Tribunal for non-imposition of penalty.
He also cites the following decisions in support of his arguments:
(i) Collector of Central Excise, Vadodara v. Rohit Pulp Paper Mills ;
(ii) CCE, Bangalore-II v. ITC Ltd. 2007 (210) E.L.T. 193 (Tribunal) : 2007 (79) RLT 251 (CESTAT-Ban.);
(iii) Commr. of Customs (ACC & Import), Mumbai v. M.B. Electronics ;
(iv) M.R.F. Ltd. v. Commissioner of Central Excise, Goa 2007 (210) E.L.T. 96 (Tri.-Mumbai);
(v) Commr. of Central Excise, Coimbatore v. Shree Karthik Paper Ltd. 2006 (206) E.L.T. 384 (T) : 2006 (135) ECR 158 (Tri.-Chennai).
4. In reply, the ld. DR for the Department states that the Commissioner, who has authorized filing of the appeal was at the material time holding charges of both the Commissionerates and hence his authorization should be taken as the authorization given by a committee of two Commissioners. He also refers to Board's Circular No. 825/2/2006-CX, dated 6-2-06 under which, in paragraph 3, it has been clarified that even where one member of the committee takes a view to file an appeal and the other member opposes it, still the decision should be to file an appeal. Hence according to the ld. DR, the decision to file an appeal by one Commissioner is also valid under the said Circular of the Board. He further states that though the note sheet order contains proposal for filing the appeal by the Joint Commissioner, the Commissioner who has approved the proposal, has applied his mind and hence the appeal cannot be challenged on that ground. He also states that in the first round of litigation, the Department's appeal had challenged the entire order, which was remanded by the Tribunal and hence there is no bar to imposition of penalty in the remand proceedings.
5. The preliminary objection raised by the ld. Advocate for the respondents regarding the competence of one Commissioner acting on behalf of committee to authorize an appeal was vehemently argued and contested, respectively by both sides and hence this issue was heard extensively over two sessions. The amount involved in this case is not large, but the preliminary issue raised is of importance and will have bearing over several appeals filed by the Department in the Tribunal, where one Chief Commissioner or one Commissioner holding two charges has authorized filing of appeals.
6. The legal position regarding filing of appeals by the Department is analyzed below:
(i) Section 35B(2) of the Central Excise Act, 1944 provides for departmental appeal against orders passed by a Commissioner (Appeals). Prior to the amendment of the section by the Finance Act, 2005, the jurisdictional Commissioner could authorize filing such an appeal if he was of the opinion that the order of the Commissioner (Appeals) was not legal or proper. The 2005 amendment requires a Committee of Commissioners to authorize filing such appeals. After the amendment, Section 35B (2) reads as under:
35B (2). The Committee of Commissioners of Central Excise may, if it is of opinion that an order passed by the Appellate Commissioner of Central Excise under Section 35, as it stood immediately before the appointed day, or the Commissioner (Appeals) under Section 35A, is not legal or proper, direct any Central Excise Officer authorized by it in this behalf (hereafter in this Chapter referred to as the authorized officer) to appeal on its behalf to the Appellate Tribunal against such order.
(ii) The Committee for this purpose is required to be constituted by the Board. The relevant provision is contained in Section 35(1 B) which reads as under:
35(1B). (i) The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) may, by notification in the Official Gazette, constitute such Committees as may be necessary for the purposes of this Act.
(ii) Every Committee constituted under Clause (i) shall consist of two Chief Commissioners of Central Excise or two Commissioners of Central Excise, as the case may be.
7. There is no dispute that the Board has constituted such committees of two Commissioners. In the instant case, one of the Commissioners who was a Committee Member was away from office for a long period on leave and hence the other Commissioner holding both the charges has authorized filing of these appeals. The question to be decided is whether one Commissioner wearing two hats by way of holding two charges can function as a Committee of two Commissioners and authorize filing of an appeal.
8. According to Concise Oxford Dictionary, a Committee is a body of persons appointed for a specific function. A Committee is generally understood as a type of deliberative assembly. "It comprises a group of persons convened for the accomplishment of some specific purposes, typically with formal protocols." The Central Excise Act requires that the Committees constituted under Section 35B shall consist of two Commissioners; two as one would note, is the bare minimum without which a body of persons cannot be formed.
9. I find that prior to amendments made in Section 35B of the Central Excise Act, 1944 by the Finance Act, 2005 w.e.f. 13-5-05, the jurisdictional Commissioner could file an appeal against the order passed by a Commissioner (Appeals). In the Finance Bill, 2005, this provision was proposed to be amended providing for authorization to file an appeal by a Committee of two Chief Commissioners. However, the proposal was modified and ultimately the Finance Act, 2005 provided for authorization by a Committee of two Commissioners. Though the Notes on Clauses to the Finance Act, 2005 and the absence of any parliamentary debate on this change do not throw any further light, the change itself indicates that the earlier provision enabling the jurisdictional Commissioner of the same rank examining the question of legality and correctness of an order passed by a Commissioner (Appeals) was not satisfactory. The Finance Bill provision entrusted the examination of legality and correctness of a Commissioner (Appeals) order to a Committee of two Chief Commissioners. But subsequently, it was diluted to that of a Committee of two Commissioners. Intention behind the legislative change replacing a provision of one Commissioner of the same rank authorising filing an appeal to a Committee of two Commissioners authorizing such appeal, seems to be a deliberate legislative change to gain advantage of viewpoints of two Commissioners and also sharing out responsibilities among them. Possibly, the legislative intention behind the change is that two minds are better than one while filing an appeal against the order by the Commissioner (Appeals) of the same rank.
10. The ld. Advocate has sought support from the decision in the case of Shree Karthik Paper (cited supra) which, in paragraph 5 thereof, states that Section 35B(2) stipulates joint sitting and deliberations by the Commissioners and forming an opinion by the Committee. I find that Section 35B(2) nowhere specifies joint sitting as an essential requirement. However, one can assume that for a Committee to come to an opinion it would require deliberation and exchange of viewpoints of the Committee Members.
11. Moreover, when the law specifies that the Committee shall consist of two Commissioners, it needs to be construed as a Committee consisting of two individuals and not one individual wearing two hats while holding additional charge of another Commissioner. A contrary interpretation would mean that one Commissioner can form an opinion that the Commissioner (Appeals) has passed an order, which is not legal or proper and authorize filing an appeal against the same. Such an interpretation would render the 2005 amendment nugatory, as such authorization would be no different from an authorization given prior to the 2005 amendment.
12. For the same reason, I am of the opinion that the view expressed in the Board's Circular dated 6-2-06 cited by the ld. DR is contrary to the legislative change brought about in 2005. Approval by one Member of the Committee on the face of opposition by another Member cannot be construed as the Committee forming an opinion that the order passed by the Commissioner (Appeal) is not legal or proper. The direction issued by the Board to file an appeal in such cases of divided opinion among two Members of the Committee would clearly result in bypassing the mandate of the changed law. I am also of the opinion that the said Circular is of no assistance to the Department in this case, where only one Commissioner has authorized filing of an appeal.
13. The ld. DR argues that at times, due to administrative exigency, some of the posts of Commissioners remain vacant and hence the legal provisions should be interpreted to mean that one Commissioner holding two charges can constitute a Committee and authorize filing an appeal. Firstly, exigency of this type cannot influence interpretation of a statutory provision. Secondly, there is a reasonably long time period for filing an appeal and the administrative branch of the Board should ensure that important posts like Commissioners are not kept vacant for long creating legal difficulties and preventing the Department from filing appeals within prescribed time limits if such appeals are required to be filed in the interest of public revenue. I also find that in view of Rule 3(3) of the Central Excise Rules, 2002, any Central Excise Officer can exercise the powers and discharge the duties conferred or imposed by or under the Act and the Rules on a subordinate Central Excise Officer and since the Chief Commissioners as well as the Commissioners of Central Excise, are Central Excise Officers under Section 2(b) of the Central Excise Act, 1944, in the absence of one of the Commissioners, who is a Committee Member, a Chief Commissioner to whom he is subordinate can also very well discharge his duties as a Committee Member. As such, the ground of exigency raised by the ld. DR has to be rejected on both counts.
14. In view of the foregoing analysis of the legal position, I am of the view that one Commissioner holding charges of two Commissioners cannot constitute a Committee of Commissioners to form an opinion that an order passed by the Commissioner (Appeals) is not legal or proper and consequently, he cannot authorize filing of an appeal against the same. The legal requirement after the 2005 amendment is that a Committee of two Commissioners must form an opinion that an order passed by the Commissioner (Appeals) is not legal or proper and such a Committee has to authorize filing an appeal on behalf of the Committee. In the instant case, since only one Commissioner has given the impugned authorization, the same is not valid in the eyes of law and consequently, the appeals require to be dismissed as not maintainable. I order accordingly.
15. The ld. DR prays that the Department should be given a chance to file a proper authorization at a later point of time and in such an event the appeals may be restored. It is left to the Department to adopt such a course of action these cases, if so advised, and if a prayer for restoration of the appeals is made, the same would be considered in accordance with law.
(Operative portion of the order pronounced in the open Court)