HIGH COURT OF CHHATTISGARH AT BILASPUR TaxCaseNo. 182 of 2010 ^v APPELLANT Versus RESPONDENTS M/s MSP Steel & Power Ltd., Vill. Jamgaon, Dist. Raigarh, Chhattisgarh, 496 001, Through It's Director Sri Saket Agrawal, aged about 29 years, son of Sri Suresh KumarAgrawal. The Commissioner, Central Excise & Customs, Raipur, Commissionerate, Central Excise Building, Dhamtari Road, Tikrapara, Raipur - 492 001, Chhattisgarh. G. ORDER FOR CONSIDERATION HON'BLE SHRI R.N. CHANDRAKAR, J OL^^^^ (^ Sd/- Dhirendra Mishra Judge ^z-zon Sd/- R.N. Chandrakar , Judge POST FOR ORDER ON 2-S' PEBRUARY. 2011 ^ ^^72/2011 Sd/- Dhirendra Mishra Judge ^•i^ ...4^/"" _- <''" /sT^ ^^.y/ \-^; ^•K^-^"' .^y7 X \. HIGH COURT OF CHHATTISGARH AT BILASPUR D.B. HON'BLE SHRI DHIRENDRA MISHRA. & HON'BLE SHRI R.N. CHANDRAKAR. JJ Appellant Versus Tax Case No. 182 of 2010 M/s MSP Steel & Power Ltd., Vill. Jamgaon, Dist. Raigarh, Chhattisgarh, 496 001, Through It's Director Sri Saket Agrawal, aged about 29 years, son of Sri Suresh Kumar Agrawal. Respondents The Commissioner, Central Excise & Customs, Raipur, Commissionerate, Central Excise Building, Dhamtari Road, Tikrapara, Raipur - 492 001, Chhattisgarh. Present: Shri Kartik Kurmi with Shri Dharmesh Shrivastava, Advocates for the appellant. Shri Bhishma Kinger, counsel forthe respondent/Revenue. ORDER (Passed on 25^February, 2011) PerDhirendra Mishra. J The appellant has preferredthis appeal under Section 35G of the Central Excise Act, 1944 (in short "the Act, 1944") against the order dated 7.1.2010 (Annexure P/7) of Customs, Excise & Service Tax Appellate Tribunal, New Delhi (in short "the Tribunal") on following substantial questions of law: "(a) Whether the Ld. CESTAT is right in confirming duty demand on 241.550 MT of Sponge Iron without tangible and cogent evidence, cross examination of Sri P.K. Sarkar, without confession of guilt and simply on the basis of loose sheets of unceriiain authorship and statement of Sri P.K. Sarkar who was not incharge offactory gate during the material period? (b) Whether the Ld. CESTAT is right in drawing presumption that 150.110 M.T. of Sponge Iron were cleared without payment of duty and not used captiveiy for manufacture of 102.093 MT of MS Ingots simply because no invoices for captive consumption U/r 11 were issued? \ V. (c) Whether the Ld. CESTAT is right in law in holding that defective excisable goods which are not marketable and kept on hold for inspection and recycling should be entered in the RG-1 (Daily Stock A/c) U/r10 and failure to do so would attract Rule 25 and warrant confiscation and levy of penalty in as much as no mens rea is required for invoking the said rule even though Rule 25 is subject to Sec. 11AC of the Act? (d) Whether the Ld. CESTAT was right in law in not dealing with their contentions that Appeal filed by the Department is not maintainable as there was no proper review and authorization in accordance with Sec. 35B(2)? 2. Briefly stated, facts of the case, as projected in the impugned order, are that the appellant is engaged in manufacture of sponge iron and MS ingots chargeable to excise duty under Chapter 72 of the Central Excise Tariff. A search was conducted in the appellant's premises and 150.110 MT of sponge iron was found short and 102 MT of MS ingotswere found in excess of the balance in the RG-1 Register. Some loose sheets (daily sheets) were found from security officer's room at the factory gate which contained details of dispatch of finished goods. Statements of Shri Sandeep Agrawal, AGM and Shri PK Sarkar, Chief Security Officer of the appellant company were recorded under Section 11 of the Act, 1944 and a show cause notice dated 3.8.2008 (Annexure P/1) was issued for confiscation of excess stock recovery of central excise duty with interest towardssponge iron found short under SectionllAB, for recovery of central excise duty for 241.55 MT of sponge iron clandestinely cleared on the basis of loose sheets and for imposition of penalty under Rule 25(1 )of the Central Excise Rules, 2002 read with Section 11AC of the Act, 1944. ^$ ^X, € 3. The Additional Commissioner, vide order-in-original dated 28.11.2006, confirmed the duty demand along with interest on MS ingots found excess and seized materials were confiscated with option to be redeemed on payment of redemption fine of Rs.3,00,000/- and penalty of Rs.50,000/- was also imposed under Rule 25(1) ofthe Rutes, 2002. 4. On appeal, the Commissioner (Appeals) upheld the demand of duty with interest on the shortage of 150.11 MT of sponge iron and imposition of penalty Rs.50,000/-. However, the duty demand on the basis of dispatch details in the loose sheets recovered from the security officer's room was set aside and confiscation of 102.09 MT of seized MS ingots and redemption fine in lieu of confiscation was also set aside. However, penalty of Rs.50,000/- for non-accounting of 102.093 MT of MS ingots was imposed. 5. While the appellant filed appeal against upholding of the duty demand and penalty of Rs.50,000/- by the Commissioner; the Commissioner of Central Excise, Raipur also preferred an appeal against dropping oftheduty demand on alleged clandestine clearing of sponge iron without payment of duty and setting aside of theconfiscation of 102.093 MT of MS ingots and also redemption fine in lieuof confiscation. 6. Learned Tribunal has disposed of the aforesaid appeals by the common impugned order in the following terms: (a) the part of the impugned order modifying the order-in-original is set aside, the order-in-original is restored and the Revenue's appeal No.2494/07- SM is allowed; and (b) the part of the impugned order upholding the duty demand on shortage of 155.11 MT of sponge iron and imposition of penalty of Rs.50,000/- on the Appellant is upheld and the Appellant's appeal No.E/2785/07-SM is dismissed. ^5^ •^y-^^^" "''^^.^^ \'.V. ^ L 7. Learned counsel for the appellant submitted that the appellant herein had challenged maintainability of the respondenfs appeal before the learned Tribunal on the ground that review ofthe order-in-appeal dated 31.5.2007 by the Committee of Commissioners was not made in accordance with Section 358(2) as there was no joint sitting and deliberations between the two members of the Committee. The two members of the Committee reviewed the order-in-appeal dated 31.5.2007 on two different dates i.e. 7.9.2007 and 10.9.2007 and thus, on none of these two dates, there was a valid Committee of Commissioners competent to review, as contemplated under Section 35B(2) and therefore, the respondenfs appeal and authorization to file appeal is illegal and unauthorized. Specific objection with regard to maintainability was taken by the appellant in para-10 of its written statement dated 5.10.2009 (Annexure P/6), however, the Tribunal has not cared to deal with the objection of the appellant regarding maintainability of appeal in the impugned order. Therefore, the substantial question of law, as framed in para-3(d,arises for adjudication ofthis appeal. 8. Reliance is placed on the decisions in the mattersof Commissioner of C. Ex. & Cus., Surat- Vs. Shree Ganesh Dyeing & Ptng. Works\ Commr. Of C. Ex; Cus. & Ser. Tax, BBSR-11 Vs. Anurag Ferro Products (P) Ltd.2 Commissioner of Central Excise, Meerut-1 Vs. Ram Prakash3 and Commr. OfC. Ex., Coimbatore Vs. Shree Karthik Papers Ltd.4. 9. On the other hand, Shri Bhishma Kinger, learned counsel for the respondenVRevenue, would argue that from perusal of the impugned order of Annexure P/7, itwould be evident that the Tribunal has decided the merits of the appellant's Central E. Appeal No.2785 of 2007-SM. The appeal preferred by the Revenue has not at all been considered and there is no ; 2008 (232) ELT 775 (Guj.) 2 2008 (230) ELT 51 (Tri.-Kolkata) 3 2010(19) STR 664 (Tri.-Del.) 4 2006 (206) ELT 384 (Tri.-Chennai) ^-?%^, ^.ras<^' y fit..-. '^ ^ 1 c YI-, ^.^-., ^^^.^^ x"^. fc' L adverse effects on the rights of the appellant's company on account of entertaining the Revenue's appeal and therefore, objection of the appellant based on Section 35B oftheAct, 19441s meaningless. 10. Heard learned counsel for the parties. 11. In the matters of Shree Ganesh Dyeing & Ptng Works , interpreting Section 35B(2) of the Act, it has been held that the formation of opinion, as contemplated in Section 35B(2) of the Act, is a mandatory requirement, which cannot be treated to be a procedural formality. In a given case, it would be always open to the Tribunal to call upon the department to point out to the Tribunal as to whether an opinion has or has not been formed by the Commissioners before appeal was preferred, either by Commissioner himself or by the aforesaid Commissioners. The formation of opinion by the Commissioner has to be prior to the point of time when the appeal is preferred. 12. In Anurag Ferro Products (P) Ltd.2, the Kolkata Tribunal, considering that the authorization for filing appeal was signed on two different dates by the members of the Committee of Commissioners, observed that on none of these two dates, there was any "committee" of two Commissioners nor they met to opine u/s 35B(2) of the Act to seek appeal remedy. 13. In the case of Ram Prakash3, the Principal Bench, New Delhi of the Tribunal also held that where the two members of the Committee signed authorization on two different dates, the same does not show that there was ad-idem and the review order suffers from legal infirmity. 14. Similar view has also been taken by the Tribunal at Chennai in the matters of Shree Karthik Papers Ltd.4 15. In the instant case also, the two members of the Committee of Commissioners reviewed the order-in-appeal dated 31.5.2007 on two tf' ^^ T;, 1 ^^ '••^ l. ""'t , :s^^'^ Cz^ ^. <:, different dates i.e. 7.9.2007 and 10.9.2007. There is no substance in the argument of Shri Kinger that the appellant is not affected by mere filing of the appeal by Revenue, as from perusal of the impugned order we find that the Tribunal allowed the Revenue's appeal and set aside the order of the Commissioner, whereby order-in-original was modified and the order-in- original was restored. From the impugned order, we find that the Tribunal has not even cared to consider the objection of the appellant with regard to maintainability of the Revenue's appeal. 16. In these circumstances, we hold that the substantial question of law, as proposed in para-3(d), is made out for adjudication of this appeal. Since the above question of law has not been dealt with by the Tribunal, we set aside the impugned order and remand the matter to the Tribunal to record a finding on the following limited question of law, after affording opportunity of hearing to the parties: "Whether the appeal filed by the Revenue was not maintainable as there was no proper review or authorization in accordance with Section 358(2) of the Act, 1944?" Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar Judge ^