TAXAP/1513/2006 1/11 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No.1513 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HON'BLE SMT. JUSTICE ABHILASHA KUMARI Sd/- =================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO =================================================== COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, SURAT-II - Appellant(s) Versus M/S. SIDDHARTH PETRO PRODUCTS LTD. & 1-Opponent(s) =================================================== Appearance : MR HARIN P RAVAL for Appellant(s) : 1, MR PARESH M DAVE for Opponent(s) : 1, RULE SERVED for Opponent(s) : 2, =================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HON'BLE SMT. JUSTICE ABHILASHA KUMARI Date : 13/11/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) TAXAP/1513/2006 2/11 JUDGMENT (1) This appeal was admitted on 18.10.2007 and the following substantial question of law was formulated at the time of admission: “Whether the Commissioner who is directed by Central Board of Excise and Customs to file appeal under Section 35E(1) read with Section 35E (4) of the Central Excise Act, 1944, validly authorise the Superintendent (Appeals), Central Excise and Customs to present such appeal to the Appellate Tribunal, and will the appeal so presented be maintainable or not? (2) However, after hearing the learned advocates appearing for both the sides the Court finds it appropriate to reformulate the question as under: “Whether on the facts and in the circumstances of the case provisions of Section 35E(1) of the the Central Excise Act, 1944 permit any other person, other than the Commissioner of Central Excise, who is directed by Central Board of Excise and Customs to make an application under Section 35E(1) of the Act to the Appellate Tribunal, to make such an application ?” (3) It appears that a show cause notice dated 31.03.1998 came to be issued by Commissioner, TAXAP/1513/2006 3/11 JUDGMENT Central Excise & Customs, Surat-I (the Commissioner) to the respondent-assessee. After considering the reply tendered vide order dated 31.08.1998 the Commissioner dropped the proceedings initiated by the show cause notice. The Board called for the record of the proceedings and, in exercise of powers under Section 35E(1) of The Central Excise Act, 1944 (the Act), directed the Commissioner to apply to the Appellate Tribunal for determining such points arising out of the decision or order of Commissioner as were specified by the Board in its order so directing the Commissioner. The application was presented before the Tribunal. (4) When the matter was taken up for hearing by the Tribunal the Bench, originally hearing the matter, felt that there was a conflict of opinion rendered by various Benches of the Tribunal and hence, reference was made to a Larger Bench on the following question: TAXAP/1513/2006 4/11 JUDGMENT “Can the Commissioner who is directed by the Central Board of Excise & Customs to file appeal under Section 35E(1) read with Section 35E(4) of the The Central Excise Act, 1944, validly authorize the Superintendent (Appeals) Central Excise and Customs to present such application (appeal) to the Appellate Tribunal, and, will the appeal so filed be maintainable or not?” The Larger Bench held that: “6. In this case, it is not a question of mere presentation of an appeal. The appeals have been filed by a Superintendent (Appeals) and filing of an appeal is certainly cannot be a ministerial function, but a substantive function, which cannot be further delegated to any other officer by the Commissioner, who is the officer to whom a direction was given by the Board under Section 35E(1).” (5) Thereafter, in the immediately succeeding Paragraph, namely, Paragraph No.7 the reference is answered by stating that the Commissioner, who is directed by the Board, cannot validly authorise Superintendent to present such application to the Tribunal and the appeal will not be maintainable. (6) The Bench, which passed the order originally, TAXAP/1513/2006 5/11 JUDGMENT in conformity with the decision of the Larger Bench, dismissed the appeal as not maintainable on 20.01.2006, has also repeated the same error as can be seen from the observations made in Paragraph No.1 and Paragraph No.2 of the said order. (7) In fact if all the three orders are seen, commencing from the order of the Division Bench making the reference to Larger Bench, the Tribunal has used the terms “file” and “present” an appeal by equating both the terms and interchanging the same without realizing that the two terms inherently have different connotation and cannot be either equated or interchanged. Section 35E(1) of the Act reads as under: “Section35E. Powers of Board or [Commissioner of Central Excise] to pass certain orders. --- (1) The Board may, of its own motion, call for and examine the record of any proceeding in which a [Commissioner of Central Excise] as an adjudicating authority has passed any decision or order under this Act for the purposes of satisfying itself as to the legality or TAXAP/1513/2006 6/11 JUDGMENT propriety of any such decision or order and may, by order, direct such [Commissioner] [or any other Commissioner] to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order. (8) On a plain reading it becomes apparent that the Commissioner of Central Excise who has exercised powers as an adjudicating authority is the Commissioner whose decision/order is examined by the Board and thereafter the Board directs such Commissioner, namely, the Commissioner who exercised powers as an adjudicating authority, to apply to the Tribunal. The application to be so made by the Commissioner is for the determination of such points arising out of the decision/order of the Commissioner as may be specified by the Board in the order made by the Board. Therefore, what has to be verified by the Tribunal on examination of the application so made is as to who is the applicant, namely, who is the signatory to the application. Physical presentation of the application could TAXAP/1513/2006 7/11 JUDGMENT be by any one for which no authorization is necessary. In fact the application could be sent by post also. Therefore, who presented the application is an irrelevant factor and the Tribunal has misdirected itself in law in placing emphasis on the factum of the presentation of the application by the superintendent. (9) Similarly, reliance on provisions of sub- section (4) of Section 35E of the Act by the Tribunal is also misplaced. The said provision comes into play only after the application made by the Commissioner is received by the Registry of the Tribunal. Thereafter, for the sake of administrative and procedural convenience, the Statute has deemed that such an application shall be treated as an appeal for all intents and purposes. In other words, the procedural requirement of registering an appeal, hearing of an appeal, right to file cross-objections, disposal of the appeal, etc. and the provisions dealing with these TAXAP/1513/2006 8/11 JUDGMENT requirements are by implication incorporated in the present section by virtue of sub- section (4) of Section 35E of the Act. But from that the application made under sub- section (1) of Section 35E of the Act cannot be equated to an appeal for the purposes of a substantive right. Neither sub-section (1) nor sub-section (2) of Section 35E of the Act in fact use the term “file” or “present”, the only requirement being that the Commissioner should apply to the Appellate Tribunal for determination of the points specified by the Board in its order. The Tribunal was therefore, required to ascertain and verify from its own record as to who was the applicant, the signatory to the application, and not be concerned with who physically / actually presented the papers of the application. (10) There is one more aspect of the matter. The case of the respondent-assessee has all along been that the Commissioner had erroneously TAXAP/1513/2006 9/11 JUDGMENT authorized the superintendent to file the appeal. It was therefore, all the more necessary for the Tribunal to ascertain factually whether the superintendent had filed the application, namely, signed the application or whether it was the Commissioner who had signed the application. The Tribunal has also committed an error in law in reading Section 35E(2) of the Act by presuming that the powers available under the said provision can also be exercised by the Commissioner while discharging duty under Section 35E(1) of the Act. The powers available to the Commissioner under sub-section (2) of Section 35E of the Act are not available to the Commissioner to be exercised for complying with the directions of the Board under sub- section (1) of Section 35E of the Act, because the powers available under sub-section (2) of Section 35E of the Act are only in relation to an order made by an authority subordinate to the Commissioner, namely, an adjudicating TAXAP/1513/2006 10/11 JUDGMENT authority subordinate to the Commissioner against whose order an application could be preferred before Commissioner (Appeals) and not before the Tribunal. Therefore, while complying with the directions of the Board under sub-section (1) of Section 35E of the Act the Commissioner could not have exercised powers available under sub-section (2) of Section 35E of the Act. (11) In these facts and circumstances of the case, the Tribunal has committed an error in law in not recording the finding as to whether the Commissioner had or had not complied with the requirement of sub-section (1) of Section 35E of the Act by making application himself. The Tribunal has misdirected itself by considering the act of physical presentation of the application as against considering the correct applicant. In the result, the question is answered in the negative. (12) The Tribunal shall now decide the application TAXAP/1513/2006 11/11 JUDGMENT (appeal) afresh which shall stand restored to its file, after ascertaining whether the Commissioner is the applicant or some other person is the applicant. Needless to state that if any other person, other than the Commissioner to whom directions have been issued by the Board, is the applicant the application shall not be maintainable. However, if the Commissioner is the applicant but actually the application is presented by some other person, the application shall be dealt with on merits by the Tribunal. (13) The appeal stands disposed of accordingly. There shall be no order as to costs. Sd/- [D. A. MEHTA, J] Sd/- [SMT. ABHILASHA KUMARI,J] *** B h a v e s h *