Improperly Constituted “Committee of Chief Commissioners of Central Excise” Costs Revenue its Appeal

Commissioner of Central Excise Ahmedabad-II Vs M/s Ankit Textiles & Others decided on 24th October, 2014

The Commissioner C.Ex, Ahmedabad-II dropped the proceedings under a notice issued to M/s Ankit Textiles by order dated 10th/15th February 2006. Under the current provisions of section 35E, the revenue was  enabled to file an appeal against such an order passed by the Commissioner C. Ex. Ahd II. The relevant portion of the section reads :


“Section 35E. Powers of Committee of Chief Commissioners of Central Excise or Commissioner of Central Excise to pass certain orders.—
 
(1) The Committee of Chief Commissioners of Central Excise  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 purpose of satisfying itself as to the legality or 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 Committee of Chief Commissioners of Central Excise  in its order.”

Thus before filing an appeal against an order passed by an officer in the rank of a Commissioner of Central Excise,  three pre-requisites should be met. They are :

1.    The “Committee of Chief Commissioners of Central Excise” should examine the records and if not satisfied with the legality or propriety of the order, may direct the Commissioner to apply (file appeal) to the Tribunal to determine the points arising from the review by the Committee.

2.    The Committee of “Chief Commissioners of Central Excise” is the one notified in terms of Notification No.24/2005-CE(NT), dt.13.05.2005 which will review the order.  The purpose of this provision is to ensure that appeals are not routinely filed by the

3.    The expression “Committee” seems to imply that the Chief Commissioners of Central Excise on the Committee will meet and review the legality and/or propriety of the order and determine the points if any for directing the Commissioner to file an appeal .

Quite obviously, these provisions were introduced (in 2005) to make the review process robust and ensure that appeals are filed judiciously and not routinely against orders of Commissioners. Also, to prevent frivolous appeals being filed based on recommendations by the lower formation, at least two Chief Commissioners (as notified to form the committee) have to deliberate and decide on the legality and propriety of the order of the Commissioner being reviewed.  Further this is not a review by a single Chief Commissioner or even two Chief Commissioners individually/separately but as a Committee.

In this case, the notified “Committee of Chief Commissioners of Central Excise” were the Chief Commissioner of Central Excise Ahmedabad and Chief Commissioner of Customs Ahmedabad. However, when the review took place, it was conducted and order was by Chief Commissioner of Central Excise Ahmedabad and Chief Commissioner of Central Excise Vadodara. Thus there was no participation by Chief Commissioner of Customs Ahmedabad who was the authorised Chief Commissioner.

The respondents naturally raised a very crucial point that the “Committee” was not authorized by the notification to review the order and hence the appeal emerging from the order is not maintainable. The second observation by the Tribunal is that the two Chief Commissioner have signed the order on different dates. This indicates that they did not meet even on a single day. On these two grounds the revenue appeal was dismissed as not maintainable without going into other aspects.

 

The following points emerge from this Tribunal Order :

1.    It is strange that a Committee of Chief Commissioners sitting in judgement on the legality and propriety of Commissioners’ orders are themselves ill informed / have not read or considered the notification which constitutes them as a “Committee”. The “Committee” therefore passes an unmaintainable order.

2.    How many such orders have been passed so far by the same Committee of Chief Commissioners? What will be the fate of these orders already passed? Will appeals pending against such orders before the Tribunal be dismissed? What if some of the appeals have already been decided by Tribunal without considering the point that this Committee is “unauthorized”. What does the revenue intend to do?

3.    Are there other “unauthorized” Committees elsewhere in the country passing such unmaintainable orders? What is the Central Board of Excise & Customs doing about this?

4.    Section 35E uses the expression “Committee of Chief Commissioners of Excise”, however the notification proceeds to notify the “Chief Commissioner of Customs Ahmedabad”  as forming the Committee for Excise. There seems to be an incongruity between the expression used in the section 35E and the notification. Was this the cause of the confusion?

5.    Unlike in appeals apparently there are no provisions for condoning delays of review.  Otherwise a fresh review of the order may have been resorted to. What do the revenue authorities intend to do?