Grace period to Committee of Chief Commissioners for passing review orders - an unhealthy trend
By TIOL News Service
NEW DELHI: JULY, 10, 2014: IN terms of section 35E of the CEA, 1944, the Commissioner of Central Excise is empowered to review an order passed by an adjudicating authority subordinate to him. Similarly, the Committee of Chief Commissioners is empowered to review an order passed by a Commissioner of Central Excise.
The section mandates that this review order is made within a period of three months from the date of communication of the decision or order of the adjudicating authority.
Based on this review order, the adjudicating authority or the authorized officer is required to file an application (appeal) to the CESTAT or the Commissioner(Appeals) within a period of one month from the date of communication of this review order.
What happens if the Committee of Chief Commissioners does not observe the mandatory time limit of 3 months for passing of the review order?
Whether the review order passed after 3 months is illegal?
These were the questions which were answered by the Larger Bench of CESTAT in the case of C ommissioner of Central Excise Vs. Monnet Ispat& Energy Ltd. - (2010-TIOL-1133-CESTAT-DEL-LB).
The Larger Bench held –
Central Excise - Departmental appeal to Tribunal - Review by Committee of Chief Commissioners - Tribunal has power to condone delay in filing appeal: The Tribunal has ample power to condone the delay in filing the appeal including the one filed under section 35 E (4) of the said Act. The period which can be condoned in relation to filing of the appeal under section 35 E (4) of the said Act would include the period availed by the review committee in terms of section 35 E (1) or 35 E (2) of the said Act. As regards the appeals by the Department in terms of section 35 E (4), the same should be filed within one month from the date of communication of the order under sub-section (1) or sub-section (2) of the said section but not beyond four months from the date of communication of order of the adjudicating authority to the review committee. In case there is any delay in this regard, the same can be condoned in exercise of powers under section 35 B (5), on being satisfied about sufficient cause for such delay and power to condone the delay would include the period availed under section 35E (1) or (2) by the reviewing committee to decide about filing of the appeal.
Incidentally, the Single Member Bench in the case of CCE, Delhi-III, Gurgaon vs. Kap Cones [2012-TIOL-1301-CESTAT-DEL] refused to follow this decision of the Larger Bench. He held that the Tribunal has no power to validate and revive such invalid and ineffective order. To arrive at such a conclusion the SMB relied on the apex Court decision in M.M.Rubber Co. [ 2002-TIOL-111-SC-CX ], which, incidentally, the Larger Bench had held to be of no help to the case in hand.
Also see 2012-TIOL-105-SC-CUS.
Be that as it may, sensing that this issue may turn into a calamitous one in the coming days, the Central Government has provided a leeway by proposing an amendment to section 35E of the CEA, 1944.
The amendment by clause 97 of the Finance Bill, 2014 reads –
In the Central Excise Act, in section 35E, in sub-section (3), the following proviso shall be inserted, namely –
"Provided that the Board may, on sufficient cause being shown, extend the said period by another thirty days."
Similar amendment is proposed in section 129D of the Customs Act, 1962.
Incidentally, sub-section (3) in section 35E reads –
[(3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.]
Whereas order under sub-section (1) refers to an order passed by the Committee of Chief Commissioners, order under sub-section (2) refers to an order passed by the Commissioner as a reviewing authority.
So, will this "extension"not be applicable to both orders?
Perhaps, the answer lies in the negative as the TRU communication F.No. 334/15/2014-TRU dated 10.07.2014 says – "Section 35E is being amended to insert a proviso in sub-section (3) to vest the Board with powers to condone delay for a period upto 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the Commissioner of Central Excise."
And what about Service Tax and why are similar amendments not made to section 35B of the CEA, 1944 & 129A of the Customs Act, 1962 concerning orders passed by the Committee of Commissioners?
