By TIOL News Service

MUMBAI, FEB 14, 2017: APPELLANT is franchisee of M/s Pepsi Foods Ltd. selling aerated drinks to a marketing agency, M/s Amit Agency, and, on the premise that the latter is a dummy front, central excise authorities sought to saddle the depreciation of the fixed assets of M/s Amit Agency, as well as a margin of profit of 15%, on the assessable value of the products cleared by the appellant for the period from March 1994 to December 1994.

SCN proposed recovery of differential CE duty of Rs.32,35,373/- out of which the AA confirmed only Rs.7,73,422/-.Both, Revenue and assessee went in appeal before the Tribunal. Appeal of assessee was disposed of on 18th October 2000 by way of remand and that of Revenue was disposed of on 11th August 2004 with the same directions as in assessee appeal.

Even before the remand was ordered on appeal of Revenue, the AA ( probably unaware of his own appeal against the first order proceeded to adjudicate the matter afresh without awaiting the outcome of his own appeal ), in denovo proceedings, passed an order on 28th June 2002 confirming the demand of Rs.7,30,377/- and imposinga penalty of Rs.1,00,000/-. This order, apparently, has not been challenged by Revenue, or by assessee, thus according it finality.

Interestingly, the AA has also passed the impugned order dated 30 November 2005 pursuant to the directions for a denovo adjudication made by the Tribunal (on 11 August 2004) in Revenue appeal.

This order has taken note of the first order of the Tribunal as well as the order passed thereon by the adjudicating authority. Of the amount in dispute as originally computed, i.e. Rs.32,35,373/- the impugned proceedings confirmed Rs.24,09,256/- for April-December 1994 and Rs. 2,23,411/- for March 1994 as recoverable. Incidentally, this order has also subsumed the de novo order issued subsequent to appeal of assessee.

The assessee-appellant is before the CESTAT.

It is submitted that the second proceedings leading to the impugned order is without legal authority as it has revisited the assessable value arrived at in the de novo order arising from appeal of assessee. While conceding that the order of 2002 was limited to the components in enhancement of value that were agitated by assessee, it was contended that the valuation of ‘aerated drinks' for the entire period of dispute had been decided therein and a fresh valuation was in violation of all canons of judicial property.

The Bench (quipped - issue for determination is whether an adjudication order can, in the manner natural to protozoa, split into two ) noted -

+ There are two orders of the Tribunal in relation to the same dispute. This in itself, though improbable, may not necessarily be an impossibility. The existence of two determinations of assessable value for the same sets goods is not in consonance with judicial propriety or Central Excise Act, 1944.

+ The second order of the Tribunal has set aside an order of the original authority which was itself non-existent by having been set aside earlier. With the first occurrence of setting aside, the order impugned in appeal of Revenue ceased to exist and the remand order was consequently unenforceable. More so, as at the time of the remand, a fresh order, though unbeknownst, to the bench, substituting the earlier was already in existence. That order continues to exist even today and covers the period of dispute in entirety. Hence, the validity of an order arising out of the second remand is doubtful.

+ The Commissioner who issued the order in 2005 was well aware of the existence of the order of 2002 and that it had, by lack of any appeal thereto, attained finality. Another order re-determining the value of the goods covered in the earlier order is, therefore, without sanction of law. Moreover, by incorporating the duty determined by the order of 2002 in the order now impugned before us, he has, in effect, accepted that order. With such implied acceptance, he was in error in supplementing the order of 2002 with his own findings to enhance the assessable value.

+ Doubtlessly, it was the Tribunal that did order the second de novo proceedings, but it occurred after conclusion of the first and without nullifying that de novo order. That, from a perusal of the order, was not a deliberate course of action that was adopted but a consequence of less than adequate assistance from both sides of the bar. The adjudicating authority, fully aware that their own appeal was, as yet, pending for disposal in the Tribunal should have awaited disposal of that appeal before taking up the adjudication. Even when the second order was in possession of the adjudicating authority, and being cognizant of the first de novo order, appropriate clarification should have been sought from the Tribunal.

Conclusion:

++ Not having taken corrective steps, the consequences must follow, as surely as night follows day. The impugned order is rendered a nullity and the merits in a null order is beyond the scope of consideration in this appeal.

++ The appellant is discharged of the detriment flowing from the impugned order.

The Appeal was disposed of.

(See 2017-TIOL-426-CESTAT-MUM)