Commissioner (Appeals) divested of Power to remand cases - Board's Instructions
SECTION 35A (3) of the Central Excise Act, 1944 / Section 128A (3) of the Customs Act, 1962 as it existed prior to 11.5.2001 provided that Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass such orders, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the adjudicating authority with such direction as he may think fit for a fresh adjudication or decision as the case may be, after taking additional evidence, if necessary.
An amendment was brought out in the aforesaid provisions of the statutes vide Finance Act, 2001 with effect from 11.5.2001 with an intention to withdraw the statutory powers available to Commissioner (Appeals) to remand cases for fresh adjudication to the original adjudication authorities.
After the amendment in 2001, the said provisions in the relevant statutes read as follows:-
“The Commissioner (Appeals) shall, after making such further enquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against.”
But, many Commissioners ( Appeals) did not really give effect to the above amendment and continued to remand the cases to the original authorities. The revenue was taking up the cases to higher levels on the ground that the Commissioner ( Appeals) did not have the power to remand the cases after the amendment in 2001.
The issue of whether the Commissioner (Appeals) still had the powers to remand cases beyond 11.05.2001 came up for judicial scrutiny before the Gujarat High Court in the case of CCE , Ahmedabad -I vs. Medico Lab (). The Gujarat High Court vide order dated 21.09.2004 held that Commissioner (Appeals) continues to have the power to remand cases even after the said amendments.
Subsequently, the Punjab & Haryana High Court in the case of CC, Amritsar vs. Enkay (India) Rubber Co. Pvt. Ltd () vide order dated 08.03.2007 had held that the Commissioner (Appeals) have been divested of the power to remand cases back to adjudicating authority after amendment to Section 35A (3) of Central Excise Act vide an amendment made through Finance Act, 2001.
The P & H High Court distinguished the judgment of the Gujarat High Court rendered in Medico Labs case and stated that the reliance on Supreme Court judgment in the case of Umesh Dhaimonde () cannot be made, as in that case, the Supreme Court was not dealing with the provisions where earlier power of remand was specifically conferred and subsequently taken away by an amendment carried out through Finance Act, 2001.
The Supreme Court in the case of MIL India Ltd ()] vide judgment dated 01.03.2007 in Civil Appeal No. 6988/2005 has observed,
“in fact, the power of remand by the Commissioner(Appeals) has been taken away by amending Section 35A with effect from 11.5.2001 under the Finance Bill, 2001. Under the Notes to clause 122 of the said Bill it is stated that clause 122 seeks to amend Section 35A so as to withdraw the power of the Commissioner (A) to remand matters back to the adjudicating authority for fresh consideration.”
The said decision of the Supreme Court was brought to the notice of CESTAT in the case of CCE , Jallandhar vs. Hawkins Cookers Ltd. reported in [2007 (8) RLT 7] , but the Tribunal held that the Supreme Court in the said case had only noted the provisions of amended law whereas the specific issue as to whether Commissioner(A) has the power to remand after the amendment to provisions of Section 35A has been considered by the Gujarat High Court in the case of Medico Lab wherein it was held that the Commissioner (A) has the power to remand under the amended provisions also.
The appeal (CEA No.29 /2008) filed by CCE , Jallandhar against the said order of CESTAT in Hawkins Cookers case before the P & H High Court, urging that the said observations of Supreme Court in MIL India Ltd case as quoted above are a part of the ratio decidendi of the decision of Supreme Court, has been allowed by the P & H High Court vide order dated 14.7.2008 relying on its own judgement in the case of CCE , Jallandhar Vs. B.C. Kataria .
In the light of the observations of Supreme Court in MIL India Ltd and the judgments of Punjab & Haryana High Court in Enkay (India) Rubber Co. Pvt. Ltd., M/s. B.C. Kataria and Hawkins Cookers Ltd, the Board directs that the Commissioner (Appeals) should follow the said judgments strictly.
Board further directs that Commissioner (Appeals) should note that the Supreme Court in the case of MIL India Ltd while noting that the powers of remand had been taken away, had also categorically stated that the Commissioner (Appeals) continue to exercise the power of adjudicating authority in the matter of assessment and that the Commissioner (Appeals) can add or subtract certain items from the order of assessment made by the adjudicating authority and such orders from the Commissioner (Appeals) could also be treated as an order of assessment. In this regard, Board's instructions dated 25.07.2008 on the subject (annexed to these instructions) may be referred to.
But, why can't the Board be a little tolerant on remand of cases by Commissioner ( Appeals)? The Commissioner ( Appeals) offices do not have the sufficient manpower or resources to play the role of an original adjudicating authority to make such further enquiry and decide the cases afresh. What is wrong in remanding a few cases? Now, the effect of the present instructions would be that the Commissioner (Appeals) instead of remanding the cases where the orders-in-original are passed in violation of principles of natural justice can simply set aside the orders.
We came across a live case as we were working on this DDT, where the Commissioner (Appeals) had set aside the order-in-original on the ground that the principles of natural justice were violated. The CESTAT has remanded the case to the original authority with the observation that “the Commissioner (Appeals) should have remanded the case instead of setting it aside”. So, finally the case came back to the original authority through CESTAT (please see 2010-TIOL-392 - CESTAT-MAD) .
And by giving such directions to the Commissioner (Appeals) is the Board not interfering in the quasi judicial functions? What will be the consequences if even after these instructions, a Commissioner (Appeals) remands a case?
Why does it take so long for the Board to react to the orders passed by the Courts or Tribunals for issuing instructions to the field formations?