TIOL-DDT 1317 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"
"http://www.w3.org/TR/html4/loose.dtd">
<html>
<head>
<title>Untitled Document</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
</head>
<body>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1317 </font><br>
12.03.2010 <br>
Friday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner
(Appeals) divested of Power to remand cases - Board's Instructions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 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<strong> <em>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</em></strong>, after taking additional evidence, if necessary. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the amendment in 2001, the said provisions in the relevant statutes read as follows:- </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“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.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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 <em>CCE , Ahmedabad -I vs. Medico Lab <font size="1"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2004/2004-TIOL-39-CESTAT-DEL.htm">2004-TIOL-39-HC-GUJ-CX</a>)</strong></font></em>. 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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Subsequently, the Punjab & Haryana High Court in the case of <em>CC, Amritsar vs. Enkay (India) Rubber Co. Pvt. Ltd <font size="1"><strong> (<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2007/2007-TIOL-152-HC-P-H-CUS.htm">2007-TIOL-152-HC-P&H-CUS</a>)</strong></font></em> 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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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 <em>Umesh Dhaimonde<strong> <font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2002/2002-TIOL-415-SC-CUS.htm">2002-TIOL-415-SC-CUS</a>)</font></strong></em> 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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in the case of <em>MIL India Ltd <font size="1"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2007/2007-TIOL-30-SC-CX.htm">2007-TIOL-30-SC-CX</a>)</strong></font></em>] vide judgment dated 01.03.2007 in Civil Appeal No. 6988/2005 has observed, </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“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.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The said decision of the Supreme Court was brought to the notice of CESTAT in the case of <em>CCE , Jallandhar vs. Hawkins Cookers Ltd. reported in [2007 (8) RLT 7]</em> , 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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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 . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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 <strong><em>such further enquiry</em></strong> 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. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We came across a live case as we were working on this<strong> DDT</strong>, 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 (<em><strong>please see <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/cestat/2010/2010-TIOL-392-CESTAT-MAD.htm" target="_blank">2010-TIOL-392 - CESTAT-MAD</a></font></strong></em>) . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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?</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner
(Appeals) not utilizing power to make further enquiries – Board's directions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 35A of the Central Excise Act, 1994 prescribes the procedure in appeal to be followed by Commissioner (Appeals) while deciding the appeals filed before him under Section 35/ 35E of the Central Excise Act 1944. Similar provisions exist under Section 128A of the Customs Act, 1962 and Section 85 of the Finance Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 35A (3) of the Central Excise Act, 1994 reads as follows- </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The Commissioners(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;” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, Rule 5(4) of Central Excise (Appeals) Rules, 2001 provides that nothing contained in the said rule shall affect the power of Commissioner (Appeals) to direct the production of any document, or the examination of any witness to enable him to dispose of the appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has noted that Commissioner (Appeals) are not resorting to the mechanism of further enquiry as provided to them under the statutes, in such cases where it may be necessary, before passing the orders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the provisions contained in Section 35A (3) of Central Excise Act and the rules made there under, Board directs that the Commissioners (Appeals) should resort to enquiry in such appeals as may be necessary, in the facts and circumstances of the case before passing a just and fair order in accordance with the provisions of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/instruction10_001.htm" target="_blank">CBEC Letter F.No.275 /34/2006- CX.8A , Dated: February 18, 2010</a></strong> <strong>with Annexure vide <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/instruction10_001.htm" target="_blank">Letter F.No . 275/34/2006- CX.8A , Dated: July 25, 2008</a> </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Love
interest smuggled into USA in Hockey Bag </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE
</strong>USA Customs
and Border Protection Field Operations officials based at Alexandria Bay,
New York Port of Entry, intercepted a SUV belonging to two US female citizens,
who were returning to the United States after visiting their friends in Montreal,
Canada. On inspecting the cargo area of the SUV, the officials found several
pieces of luggage and a large hockey bag. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the hockey bag, the officials found a male Haitian National, who was earlier
ordered deportation from the US in the year 2006, but fled to Canada. One
of the US Citizens admitted during questioning that she had been dating the
Haitian national for four years and she attempted this unlawful entry with
the intention of marrying that person. All the three were arrested by the
US CBP officials for violating various provisions of US law. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Monday's cases</font></strong></font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><strong><font color="#663399">Income Tax </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether profits earned by an assessee from its parent company in USA for providing recruitment and training services to software professionals qualifies for deduction u/s 10A of Act or not - ITAT by majority held that it is eligible for deduction u/s 10A . </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> departmental representative assailed the order of CIT( A) on various grounds. Inter alia , it was argued that the assessee is only engaged in recruitment and training of personnel for its parent company in USA and this activity does not come under the purview of eligible items for deduction u/s 10A of the Act. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Settlement Commission has no jurisdiction to decide questions of law and facts- Dough cleared to institutional buyers for free supply, not covered under MRP valuation: High Court. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Division Bench observed that the assessee may approach the Settlement Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed by him before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as to the applicability of a provision of law, like the one in hand wherein the issue centres around the applicability of whether Section 4 or Section 4-A of the Central Excise Act. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Spent Palladium Catalyst is not excisable - Prima facie case in favour of appellant – Pre-deposit waived and stay granted in respect of duty and penalty: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> lower authority has demanded duty of over Rs.65 lakhs from the appellant for the period November 2003 to January 2007 in respect of “<em>Spent Palladium Catalyst</em>” cleared by them. According to the Revenue, this item is classifiable under heading 26.20 of the CETA , 1985. The natural consequence followed - the demand was confirmed by CCE , Mumbai III with loads of penalty. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend. </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
</body>
</html>