Can Commissioner (Appeals) Remand?
THIS is a 13-year-old dispute.
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 these 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. And the Tribunal in many cases agreed that the Commissioner (Appeals) did not have the power to remand, but since the Tribunal had such power, the Tribunal regularly remanded the matter to the Original Adjudicating Authority. What really happened was one more stage of appeal and unnecessary expenditure for the assessees.
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."
CBEC in its letter F.No. , Dated: February 18, 2010 requested the Chief Commissioners to instruct the Commissioners(Appeals) to follow these judgements strictly. The Board also wanted the Chief Commissioners to bring to the notice of the Appellate Commissioners that the Supreme Court in the case of MIL India Ltd., while noting that the powers of remand had been taken away, has also categorically stated that the Commissioner (A) continues to exercise the power of adjudicating authority in the matter of assessment and the Commissioner(A) can add or subtract certain items from the order of assessment made by the adjudicating authority and the order of Commissioner (A) could also be treated as an order of assessment.
Remand is sometimes unavoidable and making a Law against remand may not be all that wise a decision.