Appeals - Why difference in provisions in Service Tax and Central Excise
Central Excise:
As per Section 35B(2) of the Central Excise Act, if the Committee of Commissioners is of the opinion that an order passed by the Commissioner (Appeals), is not legal or proper, it can direct any Central Excise Officer to appeal to the Tribunal.
As Section 35E(1), of the Central Excise Act, the Committee of Chief Commissioners of Central Excise may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Central Excise as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Central Excise in its order.
Customs:
As per Section 129A(2) of the Customs Act, if the Committee of Commissioners is of the opinion that an order passed by the Commissioner (Appeals), is not legal or proper, it can direct the proper officer to appeal to the Tribunal.
As per Section 129D(1) of the Customs Act, the Committee of Chief Commissioners of Central Excise may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Customs in its order.
Service Tax:
As per Section 86(2) of the Finance Act, 1994, if the Committee of Chief Commissioners objects to any order passed by the Commissioner of Central Excise under section 73 or section 83A, it can direct the Commissioner to appeal to the Appellate Tribunal against the order.
As per Section 86(2A) of the Finance Act, 1994, if the Committee of Commissioners objects to any order passed by the Commissioner of Central Excise (Appeals), it can direct any Central Excise Officer to appeal on its behalf to the Appellate Tribunal against the order.
Under all the three Statutes, what the Department is doing is appealing to the Tribunal against the orders of Commissioners or Commissioner (Appeals). But see the difference in procedure.
Appeals against orders passed by Commissioner (Appeals) | |||
Central Excise | Customs | Service Tax | |
|---|---|---|---|
1. | Committee should form an opinion that the order is not legal or proper. | Committee should form an opinion that the order is not legal or proper. | It is enough if the Committee objects to any order. Legality and propriety are not issues |
2. | Committee can direct any Central Excise Officer to appeal to the Tribunal. | Committee can direct the proper officer to appeal to the Tribunal. | Committee can direct any Central Excise Officer to appeal to the Tribunal. |
Appeals against orders passed by Commissioner (Jurisdictional) | |||
1. | Committee may of its own motion, call for and examine the record of any proceeding… | Committee may of its own motion, call for and examine the record of any proceeding… | The Law does not state how the order will reach the Committee. |
2. | Review is for the purpose of satisfying itself as to the legality or propriety of the Order. | Review is for the purpose of satisfying itself as to the legality or propriety of the Order. | It is enough if the Committee objects to any order. Legality and propriety are not issues |
For identical purposes why can't they have identical law? This is what happens when Revenue officers try their hand in law making. However loosely or carelessly they are worded, they go to Parliament and get the strong imprint of the Parliament of India and is applied with respect by the courts.
Why should there be satisfaction of legality and propriety in Central Excise and Customs and only objection in Service Tax?
And what is your problem if there are different yardsticks?
Please see the details in the following case.
In Kundalia Industries - , the Delhi High Court held that there should be a meaningful consideration which should be reflected on the note sheets in order to comply with the requirement of Section 35B(2) and since the Commissioners simply signed on the notesheets, the Revenue Appeal was dismissed.
Relying on the above decision, the CESTAT dismissed a Revenue Appeal in LR Sharma & Co.- 2013-TIOL-944-CESTAT-DEL. The Tribunal observed that as pointed out by the High Court, mere appending of signature on the departmental note file in a mechanical fashion does not constitute sufficient compliance with the clearly implied statutory obligation of due application of mind by the Commissioners comprising the committee.
But this was a Service Tax case and the Revenue had argued that:
Under the Central Excise Act, the committee if of the opinion that an adjudication order or an appellate order is not legal and proper may direct preferring of an appeal to the Tribunal. Section 86(2) of the Act enjoins that the committee, if it objects to an adjudication order, may direct an appeal to be preferred to the Tribunal. In view of the difference in the language of the two distinct provision conferring discretion on the committee under the different enactments, even if Chief Commissioners (DZ& CZ) in the present case had merely appended their signatures (on 14.07.2012 and 23.07.2012) the respective office notes, there is sufficient compliance of Section 86(2).
See how the difference was used. But the Tribunal was not impressed.
Revenue will not accept a dismissal that easily and they went to the High Court.
This time around, the High Court too agreed that there is a difference. The High Court found that Kundalia was of no assistance to the assessee as it concerned authorization under Section 35 of the Central Excise Act, 1944 (requiring the Chief Commissioners to be of the opinion that the order in question is illegal and improper, as opposed to only objecting to the order under Section 86(2)). ()
And the assessee's appeal was dismissed in the Supreme Court. See () & ().
So, the Law is in Customs or Central Excise, the Committee should be satisfied that the order under review is not legal and proper, if they want to appeal. But in Service Tax, a mere objection is enough - even if they feel that the order is legal and proper, just for the fun of it, they can decide to appeal!
Ease of doing business?
(PS: all the differences are not highlighted. To avoid confusion, reference to Principal Chief Commissioner and Principal Commissioner is avoided.)