Can CESTAT condone delay in order passed by Committee of Chief Commissioners?

By Vijay Kumar

THIS was the issue in a case decided by the Supreme Court yesterday. A little recap on the statutory position:

This is how Revenue has to appeal if it is aggrieved by an order of a Commissioner of Central Excise.

1. As per Section 35E(1), the Committee of Chief Commissioners has to examine the order for the purpose of satisfying itself as to the legality or propriety of the decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal.

2. The Order of the Committee directing the Commissioner has to be passed within a period of three months from the date of communication of the decision or order of the Commissioner. (By an amendment in 2014, the Board was given the power to extend this period by another thirty days)

3. The Commissioner has to make an application within a period of one month from the date of communication of the order of the Committee.

What happens if the Committee passes an order after the stipulated three months? Can the CESTAT condone this delay.

The facts in the present case were:

Here the Commissioner had filed the appeal within one month of receiving the Committee's order, but the Committee's order itself was delayed by 8 days. Can the Tribunal condone this delay?

The Tribunal followed the decision of the Supreme Court in the case of Commissioner of Central Excise Vs. M.M. Rubber Co. - 2002-TIOL-111-SC-CXwhere it was held that - ‘when a time limit is prescribed in Section 35E (1) of the Central Excise Act for review of an order, any order issued after expiry of this limitation period would be invalid and ineffective'. The Tribunal held that when an order passed by the reviewing authority after expiry of the limitation period is invalid and ineffective and since such an order is a pre-requisite for filing appeal before the Tribunal, there is no question of condonation of delay. 2012-TIOL-1301-CESTAT-DEL

Interestingly there was a decision of the Larger Bench of the Tribunal in CCE v. Monnet Ispat & Energy Ltd. - 2010-TIOL-1133-CESTAT-DEL-LB, wherein the Tribunal held that it had ample power to condone the delay in filing the appeal including the one filed under Section 35E(4).

The Single Member who decided the present case held that the decision of the Larger Bench was contrary to the law laid down by the Apex Court in the case M.M. Rubber Co. Ltd. And so dismissed the application for condonation as well as the appeal.

The High Court, on appeal by Revenue, confirmed the order of the Tribunal dismissing the condonation petition.

Revenue took the matter to the Supreme Court. The Supreme Court agreed with the analysis of the Larger Bench,

"The Tribunal has ample power to condone the delay in filing the appeal including the one filed under Section 35E(4) of the said Act. The period which can be condoned in relation to filing of the appeal under Section 35E(4) of the said Act would include the period availed by the review committee in terms of Section 35E(1) or 35E(2) of the said Act. As regards the appeals by the Department in terms of Section 35E(4), the same should be filed within one month from the date of communication of the order under sub-section (1) or sub-section (2) of the said section but not beyond four months from the date of communication of order of the adjudicating authority to the review committee. In case there is any delay in this regard, the same can be condoned in exercise of powers under Section 35B(5), on being satisfied about sufficient cause for such delay and power to condone the delay would include the period availed under Section 35E(1) or (2) by the reviewing committee to decide about filing of the appeal."

Supreme Court allowed the Revenue Appeal and remanded the matter to the Tribunal to hear the Condonation of Delay petition on its merits.

While allowing the Revenue appeal Supreme Court passed mild strictures on the Tribunal - "the members deciding the lis by the impugned order should have kept themselves abreast to the Full Bench decision of the tribunal so that there would not have been two views as regards the same proposition."

Perhaps nobody informed the Supreme Court that the Tribunal Member was very much aware of the Larger Bench decision and he did not follow it as he thought that the LB Decision was contrary to the Supreme Court decision on the subject.

Twist in the Tale: while reporting the Single Member decision in 2012-TIOL-1301-CESTAT-DEL, we concluded with:

Judicial discipline & LB decision?

- Interestingly, the present decision is passed by a Single Member Bench who has observed that the LB decision is contrary to the law laid down by the apex court in M.M Rubber (supra). Incidentally, in the proceedings before the LB, the Revenue representative had relied on the Apex Court decision in M.M.Rubber (supra) to which the Larger Bench remarked - "The background and the circumstances in which the said decision was arrived at, no more exist, apart from the total change in the statutory provision on the relevant aspect. M.M. Rubber's case, therefore, is of no help in the case in hand. [para 22]."

We bring you this judgement today. Please see Breaking News