the untouched capture · TIOL-DDT 542

TIOL-DDT 542 · the untouched capture
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<p align="justify"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 
  542</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
  31.01.2007<br>
  Wednesday</b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Landmark 
  judgement from Chennai CESTAT - Departmental Appeal to the Tribunal – Committee 
  of Commissioners – Board circular invalid </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 
  Finance Act 2005 amended the Central Excise Act and Customs Act to provide for 
  a review of orders by Commissioners by a Committee and this Committee is to 
  take a decision whether to file an appeal with the Tribunal or not. The orders 
  of Commissioners are to be reviewed by a Committee of two Chief Commissioners 
  and the orders of Commissioner (Appeals), are to be reviewed by a Committee 
  of two Commissioners. What happens if there is a difference of opinion between 
  the two Commissioners? DDT asked this question in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1274">DDT 
  66 -<u> 2 3 2005</u>.</a><b> </b>After nearly a year, Board gave a clarification 
  in Circular No. 824/2006 dated 6.2.2006. To start with, we had pointed out that 
  there was already another circular with the same number. So this circular number 
  was changed to 825/2006 by Circular No. 826/2006. Coming back to the Circular, 
  Board clarified that appeal has to be filed even if one of the two commissioners 
  had decided not file the appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3271">DDT 
  300</a></u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3271"> 
  on 10.2.2006</a> said,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board’s clarification is 
  a master piece.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Board says that it has 
  <b>decided</b>, “When two members take a common view to file an appeal or not 
  to file an appeal, there would be no difference of opinion and the same would 
  be followed.” What a brilliant discovery, decision and conclusion!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <i>“In a rare case when 
  two member take different views that is one member takes a view to file an appeal 
  and the other member opposes it the decision should be to file an appeal.”</i> 
  Why should this be a <b>rare</b> case? Does the Board believe that no Commissioner 
  has the guts to take a decision not to file an appeal and it is only in a rare 
  case that such a decision would be taken? And when one member has taken a decision 
  not to file an appeal how can it be held that the decision <b>is</b> to file 
  an appeal?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is the Board trying to influence 
  the Committee of Commissioners? Is the Commissioner who has taken a decision 
  not to appeal required to pass an order that on going through the order he has 
  come to the conclusion that the order is not proper and legal and so the department 
  must file the appeal, because the Board has directed him to pass such an order?.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The more important legal 
  question is “Is the Board’s circular legally valid</b>?” Section 35B(2) stipulates 
  that the committee of Commissioners if it is of the opinion that an order passed 
  by the Commissioner (Appeals) is not legal and proper, direct and authorise 
  a Central Excise Officer to appeal against the order. So it is very clear from 
  the Section that it is the <b>committee</b> of Commissioners who should form 
  the opinion and not one member of the committee. If the Board wants appeal to 
  be filed even without the approval of both the members, it should get the law 
  amended and not issue a Circular. <b>Board certainly cannot usurp the powers 
  of the Parliament and amend the Act by a circular.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DDT</b> is happy to report 
  that the Chennai bench of the CESTAT, in a classic landmark order, has virtually 
  struck down the Board Circular. The Tribunal in no uncertain terms held that 
  the Board had no power to issue such a circular.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Unanimity in the Committee: 
  </b>The Tribunal held that Parliament did not contemplate any difference of 
  opinion amongst the Commissioners in the Review Committee and hence did not 
  make provision for resolving such differences. Nor did the law-makers authorize 
  the Board to make any such provision.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>No casting Vote for the 
  Board: </b>This situation is somewhat analogous to the presiding officer of 
  a legislative assembly casting his own vote when the pro-Government and Opposition 
  votes are equal in number. But the Board has no 'casting vote' in relation to 
  proceedings of a Review Committee inasmuch as it is not a part of the said Committee 
  and has no power to review orders of appellate Commissioners.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Circular is without legal 
  basis:-  </b>The Board's circular was issued without legal sanction and militates 
  against Section 35B(2)/129A (2) and cannot be given effect to.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Breaking News and 
  the full text of this remarkable judgement in <b><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2007/2007-TIOL-143-CESTAT-MAD.htm">2007-TIOL-143-CESTAT-MAD</a></font><u>.</u></b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Committee 
  of Commissioners – No remote review – sit together and decide</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The above case had other 
  interesting aspects. Our bureaucracy is determined to frustrate any progressive 
  actions of the government and Parliament. Why was it made mandatory for a Committee 
  of Commissioners to review an order? Obviously to ensure that frivolous appeals 
  are not filed as two officers are more prone to a rational decision than one! 
  But whatever law you make, the good bureaucracy will find a way to wriggle out 
  of it.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How does the Committee function? 
  We tried to find out. There are two situations:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. When both the Commissioners/Chief 
  Commissioner are in the same city</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. When they are in different 
  cities.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Case1:</b> Both the Commissioners 
  are in the same station. The order of the Commissioner goes to the Tribunal 
  section where an inspector decides whether the order is to be appealed against. 
  It goes through Superintendent, Assistant Commissioner, Joint Commissioner, 
  and reaches the Commissioner who all sign on the note sheet. Then the file goes 
  to the other Commissioner member of the Committee who also signs it and Lo! 
  And behold! The Committee has taken a decision. The Jurisdictional Commissioner 
  signs a review order and directs an Assistant Commissioner to file an appeal 
  and the appeal is filed in the Tribunal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Case 2:-</b> The Commissioners 
  are in different stations and they have decided that they are bored with trips 
  to the other station. So the order is sent to the second member of the Committee 
  and he gives his opinion. Then the file is put up to the jurisdictional Commissioner 
  who gives his opinion and the appeal is filed! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Tribunal has called 
  a halt to this patent and flagrant violation of the legislative intent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this case the Commissioner,Salem, 
  a member of the Committee sitting in Salem on 30.1.2006 decided that appeal 
  has to be filed. Two days later on 1.2.2006, the Commissioner, Trichy acting 
  as Commissioner, Coimbatoredecidedthat no appeal needs to be filed. Was this 
  what Parliament meant by a Committee of Commissioners? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed, The 
  law-makers expected the members of the Review Committee to sit together, examine 
  the case records, deliberate, discuss and converge to a view on the question 
  whether the appellate Commissioner's order was legal or proper. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal found that 
  the decision taken by the Commissioner (Salem) on 30.1.2006 to file appeal against 
  the appellate Commissioner's order or the opposite decision taken on 1.2.2006 
  by the other member of the Committee cannot be accepted as decision of the Review 
  Committee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Review is not an empty formality 
  but a solemn responsibility and please don’t frustrate it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT has, over the 
  years, grown into a highly respected judicial organisation and decisions such 
  as this would certainly enhance its prestige. The CESTAT is the <b>hope </b>in 
  the Pandora’s Box in a system that is in shambles. </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>How
      long  does it take for a Board circular to reach Coimbatore from Delhi
      ? More than a  month!</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
    are not finished with  the case yet. How long does it take for a circular
    to reach Coimbatore from  Delhi? Five weeks! according to the Commissioner,
    Coimbatore. In the time chart  attached to the application for Condonation
    of Delay in the appeal mentioned  above,  the Commissioner says that he received
    the Board Circular dated 6.2.2006  on 13.3.2006 that is after five weeks
    of issue. Even if it was sent through  a pigeon, it would have reached earlier.
    We carried a detailed analysis of the  Circular in DDT on 10.02.2006. The
    Commissioner was not aware of the Circular  till 13.3.2006 that is more than
    a month after we carried it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe logging on to <b>TIOL</b> 
  makes good economic sense.  </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gandhigiri</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><img src="http://www.taxindiaonline.com/RC2/image/stories/gandhi.jpg" width="119" height="142" border="1" align="left"></b>This 
  man died 59 years ago but is still relevant not only in <st1:country-region><st1:place>India</st1:place></st1:country-region> 
  but also the rest of the world. Prime Minister Dr. Man <st1:PersonName>Mohan</st1:PersonName> 
  Singh said, Mahatma Gandhi was the “most modern thinker” of the 20th century, 
  whose political philosophy was centred on empowering every individual irrespective 
  of caste, class, creed, orcommunity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Emphasising the timeless 
  relevance of his ideas, Singh identified Gandhiji’s statement on the “Earth 
  providing enough for everyone’s need, not greed”, as one such idea. “Concern 
  for environment that now envelopes civil society across the globe is best articulated 
  by this simple statement. He called for a “new development paradigm” that caters 
  to everyone’s need and “can keep in check human greed”.</font></p>
<p align="justify"><br>
  <font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
  Until  tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have 
  a nice day. </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></span></font></p>



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