Fate of Adjudication Orders in favour of revenue but apparently not legal and proper
In the recent Conference of Chief Commissioners and Director Generals held on May 29-30, 2008 with great pomp and ceremony and addressed by the Finance Minister [Refer and 877] , one of the decisions taken was that Adjudication Orders passed by the adjudicating authorities in favour of Revenue but which are apparently not proper and legal can also be taken up for review by the Chief Commissioners/Commissioners. Now after a lapse of two months, CBEC has addressed to the Chief Commissioners of Customs and Central Excise formations to solicit their views on the matter.
In the intervening period, Mumbai Tribunal also had an occasion to deliberate on a very similar issue in Associated Film Industries Pvt Ltd & Others Vs. CCE, Mumbai –V [] wherein the Tribunal held that when the Commissioner drops proceedings in a show cause notice, the findings arrived at on the issues agitated in that notice will get buried with the dropped proceedings irrespective of the fact that the findings are in favour of revenue and the proceedings in the show cause notice were dropped on the ground of limitation.
The essence of this judgment is that adjudicating authorities cannot base their decisions on the previous orders on similar/identical matter on the assumption that this was already in their favour by virtue of some finding in an order when the entire SCN gets washed away by dropping the proceedings. Unless the issue is further agitated by either of the parties at the appellate level and legality of the issue is decided one way or the other, mere findings in an order dropping the proceedings in a show cause notice cannot become a binding precedent for the subsequent litigations.
If the orders are in favour of the revenue, but not legal and proper, obviously the assesses will take up the issue in appeal. Will the Revenue also help the appellant to win his case?
Now with the CBEC calling for comments on this issue once again, it is a foregone conclusion that the field formations will agitate the issues further and Tribunals will be saddled with even cases where proceedings are dropped at the lower levels.
CBEC Letter F.No. 275/55/2008-CX.8A Dated: July 28, 2008