RSA/2/2009 of The Commissioner of Central Excise and Service Tax, Siliguri Commissionerate, Siliguri Vs Ms Mount Distilleries Ltd on 7 March 2011

JUDGMENT

This is to consider an appeal under Section 35(G) ofthe Central Excise Act, 1955 read with Section 83 of the Finance Act, 1994, filed by the appellant, the Commissioner of CentralExcise and Service Tax, Siliguri Commissionerate, challenging thefinal order No. A-41/KOL/09 dated 09.01.2009 passed by theCustoms, Excise and Service Tax Appellate Tribunal, East ZonalBench, Kolkata (CESTAT in short) in Service Tax Appeal No.161/2008 whereby the CESTAT disposed of the departmentalappeal ruling that the order dated 19.07.2007 passed by theDeputy Commissioner sanctioning the refund of the Service andEducation Cess amounting to Rs. 96,955/- was valid and,therefore, sustained.

The brief facts of the case are that, the respondentM/S Mount Distilleries Ltd., an. assessee registered with RangpoRange (under Gangtok Division) of Siliguri Central Excise &Service Tax Commissionerate under Section 69 of the FinanceAct 1994, had filed a refund application in Form-R under Section118 of the Central Excise Act,1994 as made applicable to servicetax under Section 83 of Ch.apter V of the Finance Act, 1994, tothe Deputy Commissioner of Central Excise, Gangtok Division,claiming refund of Rs. 96,995.00 paid by them in excess of``taxable services" in relation to ``transportation of their goods byroad in goods carriage provided by Goods Transport Agencies"during the period from October, 2005 to September, 2006. It isstated that the refund sanctioning authority, i.e., the Deputy Commissioner of Central Excise, Gangtok Division, afterconsideration of the refund claim, held that the respondent wasentitled to the refund as sought for in terms of Section 11(8)(2)of the Central Excise Act, 1944 read with Section 83. of ChapterV of the Finance Act, 1994 vide his refund sanction order dated01/ST/GTK/07 dated 19.07.2007.

It is stated that in course of review of the aboverefund sanction order of the Deputy Commissioner of CentralExcise, Gangtok Division, under Section 84 of the Finance Act,1994, the Commissioner of Central Excise, SiliguriCommissionerate, vide his Order-in-Review dated 10.12.2007,held that the said refund sanction order dated 19.07.2007 wasneither legal nor proper and, accordingly, directed and authorizedthe Assistant Commissioner, Central Excise, Gangtok Division, tofile an appeal under Section 85 of the Finance Act, 1994 againstthe said refund sanction order dated 19.07.2007 before theCommissioner (Appeals-IV), Central Excise, Kolkata, on variousgrounds.

The Assistant Commissioner of Central Excise,Gangtok Division, accordingly filed an appeal in Form ST-4before the Commissioner of Central Excise (Appeals-IV), Kolkata,under Section 85 of Chapter V,1994 on 14.12.2007 praying for modification of the refund sanction order dated 19.07.2007.However, since the period of limitation of three monthsprescribed for filing of such appeal before the Commissioner(Appeals) prescribed under Section 85(3) of the Finance Act,1994 had expired, an application for condonation of such delaywas also filed along with the appeal before the AppellateCommissioner praying for condonation of delay of about 35 daysin filing the appea'l.

It is the case of the appellant that the Commissioner(Appeals-IV), Kolkata, re].ected the appeal as being barred bylimitation holding that the Commissioner (Appeals-IV) was notempowered to condone delay beyond 90 days by erroneouslyrelying upon the ratio of the ].udgment of the Tribunal in the caseoF Mayor Steel Corporation vs. C. C. Ahmedabad reported .in2004 (167) ELT 107 (T). On examination of the said order inappeal by the Committee of Commissioners, constituted in termsof Section 86 of the Finance Act, 1994, vide its order dated13.08.2008, directed and authorized the Assistant Commissioner(A&R), Central Excise, Siliguri Commissionerate to file an appealunder Section 86(2A) of the Act before the CESTAT, EZB,Kolkata, against the impugned decision of the Commissioner(Appeals). Accordingly, the Assistant Commissioner filed anappeal before the CESTAT, EZB, Kolkata, as directed by the Committee of Commissioners praying, inter alia, for setting asidethe impugned order in appeal dated 21.07.2008 passed by theCommissioner (Appeals) and for restoratio.n of the Departmentalappeal before it. The CESTAT upon hearing dismissed the appealby its order dated 09.01.2009 thereby upholding the originalorder of the Deputy Commissioner of Central Excise allowingrefund to the respondent. It is this order that the present appealis directed against.

In the appeal before this Court, the appellant hassought to assail the impugned order of the CESTAT on thefollowing grounds: -

(i) That the CESTAT acted in excess of its

I.urisdiction and enlarged the scope of the appeal suo moto, indeciding that (i) the earlier appeal of the department against therefund order in original dated 19.07.2007 made under Section 85of the Finance Act, 1994, First Appellate Authority, i.e.,Commissioner (Appeals), could not be sustained as being beyondthe statutory prescription; and

(ii) that it was wrong on the part of the CESTAT tohold that the order-in-review passed by Shri C. M. Mehra dated10.12.2007 directing and authorizing the Assistant Commissionerof Central Excise, Gangtok Division to file the said appeal before the Commissioner (Appeals) could not be sustained as the saidShri C. M. Mehra had no authority to act as the Commissioner ofCentral Excise, Siliguri, having not been so appointed by theBoard as required under the law as laid down in the decision ofthe C:ESITRT .in the case oF CCE, Siliguri vs. M_all Eximp Pvt. Ltd.

7. It has.been urged that since the above two questionshad not been raised by either of the parties, and, therefore, nosuch dispute at all existed, the CESTAT had no ].urisdiction to gointo those questions. As per the appellant, the I.urisdiction andpower of the Tribunal is restricted only to decide such issueswhich are properly raised before it. The CESTAT committed agrave error in failing to consider the issues that were broughtbefore it in the appeal, namely, (a) whether the Commissioner(Appeals) had erred in holding that he had no power to condonedelay beyond 90 days in filing appeals in Service Tax mattersand (b) as to whether or not the Commissioner (Appeals) wasvested with the power to condone the delay to the extent ofthree months under the proviso to Section 85 (3) of the FinanceAct, 1994. It is stated that the CESTAT had wrongly gone intoareas extraneous to t:he appeal, thereby misdirecting itself inpassing the impugned order dated 09.01.2009.

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8. Apart from the above, certain additional grounds havealso been pleaded in assailing the impugned judgment of theCESTAT which are briefly set out below:- (a) The Commissioner (Appeals) has wrongly interpreted the provision of Service Tax Laws and erroneouslyplaced reliance on a case law relating to customs matters todecide the issue of limitation in filing appeal in service taxmatters before the Commissioner (Appeals).

(b) The CESTAT had committed an error in not appreciating that the earlier appeal of the department before theFirst Appellate Authority against the refund sanction order-in-original dated 19.07.2007, was filed under Section 85 of theFinance Act, 1994 and not under Secti'on 84 of the said Act aswrongly observed by the Tribunal.

(c) In any case under Section 85 of the Finance Act, 1994 it is permissible for any person, aggrieved by any decisionof the ad].udicating authority subordinate to the Commissioner ofCentral Excise, to appeal to the Commissioner of Excise(Appeals), thereby rendering redundant and superfluous theorder of Shri C. M. Mehra, Commissioner of Excise, Si!iguri, withthe consequence that the order of the CESTAT holding that the order of the said Shri C. M. Mehra as unauthorized and a nullity,became non-est and of no effect.

(d) That in any case, it was an error for the CESTAT torely upon an erroneous decision of the Tribunal in the. case ofCCE, Siliguri vs. Mall Eximp Pvt. Ltd., a dects.ion under challengein Appeal (FMAT) No. 1703 of 2008 before the Calcutta HighCourt to hold that Shri C. M. Mehra, the then Commissioner ofCentral Excise, had no authority to act as Commissioner ofCentral Excise, Siliguri, having not been so appointed by theboard and that he ought not to have directed and authorized theAssistant Commissioner to file an appeal in his order-in-reviewdated 10.12.2007.

(e) That the said order-in-review dated 10.12.2007

having been passed legitimately by the said Shri C. M. Mehra,Commissioner of Central Excise, Siliguri Commissionerate withinhis competence, the finding of the CESTAT to be contrary waserroneous, and, therefore liable to be set aside.

9. Based on the above facts and circumstances, whichare shorn of details considered irrelevant by this Court, thefollowing questions have been formulated, that are stated to besubstantial questions of law:-

A. Whethertheorderdated 9/1/2009 passed bythe.

Hon'ble Tribunal (CESTAT) is perverse for notdeciding the question of limitation.deciding the question of limitation.

8. Whether the Hon'ble Tribunal has suo-motoenlarged the scope of controversy and disposedoff the instant departmental appeal by way ofdeciding uncalle-d, unurged and extraneousissues only, not at all placed before it by theparties for consideration.enlarged the scope of controversy and disposedoff the instant departmental appeal by way ofdeciding uncalle-d, unurged and extraneousissues only, not at all placed before it by theparties for consideration.

C. Whether the Tribunal has misdirected itself in not deciding the issue of condonation ofdelay/limitation raised before it and also beforethe Commissioner (Appeals).delay/limitation raised before it and also beforethe Commissioner (Appeals).

10. The respondent-Company filed a counter-affidavit rais`ing preliminary objection as to the maintainability of theappeal on the ground:

(i) that the present appeal is barred by the law oflimitation having been filed a delay of 77 days;limitation having been filed a delay of 77 days;

(ii) that the impugned order having been passed bythe CESTAT withi.n the permissible limits of the law,the CESTAT withi.n the permissible limits of the law, the infirmity being pointed out to assail it cannot besustained; and

(iii) that the appeal does not involve any substantialquestion of law.

11. Before dealing with the merits of the case, it may benoted that the Memorandum of Appeal was accompanied by anapplication for condonation of delay which was duly consideredand allowed by this Court by an order dated 10.06.2010, onlyafter which the case was admitted for hearing.

12. Mr. A. Moulik, learned Senior Advocate on behalf ofthe appellant submitted that the CESTAT, East Zonal Branch,Kolkata had acted in excess of its ].urisdiction in the appeal filedby the appellant before it as it went into the questions that werenever raised before it and by ignoring the only question raisedbefore it in the Memo of Appeal. It was submitted that the onlyquestion raised in the appeal was as to whether the impugnedorder of the Commissioner (Appeals) dated 21.07.2008 holdingthat he had no power to condone the delay beyond 90 days andthat the appeal having bee.n filed in excess of that period, couldnot entertained by him. It is stated that instead of confining tothat question being the question for determination before it, the i:=`.I

CESTAT had gone into other questions that were extraneous,namely: - (a) whether the power of the Commissioner of Exciseacting under Section 84 of the Finance Act, 1994 wasinvested with the powers to authorize filing of anappeal and answ:ring in negative; and (b) the question as to the validity of the order of Shri C.M. Mehra, who was holding the charge ofCommissioner of Excise, Siliguri Commissionerateauthorizing the Assistant Commissioner to file anappeal.

13. Mr. Moulik submitted that even if it is to be consideredthat those questions did arise before the CESTAT, the decisionwas erroneous for the following reasons: -

(i) that the appeal of the department filed beforethe first appellate authority against the Refund Sanction Order-in-Original dated 19.07.2007 was under Section 85 (3) of theFinance Act, 1994 and not as per the provision of Section 84 aserroneously observed by the CESTAT. In other words, it is thecase of the appellant in this appeal that notwithstanding theprovision under Section 84 a distinct right of appeal was available aC,S``

C)

to the department under Section 85 which is clearly revealed bythe opening words of Section 85 (1) ``any person aggrieved byany decision or order ........ " . It is further submitted that Section85 (1) when considered as a whole clearly provided for anindependent right of appeal.

(ii) In sofarasthe incapacity ofshri c. M. Mehra,Commissioner, Siliguri Commissionerate is concerned, it hasbeen urged that the finding was grossly erroneous as it wasbased upon an earlier decision of CESTAT in the case of GCE,Siliguri vs. Mall Eximp Pvt. Ltd., a decjis7ion which was underchallenge in an appeal before the Calcutta High Court in Appeal(FMAT) No. 1703 of 2008, which is pending decision.

14. Mr. Moulik referred to a large number of decisions insupport of his contention that the amplitude of the power of thetribunal is circumscribed by the subject matter of the appealwhich is born out by the Memorandum or grounds of Appeal. Inorder t:o avoid repetition and prolixity, we may mention some ofthe cases v.iz., M/s Trojan & Co. vs. RM. N. N. Nagappa ChettiarA:lF` ±953 SC 235 (Para 22.)', Raruha Singh vs. Achal Singh andothers AIR 1961 SC 1097 (Para 7); and A.i. Rajchart.a vs.Income Tax Officer and others (±977) ±07 FTF` 347 (Gal).

15. Mr. Zangpo Sherpa, learned Advocate representingthe respondent-Company on the other hand submitted that theCESTAT had passed the order under challenge after dulyconsidering the appeal and upon hearing the parties before itand, therefore, had acted in I.ust and appropriate mannerrendering the impugned judgment legally valid and passed withinthe power veste.d in it by law. It was further submitted that theTribunal, as the final authority to go into the finding of facts, hasthe inherent power to consider all aspects for rendering completejustice and that it was wrong to submit that the Tribunal shouldconfine itself only to the grounds of appeal raised before it.Such being the position, it was urged that the merits of thefinding on the scope of Section 84 of the Finance Act, 1994 andthe validity of the order of Shri C. M. Mehra, Commissioner ofExcise, Siliguri Commissionerate authorizing the department tofile appeal under Section 85 of the Finance Act,1994 was valid inthe eyes of law.

16. Mr. Sherpa referred to the decision of theCommissioner of Income Tax, Madras vs. The Mahalakshmirexfj-/e W;.//s Ltd. AIR 1968 SC 101 (Para 4), which we mayreproduce hereunder:

``(4) By the first question the jurisdiction of theTribunal to allow a plea inconsistent with the

plea raised before the Departmental authoritiesis canvassed. Under sub-section (4) of Section33 of the Indian Income-tax Act, 1922, theAppellate Tribunal is competent to pass suchorders on the appeal ``as it thinks fit''. There isnothing in the Income-tax Act which restricts theTribunal to the determination of questions raisedbefore the departmental authorities. Allquestions whether of law or of fact which relateto the assessment of the assessee may be raisedbefore the Tribunal. If for reasons recorded bythe Departmental authorities in rejecting acontention raised by the assessee, grant of reliefto him on another ground is ].ustified, it would beopen to the departmental authorities and theTribunal, and indeed they would be under a dutyto grant that relief. The right of the assessee torelief is not restricted to the plea raised by him."

17. The above fa.cts and circumstances and the submissions in my view would be sufficient for the purpose ofdisposal of the appeal and, therefore, this Court shall restrictitself only to those. On careful consideration of the pleadings ofthe parties, the rival contentions placed by the .learned counsels,the records available before this Court and the legal positionobtaining in the field, this Court is of the view that the appeal hasno merit for the reasons stated hereafter.

18. On careful examination of the impugned order ofCESTAT there can be no manner of doubt that it not onlyconsidered the sole ground of appeal of the Department but alsothe soundness of order of Commissioner, SiliguriCommissionerate dated 10.12.2007 as the Department had ®

raised that question during the course of their arguments. Thisis apparent from the following portions of the impugned orderdated 09.01.2009 passed by the CESTAT:

``2.

The Commissioner (ADDeals) has Passed theimDuaned Order dated 21.07.08 reiectina theADDeal filed bv the Department holdina th-at hehas no Power to condone the delay bavond 90djrys± Th ereafter, a Co in in ittee ofCom.missioners comprising Shri Jai Prakashpurportedly holding the additional charge ofCommissioner of Central Excise, SiliguriCommissionerate and Shri V. K. Goel holding thecharge of Service Tax, Kolkata Commissioneratehave authorized filing of the present Appeal tothe Tribunal.

The

araument of the learned J.C.D.R. that underSe-ction 84 of the Finance Act, 1994, theCommissioner can authorize filina an aDDeal, isnot supported either by a specific provision oflaw or b-y the practice followed throughout thecount.ry.

(emphasis supp.lied)

19. From the above, it can be reasonably inferred thatre].ection of the` application for condonation of delay and,therefore, the appeal were questions that had been raised beforethe CESTAT. It can also be reasonably inferred that thesoundness of the order dated 10.12.2007 passed by Shri C. M.Mehra directing filing of ar` appeal to the Commissioner (Appeals)had also been urged by the department and considered by the CESTAT. Therefore, it cannot be said that the impugned ordersuffers from the vice of perversity, a consideration relevant in anappeal of the present kind which in substance is a second appeal.

As regards the point raised on behalf of the appellantthat the conclusion of the CESTAT that Shri C. M. Mehra,Commissioner, Siliguri Commissionerate, was bereft of theauthority and ].urisdiction to direct filing of appeals being basedon an erroneous decision of the CESTAT in the case of CCE,Siliguri vs. Mall Eximp Pvt. Ltd. .is concerned, th-is Court .is Of theview that so long as that decision is not set aside and/or stayedby the appellate forum, in this case said to be the Calcutta HighCourt, the position of law shall continue to prevail. It is nowheresaid that the said decision of the Commissioner, Central Excisehas been stayed by the Calcutta High Court iin the appeal againstthe decision, being Appeal (FMAT) No. 1703 of 2008 which is saidto be pending decision by that Court. The CESTAT, therefore,cannot be faulted for having relied upon the impugned order ofGCE, Siliguri vs. Mall Eximp Pvt. Itd.

20. Under such circumstances, it is difficult to accept theargument of Mr. Moulik that the CESTAT had gone into thequestions that had never been raised before it and that it hadoverlooked the sole contention in the appeal of the department that the rejection of application for condonation of delay by theCommissioner (Appeals) was erroneous in law.

21. The judgment in the case of the waha/akshm/. Text/./eW/.//s Ltd. (supra) cited by Mr. Zangpo Sherpa fully supports theabove view. No doubt, the decision was rendered in respect ofsub-Section (4) of Section 33 of the Income-tax Actj 1922, butthe words used in that provision, namely, ``pass such orders onthe appealas it t:hinks fit" is in-verbatim the words used inSection 35C of the Central Excise Act, 1944, sub-section (1) ofwhich may be reproduced below: - ``35C. Orders of Appellate Tribunal -(1) The Appellate Tribunal may, aftergiving the parties to the appeal anopportunity of being heard, Pass suchorders thereon as it thinks fit, confirming,modifying or annulling the decision or orderappealed against or may refer the caseback to the authority which passed suchdecision or order with such directions asthe Appellate Tribunal may think fit, for afresh adjudication or decision, as the casemay be, after taking additional evidence, ifnecessary.

(emphasis supplied)

22. In the case of A, i. Rajghar/.a (supra) referred to Mr.Moulik, the Calcutta High Court has referred to the followingpassage of the Chief Justice in the case of Comm/.ss;.oner ofIncome-tax vs. Calcutta Discount Company Ltd. E1971|E 82 FTFt941 (Gal): - ``The above decisions of the different HighCourts in India establish beyond doubt thatthe word `thereon' in section 33(4) isrestricted to the subj.ect-matter of theappeal before the Tribunal and the subiect-matter of the aDDeal consists of-thememorandum or c]rounds of apDeal„ theadditional Grounds: if any, allowed bv theTribunal, aF`d the Grounds, if any, uraed bvor on behalf of thE3 respondent, to s-uDDortthe order under appeal. If the Tribunal,therefore, does not allow a particularground to be urged, that ground can neverbe included in or considered to be part ofthe .subject-matter of the appeal."

(emphasis supplied)

23. From the above decisions of the Apex Court and theCalcutta High Court, we find that while deciding an appeal, theCESTAT is not restricted by the grounds set out in theMemorandum of Appeal alone, but also possesses the necessary].urisdiction to entertain additional grounds allowed to be raisedby the Tribunal and the grounds urged, if any, by a party.

24. The decisions cited by Mr. Moulik are of no assist:anceto him as they are based upon facts that were `in lis' in thosecases and would not be applicable to the facts and circumstancesof the present one.

25. In the above facts and circumstances; the questions oflaw raised and which have been extracted above are answered asunder: -

(i) (Questions A and C taken up together as they aresubstantially the same.)

A. Wheth`erthe order dated 9/1/2009 passed bytheHon'ble Tribunal (CESTAT) is perverse for notdeciding the question of limitation.Hon'ble Tribunal (CESTAT) is perverse for notdeciding the question of limitation.

and

C. Whether the Tribunal has misdirected ,itself innot deciding the issue of condonation ofdelay/limitation raised before it and also beforethe Commissioner (Appeals).not deciding the issue of condonation ofdelay/limitation raised before it and also beforethe Commissioner (Appeals).

Answer: In view of the impugned order of the CESTATrelevant portion of which is set out in paragraph 17 Qf this].udgment, the answer to those questions are in the negative. Itis held that those questions were duly considered by the CESTAT,

(ii) 8. Whether the Hon'ble Tribunal has suo-motoenlarged the scope of controversy and disposedoff the instant departmental appeal by way ofdeciding uncalled, unu.rged and extraneousissues only, not at all placed before it by theparties for conside-ration.

Answer: Paragraph 3 of the impugned order of theCESTAT clearly reveals that the question as regards thecompetence of the Commissioner to authorize filing an appealwh'ile acting under Section 84, had been raised by the/

department and by virtue of the powers conferred under Section35C of the Central Excise Act, 1944 and in the light of theI.udgment in the cases of the Comrr7/.ss/.or7er of Jr7come Tax,Madras vs. The Mahalakshmi Textile Nlills Ltd. A;1F` ±968 SC ±01and Commissioner of Income-tax vs. Calcutta Discount Company ifd, [1971][ 82 ITR 941 (Cal), it is held that the Tribunal canenlarge the scope of controversy under the said provision ifurged by the parties and allowed by the Tribunal, which appearsto be so in the facts and circumstances of the case.

26. In the above facts and circumstances, I find no meritin the appeal.

27. In the result, the appeal is dismissed and the order ofthe CESTAT stands hereby confirmed.

No order as to costs.

Acting Chief Justice07.03.2011

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