2009 (2) TMI 540 - AT - Central Excise

Summary

Issues:
1. Review of earlier order by Commissioner directing payment of duty under compounded levy scheme.
2. Validity of subsequent order directing payment of duty on Ad-valorem basis.
3. Authority of Commissioner to review own order.
4. Applicability of Section 35E of Central Excise Act, 1944.
5. Legal implications of abrupt change in decision by Commissioner.

Analysis:
1. The main issue in this case revolves around the Commissioner's authority to review his earlier order directing the assessee to pay duty under the compounded levy scheme. The Commissioner (Appeals) granted benefit to the assessee by emphasizing that a decision taken by an authority cannot be changed without proper direction from a superior authority. The Commissioner had initially directed the appellant to pay duty under specific provisions, which remained applicable until a subsequent order was issued, changing the payment method. The abrupt change in decision, though aligned with the appellant's view, was challenged based on legal precedents indicating that the Commissioner lacked the power to review his own order.

2. The subsequent order by the Commissioner, communicated through a Joint Commissioner's letter, required the appellant to pay duty on an Ad-valorem basis instead of the compounded levy scheme. This change was deemed a nullity in law as the Commissioner did not follow the prescribed procedure under Section 35E of the Central Excise Act, 1944. The Commissioner's second order, which effectively reviewed his earlier decision, was considered incorrect in the eyes of the law, and the appellant's challenge was upheld based on established legal principles.

3. The judgment highlights the significance of Section 35E of the Central Excise Act, 1944, which outlines the procedure for changing an order passed by the Commissioner. The failure to adhere to this procedure rendered the subsequent order invalid in law. The decision also references a previous case to support the argument that the Commissioner's order could have been applicable only prospectively, in line with judicial precedent.

4. The legal analysis underscores the importance of following established procedures and legal principles in administrative decisions, especially concerning the review of orders by competent authorities. The judgment emphasizes that a Commissioner lacks the authority to unilaterally review his own order without proper direction from a superior authority, as prescribed by law.

5. In conclusion, the judgment upholds the Commissioner (Appeals)'s decision to set aside the impugned order and allow the appeal, based on a thorough examination of legal precedents and procedural requirements. The Revenue's appeal was rejected, and the respondent's cross-objection was disposed of accordingly, highlighting the adherence to legal principles and established procedures in resolving the dispute.