2015 (7) TMI 893 - SC - Central Excise

Condonation of delay - Revenue appeal - eight days delay in issue of the review order under Section 35-E(1) by the Committee of Chief Commissioners - Denial of CENVAT Credit - Clandestine removal of goods - Invocation of extended period of limitation - Confiscation of seized goods - Held that - Sub-section (4) of Section 35-E(4) provided that appeals should be filed within a period of three months from the date of communication of the order under sub-section (1) or (2) to the adjudicating authority. The Court has taken note of the fact that period that was given by the legislature to the revenue was one year which is more than adequate to take appropriate action in proper cases in comparison with the much shorter period within which the assessee has to exercise his right of appeal. The Court gave emphasis on the administrative chaos that would result if a further period was granted and accordingly opined that the statutory provision was to be given a literal meaning. As is noticeable, the amendment made by the Finance Act, 2008, the Committee of Chief Commissioners was required to pass an order within three months from the date of communication of the decision or the order. This period of three months is identical to the period of three months stipulated in Section 35-B of the Act. As per the scheme of the Act, sub-section (4) of Section 35-B(5) of the Act authorises the appellate tribunal to admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period if the tribunal is satisfied there was sufficient cause for not presenting the appeal within that period. As stated earlier, the power under sub-section (4) of Section 35-B has been made applicable to appeals preferred following the administrative procedure prescribed under Section 35-E of the Act. The statutory position as it existed in 1984, as we find, has undergone a change by the amendment made under the Finance Act, 2008. Under the changed circumstances, it would not be appropriate to restrict and bar an application of the provisions of sub-section (4) of Section 35-E to the period after passing of an order under sub-sections (1) and (2) of Section 35-E of the Act - Full Bench decision of the tribunal in the case of Monnet Ispat & Energy Ltd. (2010 (8) TMI 50 - CESTAT, NEW DELHI) endorsed and held has correct - Decided in favour of Revenue.

Issues Involved:
1. Jurisdiction of the Tribunal to condone delay in filing an appeal under Section 35-E of the Central Excise Act, 1944.
2. Interpretation and application of Section 35-E(3) and Section 35-E(4) of the Central Excise Act, 1944.
3. Legislative history and amendments to Sections 35-B and 35-E of the Central Excise Act, 1944.
4. Applicability of the Full Bench decision in CCE v. Monnet Ispat & Energy Ltd.
5. Impact of the Finance Act, 2008 and Finance Act, 2014 on Section 35-E of the Central Excise Act, 1944.

Detailed Analysis:

1. Jurisdiction of the Tribunal to Condon Delay:
The primary issue was whether the Tribunal had the jurisdiction to condone the delay in filing an appeal under Section 35-E(4) of the Central Excise Act, 1944. The Tribunal had previously held that it lacked jurisdiction to condone the delay, citing the decision in CCE v. M.M. Rubber Co., which emphasized that an order passed beyond the prescribed period is invalid and ineffective. The Tribunal reasoned that it had no power to validate such an invalid order.

2. Interpretation and Application of Section 35-E(3) and Section 35-E(4):
The Tribunal and the High Court had interpreted Section 35-E(3) to mean that the Committee of Chief Commissioners must pass an order within three months from the date of communication of the decision or order. Any delay beyond this period could not be condoned. The Supreme Court, however, noted that the legislative amendments and the statutory scheme allowed for the Tribunal to condone delays if sufficient cause was shown, aligning with the provisions under Section 35-B(4).

3. Legislative History and Amendments to Sections 35-B and 35-E:
The judgment provided a comprehensive review of the legislative history of Sections 35-B and 35-E, noting significant amendments over the years. Initially, the period for passing orders under Section 35-E was two years, later reduced to one year, and then to three months by the Finance Act, 2008. The Finance Act, 2014 further introduced a proviso allowing the Board to extend the time by 30 days.

4. Applicability of the Full Bench Decision in CCE v. Monnet Ispat & Energy Ltd.:
The Full Bench decision in Monnet Ispat & Energy Ltd. was crucial, as it held that the Tribunal had the power to condone delays, including the period taken by the review committee under Section 35-E(1) or (2). The Supreme Court endorsed this view, stating that the Tribunal's power to condone delay should include the period availed by the review committee, thus overruling the Tribunal's earlier stance.

5. Impact of the Finance Act, 2008 and Finance Act, 2014:
The amendments brought by the Finance Act, 2008 and Finance Act, 2014 played a pivotal role in the Court's reasoning. The 2008 amendment equated the period of limitation for both the assessee and the revenue, while the 2014 amendment allowed the Board to extend the period by 30 days. The Court emphasized that these amendments reflected the legislative intent to ensure parity and not disadvantage the revenue.

Conclusion:
The Supreme Court allowed the appeal, setting aside the Tribunal's order and remanding the matter for consideration of the application for condonation of delay on its merits. The Court highlighted that the Tribunal should have adhered to the Full Bench decision in Monnet Ispat & Energy Ltd., which correctly interpreted the provisions of Section 35-E in light of the legislative amendments. The judgment underscored the importance of ensuring that statutory provisions are interpreted to maintain fairness and prevent administrative chaos.

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