2007 (10) TMI 99 - HC - Central Excise

Even though the order passed u/s 35E(2) does not use the words not legal and proper in authorization, then such order would be considered in accordance with Sec 35E(2) Comm(A) has recorded the reasons of non acceptance of OIO so appeal by dept. can not rejected on account of authorization.

Summary

Issues:
Appeal under section 35G of the Central Excise Act, 1944 regarding the legality and propriety of the order appealed against.

Analysis:
The Commissioner of Central Excise issued a show cause notice to the respondent regarding the disallowance of Modvat credit under the Central Excise Rules. The Assistant Commissioner dropped the show cause notice after hearing the respondent. The Commissioner then authorized an appeal against the order in original, which was filed by the revenue. However, the Commissioner of Central Excise (A) dismissed the appeal on the grounds that the Commissioner did not use the words 'not legal and proper' in the authorization order. The Tribunal upheld this decision, leading to the revenue filing the present appeal.

The main contention was whether the Commissioner's authorization for the appeal was valid under section 35E(2) of the Central Excise Act. The revenue argued that the Commissioner's order clearly showed his satisfaction regarding the legality of the original order. On the other hand, the respondent relied on a Supreme Court judgment stating that without a clear recording that the original order was not legal and proper, the appeal would not be maintainable.

The Court analyzed section 35E(2) of the Central Excise Act, which empowers the Commissioner to authorize an appeal if satisfied that the subordinate authority's order is not legal and proper. In this case, the Commissioner had provided detailed reasons for not accepting the findings of the original order, which, according to the Court, demonstrated his satisfaction as required by the Act. The Court distinguished this case from the Supreme Court judgment cited by the respondent, emphasizing that the substance of the Commissioner's satisfaction matters more than specific words like 'not legal and proper.'

Ultimately, the Court ruled in favor of the revenue, stating that the Commissioner had indeed recorded his satisfaction as required by the Act. The appeal was allowed, and the matter was remanded to the Tribunal for a decision on the merits and in accordance with the law.