2017 (4) TMI 378 - AT - Central Excise

Doctrine of sub-silentio - re-opening the final assessment, without issuing another SCN - Held that - Revenue had remedy to file an appeal against the order finalising assessment, which they have not done so, in the absence of an appeal against finalisation of assessment, adjudicating authority as a Deputy Commissioner could not have ordered reopening by directing to issue a show cause notice. There are no provisions in the CEA, 1944 to reopen the assessment by issuing another SCN - appeal rejected - decided against Revenue.

Summary

Issues:
Appeal against Order-in-Appeal for refund claim finalization; Competency to reopen final assessment by show cause notice; Application of C.B.E. & C. Circular No. 502/68/99-CX; Adequacy of appellate mechanism under Section 35 of Central Excise Act, 1944.

Analysis:

Issue 1: Appeal against Order-in-Appeal for refund claim finalization
The appeal and cross objection were against the same impugned order. The respondent filed a refund claim after finalization of provisional assessment of goods cleared to specific entities. The adjudicating authority sanctioned the refund claim but also ordered reopening of final assessments for other entities. The first appellate authority set aside the reopening order, stating that the authority lacked competence to do so without an appeal against the assessment. The Revenue's appeal contended that certain facts were suppressed during the provisional assessment period. However, the Tribunal found that the Revenue failed to appeal the finalization order as provided under the Central Excise Act, 1944.

Issue 2: Competency to reopen final assessment by show cause notice
The Tribunal noted that the Revenue's appeal was misdirected as the assessments were finalized, and no appeal was filed against the order. It emphasized that without an appeal against the finalization, the adjudicating authority could not order a reopening through a show cause notice. The absence of provisions in the Central Excise Act, 1944 for such reopening was highlighted. The Tribunal supported the first appellate authority's reliance on a circular regarding issuing corrigendum post-adjudication order, emphasizing the lack of grounds for defending the reopening action.

Issue 3: Application of C.B.E. & C. Circular No. 502/68/99-CX
The Tribunal found the Revenue's argument defending the reopening action surprising, especially considering the absence of an appeal against the finalization order. It upheld the first appellate authority's reliance on the circular, emphasizing the correctness of the impugned order and rejecting the Revenue's appeal on the grounds of lacking merits.

Issue 4: Adequacy of appellate mechanism under Section 35 of Central Excise Act, 1944
The Tribunal concluded that the impugned order was correct, legal, and devoid of any infirmity. It highlighted the importance of following the appellate mechanism provided under Section 35 of the Central Excise Act, 1944 and emphasized the necessity for the Revenue to utilize the appeal process rather than seeking reopening through show cause notices.

In summary, the Tribunal dismissed the Revenue's appeal, upheld the impugned order, and disposed of the cross objection, emphasizing the significance of adhering to the statutory appellate mechanisms and the limitations on reopening assessments without proper grounds or appeals.