2006 (7) TMI 120 - AT - Central Excise

Commissioner Central Excise held that the appeal filed by the department is not maintainable on the ground that the Commissioner, Central Excise had directed the Asst. Commissioner who was not adjudicating authority and therefore the appeal was not legal and valid u/s 35E(2) as per section 35E(2), such authorisation could have been given only to the Addl. Commissioner and not to any other authority subordinate to adjudicating commissioner impugned order upheld

Summary

Issues:
1. Maintainability of appeal under Section 35E(2) of the Central Excise Act, 1944.
2. Interpretation of the term "such authority" in Section 35E(2).
3. Applicability of previous tribunal decisions in similar cases.
4. Conflict between tribunal decisions and Supreme Court rulings.

Issue 1: Maintainability of Appeal under Section 35E(2):
The case involved a dispute over the maintainability of an appeal filed by the revenue under Section 35E(2) of the Central Excise Act. The Commissioner of Central Excise directed an Assistant Commissioner to file an appeal before the Commissioner (Appeals) challenging the Addl. Commissioner's decision to allow Modvat credit on certain items of capital goods. The Commissioner (Appeals) held the appeal as not maintainable, citing that the direction should have been given to the Addl. Commissioner, who was the adjudicating authority. The revenue contended that the Commissioner had the power to direct any authority to file an appeal under Section 35E(2).

Issue 2: Interpretation of the term "such authority" in Section 35E(2):
The interpretation of the term "such authority" in Section 35E(2) was crucial in determining the scope of authority to be directed to file an appeal. The revenue argued that the term should be qualified by the clause "as may be specified by the Commissioner of Central Excise in his order," allowing the Commissioner to direct any officer, not just the adjudicating authority. This interpretation was supported by previous tribunal decisions and aimed to avoid inconsistency between provisions.

Issue 3: Applicability of Previous Tribunal Decisions:
The case referenced previous tribunal decisions like the one in Blue Star Spinning Mills Ltd., which held that "such authority" under Section 35E(2) should be read harmoniously with "adjudicating authority" to prevent defeating the purpose of the section. The tribunal also cited decisions in other cases to support the argument that the Commissioner could direct any officer to file an appeal, not just the adjudicating authority.

Issue 4: Conflict Between Tribunal Decisions and Supreme Court Rulings:
The case highlighted a conflict between tribunal decisions and Supreme Court rulings, particularly in the interpretation of Section 35E(2). While the tribunal decisions supported a broader interpretation allowing the Commissioner to direct any officer to file an appeal, the Supreme Court's decision in C.C.E. v. M.M. Rubber emphasized directing the adjudicating authority. This conflict raised questions about the binding nature of tribunal decisions compared to Supreme Court rulings.

In the judgment, the Appellate Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeal filed by the revenue, emphasizing that the power to direct an appeal under Section 35E(2) is limited to the adjudicating authority and not any other officer subordinate to him. The decision was based on a careful analysis of the relevant sections of the Central Excise Act and supported by a recent unreported decision of the Larger Bench.