WHETHER A LETTER ISSUED BY CENTRAL EXCISE DEPARTMENT IS A DECISION AND IS APPEALABLE?

[Mr. M. GOVINDARAJAN]

     Sec.85 of the Finance Act, 1994 ('Act' for short) provides that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commission of Central Excise in the prescribed form and shall be verified in the prescribed manner within three months from the date of receipt of decision or order of such adjudicating authority relating to service tax, interest or penalty.   The question arises here is whether a letter issued by Central Excise Department is a decision and is appealable.   The same is analyzed in this article with reference to decided case laws.

     In 'Indian Aluminium Company Co. Ltd., V. Commissioner of Central Excise (Appeals), Cochin - 2008 -TMI - 31791 - CESTAT, Bangalore the appellants deposited the duty by mistake of law and therefore vide their letter dated 09.01.2004 requested the department for the refund which was returned by the Dy. Commissioner.   The appellants filed an appeal against the decision of Dy. Commissioner contending that the return of the refund application by the Dy. Commissioner is not justified.  The said return of the refund application has to be treated as an order by the Dy. Commissioner and hence, the appeal filed before the Commissioner is entertainable.  The Commissioner (Appeal) has noted than an appeal under Sec. 35 of the Central Excise Act cannot be filed before him against the Department's communication.  The tribunal held that the appellants had deposited the duty by mistake of law and there is no prescribed format for filing a refund application.   Therefore, they made a request by their letter dated 9.1.2004.  The Dy. Commissioner was not justified in returning the claim for refund, he ought to have given a hearing and called upon the appellants to produce any evidence required for deciding the matter.   The tribunal further held that the Commissioner (Appeal) is also not correct in rejecting the appeal holding that the communication of the Dy. Commissioner is not an appealable order.

     In 'Indian Explosives Limited V. Collector - 2008 -TMI - 31792 - CEGAT, Calcutta the tribunal held that conveying a decision against a letter to be a decision or order passed by the adjudicating authority and to be appealable under Sec. 35 of the Central Excise Act.

     In 'Commissioner of Central Excise, Mumbai V. Radhaballabh Silk Mills Pvt. Ltd.,' - 2008 -TMI - 31793 - CESTAT, Mumbai  the tribunal held that the respondent was informed about the decision on classification and in the circumstances the appeal was held to be maintainable.

     In 'Commissioner of Central Excise, Raigad V. Bhushan Steel & Strips Ltd.,' - 2008 -TMI - 4683 - CESTAT, MUMBAI the respondent was asked by a letter of the Superintendent to reverse credit which was held to be in the nature of decision and hence appealble.

     In 'TNT India Private Limited V. Commissioner of Service Tax, Bangalore' - 2007 -TMI - 1018 - CESTAT, BANGALORE the appellant was directed to discharge service tax liability by the letter in question.   The tribunal held that it is clear that there was determination of the obligation of the appellant and therefore in the facts of the case the appeal was held to be held maintainable against a letter.

     In 'E-Biz.com Pvt. Ltd., V. Commissioner of Central Excise, Noida' - TMI 31591 (Tri. Del) the appellant addressed a letter to Deputy Commissioner of Service tax, Noida seeking guidelines/clarifications on the issue relating to CENVAT credit on Business Auxiliary Services.   Similar letter was also addressed to Asst. Commissioner of Central Excise and Service Tax and also to Joint Commissioner (Preventive), Central Excise and Service Tax.   The Assistant Commissioner sent the impugned letter by way of clarification on the point of availment of CENVAT credit in respect of service tax paid/being paid by their associates giving reference to different provisions of the CENVAT Credit Rules.   No demand was raised nor was any adjudication made on any dispute.   The letter end with the words, "This is for information please".  On appeal the Commissioner (Appeals) observed that the letter in question had simply clarified the position that the availment of CENVAT credit is restricted with certain exclusion clause in Rule 9(b) of CENVAT Credit Rules, 2004 and in case the appellant's sub-distributions are covered by the exclusion clause, then, in that case they are not entitled for CENVAT credit.

     The tribunal, in appeal, analyzed the provisions.   Sec. 85(1) of the Act lays down that any person aggrieved by 'any decision or order passed by an adjudicating authority' may appeal to the Commissioner of Central Excise (Appeals).  Sec. 86(1) contemplates appeal against an order passed by the Commissioner of Central Excise under Sec.85 to the Appellate Tribunal.  The words 'decision' or 'order' or 'adjudicating authority' have not been defined in the Act.  However the Act provides that words and expressions used but not defined in the Act and defined in the Central Excise Act, 1944 or the rules made there under, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise.   The words 'decision' or 'order' have not been defined in the Central Excise Act/Rules either.   Therefore, they have to be understood in their ordinary literal sense.   The term 'adjudicating authority' has been defined under Sec. 2 (a) of the Central Excise Act to mean any authority competent to pass any order or decision under the Act (not including the Central Board of Excise and Customs, Commissioner (Appeals) or the Appellate Tribunal).   Sec. 11A of Central Excise Act provides for issuance of show cause notice by Central Excise Officer in cases of non levy or short levy of duty, excise duty or short payment or the refund of duty or excise duty and adjudication of dispute/demand.  Sec. 11B provides for an order on the refund application of the assessee and determination of the amount of refund.   Sec. 33 provides for adjudication by way of confiscation and imposition of penalty.   These are some of the instances of adjudication and passing decision or order by the Central Excise Officer as adjudicating authority.   These orders and decisions may be challenged by way of appeal to the Commissioner (Appeals), and where the Adjudicating Authority is the Commissioner, to the Appellate Tribunal.   These provisions are mutatis mutandis applicable to the proceedings under the Act with respect to service tax.  It is clear unless there is an adjudicating resulting in any demand for duty or penalty etc., the appeal is not maintainable.

     The tribunal further analyzed that there may be cases where without any formal adjudication, the party is asked to do certain things or desist doing the thing adversely affecting its rights.   Where it is found that the rights of the party are adversely affected, the appeal may be entertained against communication informing the party of the decision even though there was no formal 'adjudication'.  But even those cases, there must be some decision in the file.   In the instant case, the appellant themselves sought 'guidance/clarification' from the Department in reply to which they were informed that availment of CENVAT credit is circumscribed by exclusion clause in Rule 9(b) of CENVAT Credit Rules and in the case the appellant's associates are not covered by exclusion clause, they are not entitled to CENVAT credit.   As rightly observed by the Commissioner (Appeals), it is not understandable as to how the appellant concluded that they have been denied credit which was otherwise admissible to them.   There being no determination of rights - final or adverse to the appellant - the letter being merely 'clarificatory' in nature issued at the behest of the applicant themselves, the tribunal is inclined to think that there was no cause of action for the appellant to file any appeal to the Commissioner (Appeals) and dismissed the appeal.