REMANDING OF CASES UNDER INDIRECT TAXES

[Mr. M. GOVINDARAJAN]

While going through the indirect tax law journals we may happen to come across judgments in which the cases may  be remanded back to decide afresh.  The cases may be remanded either by the Tribunal to the First Appellate Authority or to the Adjudicating Authority or by High Court to the Tribunal or the first appellate authority or the adjudicating authority.  The reasons for remanding the matter back are due to many various reasons.  The main reason is not conducting the adjudication/appeal procedure in accordance with law.  In addition the Principles of Natural Justice may not have been adopted by the Authorities.  Even they may not consider the evidences produced by the parties or the precedents cited either of the parties.   In this article some case laws are discussed in this regard.

1.  In ‘Mann Tourist Transport Service (P) Limited V. Commissioner of Customs (Import), Nhawa Sehva’ - 2015 (1) TMI 794 - CESTAT MUMBAI  the appellant imported the vehicles.   The appellant claimed classification under CTH 87021019 as ‘Motor vehicles for the transport 10 or more persons including the driver’.  The department claimed the same under CTH 8703. The same has been challenged before the  Tribunal.  The Tribunal remanded the classification issue to the Commissioner for fresh decision in terms of the order.   The Tribunal directed the Adjudicating Authority to take expert opinion from competent agencies/authorities like ARAI and VRDE on the designed seating capacity of the vehicle and then proceed to determine the classification under the tariff.

  The department challenged the said decision before the Supreme Court which dismissed the appeal.   Thereafter the revenue released the vehicle provisionally on execution of a bond and a bank guarantee.  The Revenue did not take effective steps to get the vehicle examined by the ARAI/VRDE and decide the classification as per decision of the Tribunal.

  Thereafter the department referred the ARAI.  ARAI has not given any opinion on the searing capacity  of the impugned vehicle.  They have merely observed that that the vehicle who originally designed for seating 5 person.  They advised the department to verify  from the concerned vehicle owner about the type approval certificate issued from the country of origin.   This direction has not also been complied with by the Department.   However, the Department concluded that  ARAI has also confirmed that the vehicle imported is principally designed for 5 sears.

  The appellant filed appeal before the Tribunal.  The Tribunal passed strictures on the department.  When the Tribunal directed for remand, the vehicle was very in the possession of the department and they could have got the necessary examination/verification done, which they failed to do.  Even before the release of the vehicle the said action could have been done.  The Tribunal held that this shows gross negligence on the part of the department to the directions given by the Tribunal.   Thus the entire blame for inaction lies squarely on the department.  The Tribunal found that the vehicle as imported has been presented with a seating capacity of 12.  The RTO at Delhi registered the vehicle as having a seating capacity of 10 seats. The Tribunal held that the impugned order is not sustainable in law and the claim of the appellant is allowed.

2  In ‘Radiant Cables Private Limited v. Commissioner of Customs, Hyderabad’ - 2015 (5) TMI 459 - ANDHRA PRADESH HIGH COURT the point fell for consideration of the Tribunal is whether the appellants are entitled to the benefit of exemption under Notification No. 23/98 dated 02.06.1998 on the raw materials imported for manufacture of cables.   The appellant contended that the appeal had been disposed of with cryptic order without considering the materials placed before it for consideration.   The High court considering the facts and circumstances of the cases set aside the order of the Tribunal and remanded the matter back to the Tribunal to dispose of the appeal afresh within a period of six months from the date of the order after giving an opportunity to both the sides to place the entire materials before the Tribunal in support of their cases.

3  In ‘Emco Limited V. Union of India’ - 2014 (3) TMI 9 - BOMBAY HIGH COURT the High Court held that there was a delay of 9 months in passing adjudication order after hearing.  The additional evidence brought on record is not considered.   The High Court held that the authorities are required to pass orders expeditiously after hearing so that all submissions made by a party are considered so as to maintain confidence of citizen in the process of litigation.   The High Court held that the delay of 9 months in passing order after hearing causes prejudice to the assessee.  The High Court set aside the order and remanded the case to the Adjudicating Authority for fresh decision within reasonable time after hearing the parties.

4.  In ‘Kamdhenu Cement Limited V. Commissioner of Central Excise, Jaipur’ - 2013 (10) TMI 1296 - RAJASTHAN HIGH COURT the appellant’s counsel did not attend the hearing before the Tribunal.  The case was adjourned for the next day which was not informed to the appellant.   No notice was issued as required under the usual practice of the Tribunal.   The High Court held that ordinarily party is to be informed about the next date either by messenger or through any other mode.   The dismissal of appeal on the next day without any notice of hearing o r information to the appellant certainly jeopardizes the right of the appellant as he is entitled to a reasonable opportunity of hearing as per the principles of Natural Justice.   The High Court set aside the order of Tribunal.   The appeal was remanded back to the Tribunal to be decided afresh in accordance with the law.

5.  In ‘Lakhani Steel Industries V. Commissioner of Central Excise’ - 2014 (12) TMI 867 - ANDHRA PRADESH HIGH COURT the High Court observed that the Settlement Commission arrived at the conclusion that the petitioner is not extended the co-operation by undertaking comparison of the facts and figures mentioned in the application on the one hand and those in the report submitted by the Commissioner, on the other.   The High Court held that this could have been certainly appreciated if only the Commission furnished a copy of the report to the petitioner enabling it to offer its own remarks where the investigation into the affairs of the petitioner, the only party which is immediately affected is the petitioner itself.   Whatever may be the entitlement of any other agency which is immediately affected cannot be denied a copy thereof.   If the report is so inaccessible or confidential for that very reason it should be kept outside the purview of the adjudication order.   The High Court was of the view that the order of the Settlement Commission suffered from a serious infirmity of non furnishing the report of the Commissioner to the petitioner.   On this short ground the High Court allowed the Writ Petition  and set aside the impugned order.  The High Court remanded the matter to the Settlement Commission for fresh disposal after a copy of the report of the Commissioner (Investigation) is furnished to the petitioner.

6.  In ‘Wellspun Maxsteel Limited V. Commissioner of Central Excise, Raigad’ - 2015 (5) TMI 458 - BOMBAY HIGH COURT the Tribunal, while disposing the stay application, disposed the application on merits in absence of the appellant and their Advocate with direction to deposit the entire sum.   The appellant, before the High Court pleaded that on merits he would be able to satisfy the court that order was not just, fair and proper.   The High Court felt that larger interest of justice would be served if looking into the facts and circumstances peculiar to the present case, a fresh opportunity is afforded to the appellant by the Tribunal.   The High Court was of the view held that without laying down a general rule or a precedent but only in the facts and circumstances of the present case that High Court can adopt such a course where prima facie nexus would have to be established with  the service of bringing in raw materials and for purposes of production of goods in the appellant’s factory and their ultimate removal and whether on such an activity can be claimed and styling the same as input services.  The High Court remanded the case to Tribunal with directions to give an opportunity to both sides to raise their contentions and thereafter after pass a fresh order.

7.  In ‘Mediaguru News Private Limited V. Commissioner of Customs, New Delhi’ - 2015 (5) TMI 457 - CESTAT NEW DELHI the Tribunal found that as per circular No. 47/2002-cust, dated 29.7.2002, the Commissioner is having power under Section 61 of the Customs Act, 1962 to consider the delay by extending the period for warehousing period.  The said exercise has not been done by Chief Commissioner in the impugned order.   The Tribunal held that Chief Commissioner ought to have exercised his powers judicially but the same was not exercised.  The Tribunal could not direct the issue of re-export or the impugned goods, as the power is vested with the Chief Commissioner.  The Tribunal remanded the matter back to the Chief Commissioner to decide the issue to re-export of the impugned goods.

8.  In ‘Geotech Digital Bharat Private Limited V. Commissioner of Central Excise & Service tax, Ahamedabad - III’ - 2014 (7) TMI 1123 - CESTAT AHMEDABAD the issues involved in this case in regarding the demand of Customs duty foregone by the department on the goods/inputs imported by the appellant as software for using Technology Park and not complying with export obligation.   In the first round of litigation the Tribunal remanded the matter back to the Adjudication Authority to reconsider the issue on the basis of letter issued by STPI, Gandhinagar.   The impugned order in the present appeal has been passed the remand proceedings, confirmed the demand that the appellant has not complied or fulfilled the export obligation as committed by them.

  The Tribunal perused the letter of STPI and found that STPI after recording the way the export obligations were calculated.    It specifically stated that the unit met the export obligations.   The report further stipulated that the appellant should pay the applicable duty on imported capital goods, inputs etc.,  The Tribunal found that there seems inherent contradiction in the letter of STPI unless there is definite conclusion by the authority whether the appellant has met with export obligations or not in the considered view of the Tribunal, the appellant cannot be saddled with duty liability and consequences.   The circular No. 21/95-Cus, dated 10.3.95 clarified specifically that the demand of duty should be confirmed only, after definite conclusion has been arrived at by the Development Commissioner.   In this case, the STPI is the final authority to come to the conclusion as to whether  the appellant fulfilled the export obligations or not.   The Tribunal remanded the matter back to the Adjudicating Authority to reconsider the issue afresh after following the principles of Natural Justice and also seeking definite conclusion from the STPI as to whether the appellant has fulfilled with the export obligation as was committed when they undertook the activities in STPI or not.

  In the first case law, the remand proceedings the directions of the Tribunal, which remanded the case to the Adjudicating Authority, was not complied with by the Authority.   Therefore the Tribunal again remanded the matter to the Adjudicating Authority and passed strictures on the Authority for not complying with the directions of the Tribunal in the remand proceedings.

  In the second case the Authority did not consider the materials put forth by the assessee before him.  In the third case also the Authority did not consider the additional evidence brought on record by the assessee.

  The fourth and fifty cases were remanded since the cases have been decided in the absence of the assessee and his Advocate and without informing the hearing date or issue notice to the assessee or his advocate.

  In the fifth case, the remand is due to the Settlement Commission did not provide the report of the Commissioner (Investigation) to the assessee.

  The seventh case is remanded since the Chief Commissioner has not exercised his powers judicially.

  The eight case is remanded since the Authority did not follow the Principles of Natural Justice.