2016 (4) TMI 796 - HC - Central Excise

Compliance of sub-section (2) of Section 35B of the Central Excise Act, 1944 - Held that - The word may , appearing in sub-section (2) of section 35B of the Act should not be misconceived as submitted by learned counsel for the appellant. The proviso to sub-section (2) of section 35B of the Act also postulates that in the case of difference of opinion between the Commissioner of Central Excise, they will make reference to the Chief Commissioner of Central Excise who after considering the facts, if found that the order of the Commissioner of Central Excise (Appeals) is not legal and proper, direct the Central Excise Officer to appeal before the Tribunal of such order. On the other hand, the Central Excise Officer will be always authorized either on concurrent view of Committee of Commissioners of Central Excise or difference of opinion is given to file appeal, but the fact remains, authorization is a must under sub-section (2) of Section 35B of the Act to prefer appeal. It is needless to say that application of judicial mind to the facts and law of the case by the concerned Committee of Commissioners of Central Excise is a condition precedent for filing appeal. Any non-application of mind in rendering opinion to file appeal may cause serious impact on the public exchequer or on the economic growth of the country. Since the authorization would be to one of the Central Excise Officers, the word may as appearing in sub-section (2) of Section 35B of the Act cannot be said to be discretionary or directory but it is a mandatory provision and should be read as shall . We do not find force with the submission of learned counsel for the appellant-Department to the effect that such word may is a directory one and as such the contention is jettissioned. Since it is a fiscal statute, it requires strict interpretation, no word can be construed otherwise and purposive interpretation is the call of the day. Adverting to the facts of the case and points of law as discussed by us, we are of the view that the authorisation made in Annexure-3 of the affidavit filed by the appellant to prefer appeal without same being filed along with appeal is surely an incurable defect and the same cannot be rectified by filing an authorization letter as stated by the learned counsel for the appellant. Similarly as the authorization by the Committee of Commissioners of Central Excise is not found in the impugned order, it must be observed that the impugned order passed by the CESTAT is correct, legal and proper. Hence we are of the considered view that the impugned order passed by the learned CESTAT being valid, legal and proper, cannot be interfered with.

Summary

Issues Involved:
1. Whether the CESTAT was correct in dismissing the appeal on the ground of lack of proper authorization by the Committee of Commissioners.
2. Whether the authorization by the Committee of Commissioners under Section 35B(2) of the Central Excise Act, 1944, is mandatory or directory.
3. Whether the appeal can be maintained without the proper authorization being filed along with it.

Detailed Analysis:

Issue 1: Dismissal of Appeal on Grounds of Lack of Proper Authorization
The appellant-Department challenged the CESTAT's dismissal of their appeal due to the absence of proper authorization by the Committee of Commissioners. The CESTAT dismissed Excise Appeal No. 674 of 2006 as infructuous, referencing its prior orders in Excise Appeal Nos. 250 and 251 of 2007. The appellant argued that the authorization from the Commissioner of Central Excise was present in the records, but the CESTAT failed to consider it. The respondent countered that no such authorization was filed at the time of the appeal, making the CESTAT's order valid.

Issue 2: Mandatory vs. Directory Nature of Authorization under Section 35B(2)
The court analyzed whether the authorization by the Committee of Commissioners under Section 35B(2) is mandatory or directory. The appellant contended that the provision is directory and that the lack of initial authorization should not invalidate the appeal. The respondent argued that the provision is mandatory, emphasizing that the Committee's authorization is a crucial procedural requirement. The court cited precedents, including Montreal Street Railway Co. v. Normandin and Bhavnagar University v. Palitana Mill Pvt. Ltd., to support the mandatory nature of the provision. The court concluded that the authorization requirement is not an empty formality but a substantive legal necessity.

Issue 3: Maintenance of Appeal Without Proper Authorization
The court examined whether an appeal could be maintained without the proper authorization being filed initially. It was found that the authorization dated 24.6.2008 was not part of the appeal records at the time of filing. The court noted that the authorization was a condition precedent for filing an appeal and that subsequent rectification could not cure the initial defect. The court held that the failure to comply with the mandatory requirement of authorization rendered the appeal invalid.

Conclusion:
The court dismissed the appeal, affirming that the authorization by the Committee of Commissioners under Section 35B(2) is mandatory. The lack of proper authorization at the time of filing the appeal is an incurable defect, making the CESTAT's order valid, legal, and proper. The appeal was dismissed as devoid of merit, upholding the CESTAT's decision.