2018 (10) TMI 320 - HC - Central Excise

Penalty exceeding ₹ 50 lakhs - section 35D(3) of Central Excise Act, 1944 - Held that - The jurisdiction of a single member to decide any appeal before the Tribunal would be limited to the cases where the amount of fine and penalty involved does not exceed ₹ 50 lakhs - In the present case therefore the single member had no jurisdiction to decide the appeal. Impugned order is therefore set aside only on this ground. Appeal is revived before the Tribunal and shall be heard by the Division Bench of the Tribunal.

Summary

Issues:
Challenge to Income Tax Appellate Tribunal judgment on penalty exceeding ?50 lakhs under section 35D(3) of Central Excise Act, 1944.

Analysis:
1. The appeal filed by the department contested the Income Tax Appellate Tribunal's decision dated 26.07.2017. The primary contention raised was that the Tribunal, being a single member, lacked the authority to address penalties exceeding ?50 lakhs as mandated by section 35D(3) of the Central Excise Act, 1944. The department argued that such cases must be heard by a Division Bench, not a single member, as was the case with the judgment in question.

2. Despite being served, the respondent did not appear. It was noted from the records that the department, in its appeal memo to the Tribunal, highlighted discrepancies in the assessment of wrong adjustments. The Revenue insisted that penalties under section 78 of the Finance Act, 1944, should have been imposed due to the significant valuation of the disputed penalty exceeding ?50 lakhs. Section 35D of the Central Excise Act, 1944, outlines the Tribunal's procedural aspects. Subsection (3) specifies that cases involving fines or penalties not exceeding ?50 lakhs can be decided by a single member.

3. The judgment emphasized that a single member's jurisdiction is limited to cases where the fine or penalty involved does not surpass ?50 lakhs. Consequently, in this instance, the single member lacked the authority to rule on the appeal. Therefore, the impugned order was set aside solely on this basis.

4. The appeal was reinstated before the Tribunal and directed to be heard by the Division Bench, in compliance with the statutory requirement.

5. In conclusion, the Tax Appeal was disposed of accordingly, with the decision to set aside the judgment based on the lack of jurisdiction by the single member, necessitating a rehearing by the Division Bench.