APPEALS - CBEC Manual (OLD) - Central Excise

CHAPTER 16 APPEALS 1. Introduction 1.1 The provisions for appeal are contained in Chapter VI A of the Central Excise Act, 1944. The rules pertaining to Appeals i.e. Central Excise (Appeals) Rules, 2001 (hereinafter referred to as 'Appeal Rules') have been notified w.e.f. 1.7.2001. 1.2 These provisions provide for appeals to Commissioner (Appeals), Appellate Tribunal, procedure, orders of appellate tribunal, powers of revisions of board, revision by Central Government, statements of case to High Court, appeal to High Court, appeal to the Supreme Court, transfer of certain pending proceedings and transitional provisions. 1.3 Provisions relating to appeals, as contained in Central Excise Act, and rules made thereunder are also applicable to cases under Produce Cess Act, 1966, and for Handloom Cess leviable under Khadi and other Handloom i Development (Additional Excise Duty on Cloth) Act, 1953. Appellate Stages 2.1 Under the new Chapter VIA of the Central Excise Act, 1944, both see and the department have been conferred with a right of two or three stage remedies against the orders passed under Central Excise Act and Rules. For orders passed by officers lower than the rank of Commissioner of Central Excise, the first appeal lies to the Commissioner (Appeals) and there from to the Appellate Tribunal and finally to the Supreme Court. But where the order of the Tribunal does not relate to determination of rate of duty or value of goods, an appeal to the High Court lies under Sections 35G reference application under 35H, instead of Appeal to Supreme Court. In cases where the Order-in-Original is passed by a Commissioner of Central Excise, appeal lies directly to the Appellate Tribunal. 2.3 The appellate remedy available for orders passed by different z is as follows:- Sr. No. Order passed by Appellate Authority 1. All officers upto including Additional Commissioner Commissioner (Appeals) 2. Commissioner or Commisssioner (Appeals) CESTAT except in cases where order relates to :- (a) a case of loss of goods, where the loss occurs in transit from a factory to a warehouse or to another factory, or from one warehouse to another, or during the course of processing of the goods in a warehouse or in storage, whether in a factory or in a warehouse; (b) a rebate of duty of excise on goods exported to any country or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India; (c) goods exported outside India (except to Nepal or Bhutan) without payment of duty; (d) credit of any duty allowed to be utilized towards payment of excise duty on final products under the provisions of the Central Excise Act or the rules made thereunder and such order is passed by the Commissioner (Appeals) on or after the date appointed under section 109 of the Finance (No. 2) Act, 1998]. 3. Commissioner (Appeals) Revision application to Central Govt. (in matters relating to export without payment of duty, goods short landed, loss of goods in transit). 4. CESTAT Supreme Court (Classification and Valuation cases) 5. CESTAT High Court (Other than classification and valuation matters) 6. High Court Supreme Court 3. Appeals to Commissioner (Appeals) 3.1 All decisions and orders passed under the Central Excise Act or the rules made thereunder are generally subject to two appeals. The First Appeal as per the provisions of Section 35 of the Central Excise Act lies to the Commissioner (Appeals) if the order or decision is of an officer lower in rank than the Commissioner of Central Excise. Such an appeal can be filed within sixty days from the date of the communication of decision/ order. This period can be extended by a further period of thirty days by Commissioner (Appeals) on sufficient cause being shown. Thereafter, the Second Appeal against the order of the Commissioner (Appeals) can be filed to the Appellate Tribunal except for the type of cases referred to in Sl. No. 2 of the chart above. (Para 2.3). 3.2 As per Rule 3 of Central Excise (Appeals) Rules, 2001, an appeal under sub-section (1) of Section 35 to the Commissioner (Appeals) shall be made in Form No. E.A.-1(in duplicate) and shall be accompanied by a copy of the decision or order appealed against. 3.3 The grounds of appeal and the form of verification as contained in Form No. E.A.-1 shall be signed - (a) in the case of an individual, by the individual himself or where the individual is absent from India, by the individual concerned or by some person duly authorized by him in this behalf; and where the individual is a minor or is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf. (b) in the case of a Hindu undivided family, by the karta and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family. (c) in the case of a company or local authority, by the principal officer thereof; (d) in the case of a firm, by any partner thereof, not being a minor; (e) in the case of any other association, by any member of the association or the principal officer thereof; and (f) in the case of any other person, by that person or some person competent to act on his behalf. 3.4 As per Rule 4 of the Appeal Rules, an application under sub-section (4) Section 35E to the Commissioner (Appeals) shall be made in Form No.E.A.-2.and such an application shall be treated as an appeal. 3.5 The form of application in Form No. E.A.-2 (See Annexure 37 in part7) shall be filed in duplicate and accompanied by two copies of the decision or order passed by the adjudicating authority (one of which at least shall be a certified copy) and a copy of the order passed by the Commissioner of Central Excise directing such authority to apply to the Commissioner (Appeals). 3.6 The Commissioner (Appeals) shall, where it is possible to do so hear and decide every appeal within a period of six months from the date on it is filed. 3.7 Amendment has been made to section 35 of the Act to provide that adjournment of the hearing shall not be granted more than three times to a party during the proceedings. 3.8 On the disposal of appeal, the Commissioner (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Commissioner of Central Excise or the respondent. 4 Jurisdiction of Commissioner of Central Excise (Appeals) 4.1 Commissioners of Central Excise (Appeals) have been given concurrent jurisdiction of the entire zone and jurisdiction of Chief Commissioner has been extended to all the Commissioners of Central Excise (Appeals) within his Zone. Chief Commissioner of Central Excise, within his jurisdiction, may specify the jurisdiction of individual Commissioner of Central Excise (Appeals), charge, by issuing suitable orders. 4.2 In normal situations, each Commissioner of Central Excise (Appeals) should continue to handle the appeals arising out of the jurisdiction of specific Commissionerates of Central Excise, as specified by Chief Commissioner of Central Excise. However, Chief Commissioner may allocate additional charge or any individual cases to Commissioner of Central Excise (Appeals), as and when required. 5. Production of additional evidence before Commissioner (Appeals) 5.1 An appellant can produce additional evidence before the commissioner (Appeals). As per sub rule (1) of rule 5 of the Appeal Rules, the appellant shall not be entitled to produce before the Commissioner (Appeals) any evidence, whether oral or documentary, other than the evidence produced him during the course of the proceedings before the adjudicating authority except in the following circumstances, namely: (a) Where the adjudicating authority has refused to admit evidence which ought to have been admitted; or (b) Where the appellant was prevented by sufficient cause from producing the evidence which was called upon to produce by the adjudicating authority; or (c) Where the appellant was prevented by sufficient cause from producing before the adjudicating authority any evidence which is relevant to any ground of appeal; or (d) Where the adjudicating authority has made the order appealed against without giving sufficient opportunity to the appellant adduce evidence relevant to any ground of appeal. 5.2 No evidence shall be admitted under sub-rule (1) unless Commissioner (Appeals) records in writing the reasons for its admission. 5.3 The Commissioner (Appeals) shall not take any evidence produced under sub-rule (1) unless the adjudicating authority or an officer authorized - this behalf by the said authority has been allowed a reasonable opportunity - (a) to examine the evidence or document or to cross-examine any witness produced by the appellant, or (b) to produce any evidence or any witness in rebuttal of the evidence produced by the appellant under sub-rule (1) 5.4 It is also provided that nothing contained in the said rule shall affect the power of the Commissioner(Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of appeal. 6. Effective handling of Central Excise and Customs Appeals before Commissioner (Appeals) 16.1 The Board on recommendation of Expert Group in appeal matters, has issued the guideline that in order to make the Department's representation before Commissioner (Appeals) more effective, it has been decided that tie Commissioner's representative may be present during the hearing before Commissioner (Appeals). It is left to the best judgment of the Commissioner as to the level of officer who should represent the Department, and also the cases in which such representation is desirable. 7.1 In response to the long outstanding demand of the trade and industry for establishing an independent machinery to redress the grievances a the Excise and Customs assesses, the Central Government set up the Customs, Excise and Gold Control Appellate Tribunal in the year 1982 to hear and dispose of appeals in Central Excise, Customs and Gold Control matters. The name of the Customs Excise Gold (Control) Appellate Tribunal stands changed to "Customs, Excise Service Tax Appellate Tribunal". (Vide CESTAT Circular F No. 29/21 /CEGAT/Admn./2003, dated 5-6-2003.) 7.2 The Benches of the Tribunal are composed of Judicial and Technical Members. As per Section 35D (3) of Central Excise Act, 1944, Single member Bench has the jurisdiction to hear appeals involving an amount of duty, fine or penalty not exceeding ten lakh rupees. 7.3 Every appeal to the Tribunal shall be filed within three months from the date on which the order sought to be appealed against is communicated to the Commissioner of Central Excise, or, as the case may be, the other party p referring the appeal. 7.3.1 As per rule 6 of the Appeal Rules, an appeal under sub-section (1) of section 35B to the Appellate Tribunal shall be made in Form No. E.A.-3 m 38 in Part 7) and the following shall be observed: (1) A memorandum of cross objections to the Appellate Tribunal under Sub-Section (4) of section 35 B shall be made in Form No. E.A-.4 (see Annexure 39 in Part 7). (2) Where an appeal under sub-section (1) of section 35B or a memorandum of cross-objections under sub-section (4) of that section is made by any person other than the Commissioner of Central Excise, the grounds of appeal, the grounds of cross-objections and the forms of verification as contained in Form Nos.E.A3 (See Annexure 38 in Part 7) and E.A.-4 (See Annexure 39 in Part 7), as the case may be respectively shall be signed by the persons specified in sub-rule (2) of rule 3. (3) The form of appeal in Form No. E.A.-3 (See Annexure 38 in Part 7) and the form of memorandum of cross-objections in Form No. E.A.-4 (See Annexure39 in Part 7) shall be filed in quadruplicate and accompanied by an equal number of copies of the order appealed against (one of which at least shall be a certified copy). 8. Appellate Tribunal against order of Commissioner (Appeals) 8.1 As per Section 35 B(2) of Central Excise Act, 1944, the Commissioner of Central Excise may, if he is of the opinion that an order passed by the Commissioner (Appeals) under section 35A is not legal or proper, direct any Central Excise Officer authorized by him in this behalf to appeal on his the Appellate Tribunal against such order. 9. Form of application to Appellate Tribunal 9.1 As per rule 7 of the Appeal Rules, an application under sub-section (1) of section 35E to the Appellate Tribunal shall be made in Form No. E.A.-5 (see Annexure 40 in Part 7). The form of application in Form No. E.A.-5(see Annexure 40 in Part 7) shall be filed in quadruplicate and accompanied by number of copies of the decision or order passed by the Commissioner Excise (one of which at least shall be a certified copy) and a copy of the order passed by the Board directing such Commissioner to apply to the Appellate Tribunal. 10. Order of Appellate Tribunal 10.1.1 As per Section 35C (2) of Central Excise Act, 1944, 3. The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend order passed by it under sub-section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Central Excise or the party to the appeal. 10.1.2 As per Section 35C (2A) of Central Excise Act, 1944, The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed: Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of Section 35B, the Appellate Tribunal I dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. 10.1.3 Amendment has been made to section 35 C of the Act to provide that adjournment of the hearing shall not be granted more than three times to party during the proceedings 10.2 The Board's Circular No. 453/19/99-CX. dated 9-4-99 envisaged that all field Commissioners shall ensure quick critical examination of all appeals filed by assessees or importers as the case may be in all cases involving important law points and/or revenue of more than Rs. 20 lakhs in each case and (i) file memorandum of Cross Objection in the Tribunal with copy the concerned CDR/JCDR/SDR within the stipulated period of I days from the date of receipt of the notice from CESTAT in terms I Section 35B(4) of Central Excise Act or Section 129A(4) of Customs Act, or (ii) send their comments along with copies of the relevant documents the concerned CDR/JCDR/SDR as the case may be within the said 45 days, so that the Departmental Representatives can effective represent department's side before CESTAT. 10.4 All cases involving important law points or revenue of more than Rs. 20 lakhs as per above para shall be immediately taken up for scrutiny on receipt of the notice from CESTAT and Cross Objections/comments shall be filed within prescribed time limit. It may be kept in mind that where the order under challenge is passed by the Commissioner as an Adjudicating Authority authorisation for filing cross objection is to be given by Board, and therefore, Zonal Chief Commissioner has to send draft Review Order along with the ca records and the Memo of appeal filed by the assessee within ten days of receipt of notice from the CESTAT. Further, whenever any specific comments clarification is asked for, it should be very expeditiously attended to and well considered comments shall be sent by the Commissioners themselves under their own signature. 10.5 It may be ensured that applications for early and out of turn hearing are filed only in deserving cases giving proper and detailed reasons for the same. It should be ensured that such application should not be filed in a routine manner and due justification must be given for out of turn hearing while filing such applications. 10.6 The Board has issued instructions in the past reiterating the importance of language used in the authorisation. Circular No. 413/46/98-CX, dated 6-8-1998 (F. No. 390/120/98-JC) [(102) E.L.T. T31] Circular No. 560/56/2000-CX, dated 30-11-2000 (F. No. 387/269/2000-JC) [(122) E.L.T.1281 in this regard are relevant. There may be cases where even though the Commissioner was inclined to accept the order of Commissioner (Appeals), the Chief Commissioner feels otherwise and on his advice appeal is filed and authorisation for that purpose is issued by the Commissioner. In such circumstances, it would be prudent if Chief Commissioner himself passes an authorisation indicating therein that he had applied his mind and he found the order to be not legal and proper. In case the Commissioner decides to himself issue authorisation on the advice of the Chief Commissioner the file and the order of authorisation have to indicate that the Commissioner had indeed applied his mind and found the order of the Commissioner (Appeals) not to be legal and proper. Commissioners are also advised to keep in mind the provision and the previous instructions in this regard which very clearly stipulate that the authorisation should show Commissioner's opinion that the order by Commissioner (Appeals) is not legal or proper. 11. Effective handling of Central Excise Customs Appeal in CESTAT. 11.1 The Board, on recommendation of Expert Group in appeal matters has issued the following guidelines: a. Copy of the Department's appeals both against the order of the Commissioner as well as Commissioner (Appeals), should be handed over to the office of CDR/Joint CDR after filing of the same in the CESTAT Registry so as to enable them to scrutinise such appeals for pointing out the technical defects and possible remedial measures. b.All correspondence with the office of the CDR/ Joint CDR or the Registry of CEGAT should be under the signature of an officer not below the rank of Addl. /Joint Commissioner in the Commissionerate. c. Appeals should be filed with proper authorization by Commissioner and after citing correct provisions of law i.e. Section 35 B or 35 E of Central Excise Act or Section 129 A or 129 D of the Customs Act. When the Board authorizes Commissioner to file appeal, it should be filed against each respondent. Appeal authorization should clearly indicate that order has been found to be not legal and proper. Commissioners should invariably file cross objection or send para - wise comments in terms of the Board's order on the subject, within the stipulated period of 45 days. Conversant officers should be deputed to brief the DRs so that the case can be presented effectively before the CESTAT. d. The improper order in favour of revenue should not be accepted in routine and the review authority should give its observations for guidance of the adjudication authorities. The tendency to invariably pass the orders in favour of revenue without application of mind or to file frivolous appeals should end forthwith. Whenever any such cases noticed, the CDR should send a note to the Chief Commissioner concerned with a copy to the Board. 12. Application to High Court 12.1 As per Section 35H, the Commissioner of Central Excise or the z party may, within 180 days of the date upon which he is served with notice of an order under section 35C passed before 1.7.2003 (not being an order ting, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), by application in the prescribed form, accompanied, where the application is made by the other party, by a fee of two hundred rupees, apply to the High Court to direct the Tribunal to refer to it any question of law arising out of such order and, subject to the other provisions contained in this section. If the High Court so directs, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such direction, draw up a statement of the case and refer it to the High Court: 12.2 On receipt of notice that an application has been made under sub section (1), the person against whom such application has been made, may notwithstanding that he may not have filed such an application, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order in relation to which an application for reference has been made and such memorandum shall be disposed of by the High Court as if it were an application presented within the time specified in sub-section (1). 12.3 Sections 35H of the Central Excise Act, 1944 provides for a reference to the High Court against any order of the Appellate Tribunal provided such order does not relate to the determination of rate of duty or value of goods among other things. However, where there are conflicting decisions of the High Courts in relation to the question of law involved, Section 35 H of the Central Excise Act provides for a direct reference to the Supreme Court. 13. Appeal to High Court As per Section 35G of Central Excise Act, 1944, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. 13.2 The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be - (a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. 13.3 Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. 13.4 The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. 14. Procedure for filing Revision Application 14.1 Sections 35E, 35EA, 35EE of Central Excise Act provide for review of an order passed by the adjudicating authorities. 14.2. Section 35E gives powers to Board or Commissioner of Central se to pass certain orders. 14.3 Section 35EA deals with powers of revision of Board or iissioner of Central Excise in certain cases while Section 35EE deals with revision by Central Government. 15. Revision Application 15.1 As per Rule 9 10 of the Appeal Rules, the revision application e Section 35 EE shall be in Form E.A.-8 (See Annexure 43 in Part 7) presented in person to the Under-Secretary Revision Application Unit, G of India, Ministry of Finance, Department of Revenue, New Delhi by registered post addressed to such officer. (1) The revision application sent by registered post shall be deemed to have been submitted to the said Under Secretary on the date on which it is received in the office of such officer. (2) The grounds of revision application and the form of verification as contained in Form EA-8 (See Annexure in Part 7) shall be signed by the person specified in sub-rule (2) of Rule 3. (3) The application shall be filed in duplicate shall be accompanied by two copies of the following documents, i.e. (i) Order referred to in 1st Proviso to Section 35B (1) (ii) Decision or order passed by Central Excise Officer which was the subject matter of the order referred to in rule 9(4)(i) 16. Form of application to High Court 16.1 As per Rule 8, an application under sub-section (1) of section 35 H requiring the High Court to direct the Appellate Tribunal to refer to the High court any question of law shall be made in Form No. E.A.6 (See Annexure 41 in part 7) and such application shall be filed in quadruplicate. Further provisions are as below: (1) A memorandum of cross-objections under sub-section (3) of section 35H to the High Court shall be made in Form No. E.A.-7 (See Annexure 42 in Part 7) and such memorandum shall be filed in quadruplicate. (2) Where an application under sub-section (1) of section 35H or a memorandum of cross-objections under sub-section (3) of that section is made by any person other than the Commissioner of Central Excise, the application, the memorandum or form of verification, as the case may be, contained in Form No. E.A.-6 (See Annexure 41 in Part 7) or Form No. E.A.-7 (See Annexure 42 in Part 7) shall be signed by the person specified in sub-rule (2) of rule 3. 17. Appeal to Supreme Court 17.1 The Central Excise Act, 1944, provides a two tier machinery for redressal of grievances against the decision of the Appellate Tribunal. In cases where the decision of the Appellate Tribunal relates to any question having relation with the determination of 'rate of duty' or 'value of goods' amongst i things, the same is directly appealable to the Supreme Court under Section 35L of the Central Excise Act, but where the order of the Appellate Tribunal does not relate to 'rate of duty' or 'value of goods', first a reference to the High Court has to be made under Section 35H and thereafter an appeal, against the judgment of the high Court on a reference, can be made to the Supreme Court provided the High Court certifies it to be a fit case for appeal to the Supreme Court. 17.2 Orders appealable to the Supreme Court An appeal under Section 35L of Central Excise Act, 1944 shall lie to the Supreme Court from - (a) any judgment of the High Court delivered (i) in an appeal made under Section 35G; or (ii) on a reference made under Section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under section 35H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certified to be a fit one for appeal to the Supreme Court; or b) any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. 17.3 The petition of appeal under Section 35L of the Central Excises and Salt Act, 1944, shall, subject to the provisions of Section 4,5 and 12 of the Limitation Act, 1963 (36 of 1963) be presented within sixty days from the date of the order sought to be appealed against or within sixty days from the date on which the order sought to be appealed against is communicated to the appellant, whichever is later provided that in computing the said period, the time requisite for obtaining a copy of such order shall be excluded. 18. Effective handling of Central Excise and Customs Appeals in Supreme Court. 18.1 The Board on recommendation of Expert Group in appeal matters has issued the following guidelines for strict compliance. a. On the basis of the terminal list provided by the Supreme Court Registry, the Directorate of Legal Affairs may list out all cases likely to come up in the next session of the Supreme Court and send it to the concerned Commissionerates. The Commissionerate in turn should review their files and take necessary action to follow up contacting the concerned advocates. Any defects or pending orders which require to be removed/implemented should be attended to well in advance of the actual date of listing. b. The Commissionerate should appoint a nodal officer responsible for maintaining a data-base of their cases and keep the same updated on the basis of references received from the DLA, Board office, Central Agency Section, Supreme Court website and take step accordingly. The nodal officer will also be responsible for attending to any important message telephone /fax relating to cases of the Cominissionerate from the Boards office/Directorate of legal Affairs. The Commissionerate should inform the DLA/Chief Commissioner and the Board about the appointment of the nodal officer of the Commissionerate.