Commissioner’s power to
pass certain orders
High
Court of Bombay
Commissioner
of Central Excise
v
M.
M. Thakkar & Sons
F.I.
REBELLO AND J. P. DEVADHAR, J.
CENTRAL
EXCISE APPEAL NO. 285 OF 2006
October
18, 2007
Section 35E of the Central Excise Act, 1944 - Powers of Board or
Commissioner to pass certain orders - Whether section 35E(2) mandates that
Commissioner in his order must use words ‘not legal and proper’ - Held, no -
Whether where order passed under section 35E(2) does not use words ‘not legal and
proper’ but it is shown from reason recorded that Commissioner has applied his
mind, and for reasons stated in order has authorised filing of appeal, then
such order would be in accordance with provisions of section 35E(2) - Held, yes [Para 13]
A show-cause notice was issued to the
respondent/assessee calling upon it to show cause as to why modvat credit of
additional duty of excise leviable under Additional Duties of Excise (Goods of
Special Importance) Act, 1957 availed by it hould not be disallowed / reversed
or recovered. After hearing the
respondent, the Assistant Commissioner dropped the show cause notice. The
Commissioner was of the opinion that the respondent was not entitled to the
modvat credit and, therefore, by an order passed under section 35E(2),
authorised the Assistant/Deputy Commissioner to file an appeal before the
Commissioner (Appeals) against the order in original. Accordingly, an appeal
was filed by the revenue before the Commissioner (Appeals). The Commissioner
(Appeals), however, without going into the merits of the case, dismissed the
appeal only on the ground that the Commissioner while directing the concerned
authority to file an appeal against the order in original, had not used the
words ‘not legal and proper’ in his authorization order and, therefore, it
could not be said that he had formed any opinion and in the absence of such
opinion, the appeal filed by the concerned officer was not maintainable. On
further appeal field by the revenue, the Tribunal 2006 upheld the order of the
Commissioner (Appeals).
On appeal :
HELD
Section 35E(2) empowers the Commissioner to pass an order authorizing filing of an appeal against an order passed by an authority subordinate to him, on his being satisfied that the order of the subordinate authority is not legal and proper. The order passed by the Commissioner under section 35E(2) must reflect the satisfaction arrived at by the Commissioner. [Para 10]
The Commissioner in his order had recorded reasons as to why the order in original, in his opinion, was erroneous and accordingly, authorised filing of an appeal. When the Commissioner had recorded specific reasons for not accepting the findings given in the order in original, both the Commissioner (Appeals) as well as the Tribunal were not justified in holding that the Commissioner had not recorded his satisfaction as contemplated under section 35E(2). [Para 11]
Neither section 35E(2) mandates that the Commissioner in his order must use the words ‘not legal or proper’ nor the Apex Court in the case of Collector of Central Excise v. Rohit Pulp Paper Mills 1998 (101) ELT 5 has held that in every authorization order the words ‘not legal and proper’ must be used. It is not the words but the substance that matters. Therefore, even though the order passed under section 35E(2) does not use the words ‘not legal and proper’ but where it is shown from the reasons recorded that the Commissioner has applied his mind, and for the reasons stated in the order has authorised filing of an appeal, then such an order would be in accordance with the provisions of section 35E(2). In the instant case, the Commissioner had recorded reasons as to why the order passed by the lower authority was not acceptable. Therefore, the Commissioner (Appeals) as well as the Tribunal were in error in holding that there was no compliance of section 35E(2). [Para 13]
Accordingly, the appeal was allowed and the matter was restored to the file of the Tribunal for decision on merits and in accordance with law. [Para 15]