Remand directions of the Tribunal to be followed by the lower authorities strictly.

PJ/Case Laws/2012-13/1313

Case:- CCE, Chennai Vs S&S Power Switch Gear Ltd.

Citation:- 2012-TIOL-1596-CESTAT

Brief Facts:-The respondent are engaged in the manufacture of HT circuit breakers of various types. During the relevant period, the respondent were discharging duty on the said goods @ 5% in terms of Notification no. 52/93-CE dt. 28/02/93 by classifying the same under heading 8535.00. The Adjudicating authority issued three SCNs, raising demands of duties on the allegation that the goods were not classifiable under heading 8535.00 but the same are properly classifiable under heading 85.37 and as such the benefit of Notification was not available to them. The Department raised demand for the period 1.03.93 to 31.12.93 by first SCN, 01.01.94 to 31.0394 by second SCN and April 94 to July 94 by third SCN. When the above SCNs were still in the process of adjudication, the CBEC vide an order No.32/8/94-CX.4 vide F.no. 151/6/94-CX.4 dt. 14/07/94 issued under Section 37B of the Central Excise Act held that circuit breakers mentioned in the list appended to the said order were classifiable under heading 8437.00 of the central excise act, 1985. Thereafter, the commissioner passed the order in original confirming the demands covered by three SCNs and imposing penalty. The respondent filed appeal against the said order before tribunal. The tribunal remanded the matter for redetermination of classification issue and held that demand of duty has to be restricted to 6 months period only.
The Commissioner, while quantifying the demand, took note of the Tribunal’s decision in the case of Southern switch Gear Ltd. V.s CCE Chennai- 2003 (155) ELT 145 (Tri. Chennai) laying down that board’s circular dt. 14/07/94 classifying the goods under heading 8537 would have only prospective effect and, therefore, classification of the product has to be adopted under heading 8537.00 only from 14/07/94, confirmed the demand of duty for the period 14/07/94 to 31/07/1994. Aggrieved by the same, the Revenue preferred an appeal to the Tribunal.

Appellant’s Contention:- The appellant submits that the demand raised against the respondents should have been confirmed for the entire period Jan’93 to July’94 inasmuch as subsequent to passing of the order by the Tribunal vide which matters were remanded, vide section 110 of Finance Act 2000 provisions of Section 11A were amended retrospectively revalidating the issuance of SCNs under Section 11A for a period of 6 months or 5 years from the relevant date notwithstanding any approval of classification list or price list during the said period. The appellant further submits that in view of the above amendment to section 11A, brought vide Section 110 of the Finance Act 2000, demands raised against the assesses by way of SCNs stand validated irrespective of the fact that as to whether the classification lists were approved or not. In such a scenario, it is his submission that the entire duty raised against the respondents by invoking the longer period of limitation is required to be confirmed.

Respondent’s Contention:-The Respondent submits that the earlier remand order of the Tribunal specifically observed that the Board’s Circular is effective only prospectively. In an identical matter, the Tribunal in the case of Southern Switch Gear Ltd. Vs. CCE Chennai-2003 (155) ELT 145 (Tri. Chennai) has held that the demand should have been confirmed by the lower authorities w.e.f. 14/07/94 onwards i.e. from the date of issuance of the board’s circular. He also relies upon the Tribunal’s decision in the case of CCE Pondicherry Vs. Micro Controls 2007 (214) ELT 547 (T) wherein following the Hon’ble Supreme Court’s decision in the case of HM bags, the demand was confirmed only prospectively from the date of issuance of the Board’s circular. As such, the respondent supports the impugned order of the commissioner, confirming the demand for the period 14/07/94 to 31/07/94 only.

Reasoning of judgment:-The Tribunal heard and appreciated the submissions made by both sides and considered that the present impugned order has been passed by the commissioner in de novo proceedings, when the matter was earlier remanded by the Tribunal. On going through the said order of the Tribunal, The Tribunal further finds that originally there was difference of opinion between the members and the matter was referred to third member. As per the majority order, the matters were remanded with the direction to restrict the demand to a period of 6 monthly only. For proper appreciation, the relevant paragraphs from the order of member (Technical) who first authored the order and the order of the third member are reproduced as follows:
Order of the Member (Technical)

“Since we are setting aside the order by restricting the demands to a period of six months and remanding the matter back to the learned commissioner to re-quantify the demands, we would consider leaving the issue on merits to be kept open, to both sides. Therefore we do not arrive at any findings on submissions made on merits an also on the logic of the Section 37B orders, as made before us. We keep the same, to be re determined in the remand proceedings”
Order of the Member (Technical)
I am also in agreement with the finding recorded by learned member (T) in para 3 (e) at page 7 that as there was no suppression of facts the proviso to section 11A (1) cannot be invoked for demand of duty. I also agree with the view taken by learned member (T) Shri S.S. sekhon that the demands have to be restricted to six months only following the ratio of the decision of the Tribunal in the case of Muzzaffarnagar Steel reported in 1989 (44) ELT 552, Page, 555 as contained in page 8 of the order recorded by present case. Therefore, the extended period cannot be invoked for demand of duty in the absence of deliberate suppression or misstatement of facts with intent to evade payment of duty. The tribunal judgment in the case of Muzzaffarnagar steel was also followed by the west regional bench of the tribunal in the case of Bombay drums manufacturing co. v. cce reported in 2000 (124) ELT 908. further in the case of fricks India Ltd. V. CCE reported in 2000 (119) ELT 676, the bench presided over by Justice K. Sreedharn, Ex- president has held that if the goods are cleared pursuant to approval of the classification list it is not open to the department to justify demand of duty invoking the longer period of limitation in terms of Section 11A.

In view of the above discussion, The Tribunal agreed with the view taken by member (Technical) that the appeal is required to be remanded for re- determination of the classification issue and the demand of duty has to be restricted to six months period only.”
The Tribunal recorded final majority order wherein said that the appeal is allowed by remand for re-determination of classification issue and the demand of duty has to be restricted only to six months period only as held by both learned members (Technical) in their respective orders.”
As is clear from the above, the majority decision was to the effect that the demands have to be restricted to 6 months period. Even the recording of the majority order clarifies that the duty demands have to be quantified for 6 months period.
The Tribunal also considered that the impugned order was being passed by the commissioner in de novo proceedings, he was bound by the observations made by the Tribunal and the findings arrived at. It was not open to the commissioner to restrict and quantify the demand for a period lesser than 6 months from the date of issuance of the SCN. Commissioner’s reliance to the tribunal’s decision in the case of southern switchgear ltd. for restricting the demand to a period from 14/07/94 to 31/07/94 is not proper inasmuch as in that case, directions were given by the earlier order of the Tribunal in the second round of litigation, the Tribunal observed that the directions given by the tribunal to lower authorities were required to be followed and the action on the part of the lower authorities to refuse to do the same amounts to judicial indiscipline in flouting the said directions. As such, the observations made by the tribunal in the case of southern switchgear ltd., in fact, advances the revenues case inasmuch as the adjudicating authority was bound to follow the directions of the tribunal, in the present case, which, in clear terms, held that the demand of duty is required to be fixed for a period of 6 months.
The tribunal further finds that the arguments made by respondent to seek support from the Hon’ble Supreme Court decision in the case of HM Bags etc. Cannot further his case inasmuch as, The appeal already stands decided by the earlier order of the Tribunal. The appellant fairly agrees that the earlier order of the Tribunal, directing confirmation of demand for six months, was not appealed against by them before any higher appellate forum. That being so, it has to be held that the same attained finality and the commissioner was bound by the directions as contained in the said order. For the same reasons, it is not open to us to go to the merits of the case and to re-decide the issue relating to the period for which the demand is required to be confirmed.
The Tribunal comes to the reasoning recorded in the earlier decision of the tribunal, as adopted by the members, the same makes it clear that the Board’s circular has to be given prospective effect only. Having held that the earlier order, in clear terms, restricts the demand to a period of 6 months, the tribunal need not examine the intention of the members writing the judgment.
For the same reasons, The Tribunal also finds that the revenue’s prayer for confirmation of entire duty by invoking the extended period cannot be accepted as the earlier order of the Tribunal had categorically held that extended period is not available to the revenue and demand should be restricted to six months period.
The Tribunal further considered that at this stage, appellant has also made reference to the fact that the review order is not appropriately signed by the proper officer. However, apart from the fact that such preliminary objection was raised at the end of the proceedings, the tribunal find no justification in the above objection of appellant inasmuch as the review order issued OSD (Review) bears the signature of the OSD, showing the signature of Member (L&J). In the absence of any doubt about the correctness of the same, The Tribunal do not find it correct to call for the records as suggested by the appellant.
The Tribunal further finds that In view of the above, revenue’s appeal allowed and the matter is remanded for quantification of duty for a period of 6 months in respect of each SCNs issued to the respondents.

Decision:- Appeal is disposed of.

Comment:- The analogy drawn from this case is that the whenever the case is remanded to the lower authorities subject to some specifications then the lower authorities are to pass the order within the boundaries of specifications drawn by the Tribunal. Any order passed in violation of such remand conditions is liable to be set aside or remanded again.

Comments

PJ/Case Laws/2012-13/1313

Post a Comment

Query