2012 (11) TMI 262 - AT - Central Excise

Appeal Dismissed for Delay in Review Order; Invalidity Renders Penalties Moot

COMMISSIONER OF CENTRAL EXCISE, DELHI-III, GURGAON Versus M/s KAP CONES

The Tribunal dismissed the appeal due to the failure to condone the delay in issuing the review order by the Committee of Chief Commissioners. The ... Whether delay in issue of review order u/s 35E(1) can be condoned by Tribunal - Review order is being issue by the Committee of Chief Commissioners against the order of Commissioner within 3 months from the date of communication of order – Held that:- Following the decision in case of M.M. Rubber Co. (1991 (9) TMI 71 - SUPREME COURT OF INDIA) that power u/s 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly and when a time limit is prescribed for exercise of this power, the same has be exercised within time limit and an order passed beyond the period prescribed u/s 35 E(3) would be invalid and ineffective. Therefore order passed u/s 35(1) held to be invalid then no question of Condonation of delay against invalid and ineffective order. Appeal decides in favour of assessee. Issues Involved:1. Wrong availment of input duty credit and capital goods duty credit.2. Clandestine removal of finished products.3. Imposition of penalty on the respondent company under Section 11AC.4. Imposition of penalty on the Manager and Accounts Manager under Rule 26 of the Central Excise Rules, 2002.5. Condonation of delay in issuing the review order by the Committee of Chief Commissioners under Section 35E(1).Issue-wise Detailed Analysis:1. Wrong Availment of Input Duty Credit and Capital Goods Duty Credit:The respondent, a proprietorship concern, was accused of wrongfully availing input duty credit and capital goods duty credit. The Commissioner, in the order-in-original dated 15.7.2011, disallowed the wrongly taken cenvat credit and confirmed its demand by invoking the extended period under proviso to Section 11A(1). This decision was based on the findings that the respondent had incorrectly availed the credits, which were not legally permissible.2. Clandestine Removal of Finished Products:The respondent was also charged with clandestine removal of finished products, specifically paper cones used for wrapping ice cream cones and cone biscuits. The Commissioner confirmed the duty demand concerning the goods alleged to have been clandestinely removed and ordered the confiscation of the seized goods. This was a significant point of contention as it involved substantial duty evasion.3. Imposition of Penalty on the Respondent Company under Section 11AC:While the Commissioner confirmed the demand for wrongly taken cenvat credit and duty on clandestinely removed goods, no penalty was imposed on the respondent company under Section 11AC. The Committee of Chief Commissioners reviewed this omission and deemed it incorrect, arguing that the facts and circumstances warranted the imposition of such a penalty.4. Imposition of Penalty on the Manager and Accounts Manager under Rule 26 of the Central Excise Rules, 2002:The Committee of Chief Commissioners also noted that the Commissioner overlooked the imposition of penalties on the Manager and Accounts Manager of the respondent company under Rule 26 of the Central Excise Rules, 2002. Given the involvement of these individuals in the alleged infractions, the Committee believed that penalties were justified.5. Condonation of Delay in Issuing the Review Order by the Committee of Chief Commissioners under Section 35E(1):The review order by the Committee of Chief Commissioners was issued on 25.10.2011, which was 8 days beyond the prescribed three-month period from the date of communication of the Commissioner's order. The Commissioner filed an application for condonation of this delay, citing genuine reasons. The Tribunal examined whether this delay could be condoned. The Tribunal referenced the Apex Court's decision in Commissioner of Central Excise Vs. M.M. Rubber Co., which held that when a time limit is prescribed for the exercise of power under Section 35E, any order issued beyond this period is invalid and ineffective. Consequently, the Tribunal concluded that it could not condone the delay in issuing the review order, as it would render the order invalid and ineffective.Conclusion:The Tribunal dismissed the application for condonation of delay and, consequently, the appeal itself. The Tribunal emphasized that it had no authority to condone the delay in the issuance of the review order by the Committee of Chief Commissioners, as this would contravene the legal provisions and precedents set by higher judicial authorities. All the points raised by the Committee of Chief Commissioners regarding penalties and the validity of the Commissioner's order were rendered moot due to the procedural lapse in issuing the review order within the prescribed time limit.