2014 (10) TMI 760 - HC - Central Excise

Court upholds Tribunal's decision on Central Excise Act case, emphasizing factual basis and manufacturer's explanation

The Court rejected the reference case under Section 35(H)(1) of the Central Excise Act, 1944, maintaining the Customs, Excise and Gold (Control) Appellate ... Reference application - Whether the Tribunal was correct in merely dismissing the appeal without having taken the Boards Review order into consideration - Held that:- The power conferred upon the Board under Section 35H of the Act is somewhat typical. Normally, the taxing statutes do not provide for any appeal by the Department, against the order passed by the original or assessing authority. It is only the prerogative of the assessee to prefer an appeal against the order of assessment. Thereafter, if the Department suffers any order to its detriment in appeal, it can certainly carry the matter in further appeal to the CEGAT, or such authority as may be prescribed. wherever a departmental authority is conferred with the power to reopen, or review the proceedings, under the Act to satisfy itself, it has either to confirm or modify or set aside the orders, under its consideration. Under Section 35E of the Act, the order passed in the first instance has to satisfy itself about the correctness thereof. However, if it finds that the order under its consideration is not correct, the only course left open to it, is to require an authority under the Act to prefer an appeal before the Board against such an order. Beyond that, it cannot express any view on merits. Even on close verification of grounds of Reference, hardly there exists any element of law in them - Decided against Revenue. Issues:Reference case under Section 35(H)(1) of the Central Excise Act, 1944 - Discrepancy in quantity of re-rolled steel cleared for excise duty payment - Appeal against order passed by Customs, Excise and Gold (Control) Appellate Tribunal, Bangalore - Power of Board under Section 35H of the Act - Justification for inclusion of quantity in balance sheet - Tribunal's dismissal of appeal without considering Board's review order - Final order based on adjudication order by Commissioner of Central Excise, Guntur.Analysis:The case involves a discrepancy in the quantity of re-rolled steel cleared for excise duty payment by a manufacturer, leading to a show cause notice issued in 1994. The manufacturer explained the difference in quantity as purchased from outside and traded, not manufactured by them, which was accepted by the Commissioner, dropping the proceedings in 1995. However, the Board, under Section 35E of the Act, verified the order and directed the Commissioner to appeal against it, resulting in an appeal before the CEGAT, which was dismissed in 2002.The power of the Board under Section 35H of the Act allows for a departmental appeal against orders, unlike the usual appeal process by the assessee. The Board's role is to confirm, modify, or set aside orders under consideration, without expressing views on merits beyond requiring an appeal against incorrect orders. In this case, the original order was based on a simple verification without legal interpretation.The CEGAT considered the explanation provided by the manufacturer, supported by a Chartered Accountant's certification, distinguishing between manufactured and traded quantities. The Tribunal found that the traded quantity was reflected in the balance sheet for commercial purposes, not as manufactured goods. The absence of the traded quantity in the manufacturing register and physical premises of the factory was noted.The Tribunal's dismissal of the appeal without considering the Board's review order was questioned, but the Court found the case primarily factual, lacking legal elements. The final order was based on the Commissioner's adjudication order, and the questions raised did not present legal grounds for intervention. Consequently, the reference was rejected, maintaining the Tribunal's decision on the appeal.