2009 (5) TMI 47 - AT - Central Excise

Challenges to Referral Order Upheld: Jurisdiction, Errors, and Precedents

The Department challenged the referral order citing lack of jurisdiction, absence of cause, and factual errors. The referral bench's authority to decide ... Reference to Larger Bench – Power of Reference Bench – Issue: Credit on steel items like angles, joists, beams, channels, bars, flats, etc. are used in the construction work - The referral Bench therefore has all the powers to refer the matter to the Larger Bench at the stage it considered appropriate - once the decision is taken by the referral bench which is in conflict with the precedent decision whether the wording used in the order of the referral bench is “prima facie view” or “final view” is immaterial as long as inconsistency in the earlier judgment has been brought out appears reasonable and acceptable Issues Involved:1. Maintainability of the referral order.2. Jurisdiction of the referral bench.3. Examination of relevant details and judgments.4. Factual errors in the referral order.5. Impact of prima facie views on referral orders.6. Legal provisions and precedents regarding referral to Larger Bench.7. Powers and functions of the Larger Bench.8. Procedural propriety and judicial discipline.Issue-wise Detailed Analysis:1. Maintainability of the Referral Order:The referral order was challenged by the Department on grounds such as lack of jurisdiction, absence of cause for reference, and factual errors. The referral bench had passed the order at the stay stage, which was contested as 'irregular' and 'illegal.' The Department argued that the referral should not have been made at the stay stage and that it lacked examination of relevant details and judgments favorable to the Department.2. Jurisdiction of the Referral Bench:The Department argued that the referral bench had no authority under Rule 4(1) of CESTAT (Procedure) Rules 1982 to decide beyond the stay petition. It was contended that even if both parties consented, the referral bench did not get jurisdiction to decide the appeal at the stay stage. The referral order was deemed 'irregular' and 'illegal.'3. Examination of Relevant Details and Judgments:The Department highlighted that several judgments favorable to them were not cited in the referral order. They listed specific judgments and argued that these were not considered due to the premature stage of the referral. The referral order was criticized for not including these judgments, which were significant for the Department's case.4. Factual Errors in the Referral Order:The Department pointed out factual errors in the referral order, particularly in the interpretation of the Bhushan Steel Strips case. They argued that the referral order contained incorrect observations and misrepresentations, which affected the Department's ability to argue the referred points.5. Impact of Prima Facie Views on Referral Orders:The referral bench had used the term 'prima facie' in their order, which was contested by the Department. They argued that a prima facie view taken at the stay stage should not be considered conclusive or in conflict with any precedent decision of the Tribunal. The appellants, however, supported the referral, arguing that such references at the interim stage were proper and legal.6. Legal Provisions and Precedents Regarding Referral to Larger Bench:The statutory provisions and case laws relating to the constitution of Larger Bench were examined. Section 129C(5) of the Customs Act was discussed, which deals with resolving differences of opinion within a Bench. The concept of referring to a Larger Bench on the basis of a prima facie view was supported by precedents, including the Hon'ble Supreme Court's judgment in Paras Laminates.7. Powers and Functions of the Larger Bench:The Larger Bench has the power to regulate proceedings, admit evidence, and consider the entire appeal filed. The referral order's legality and the Larger Bench's jurisdiction were upheld, emphasizing that the Larger Bench is not an appellate body to review the referral bench's order but to consider the issues referred.8. Procedural Propriety and Judicial Discipline:The importance of judicial discipline and following precedent decisions was highlighted. The Tribunal's practice of referring matters to a Larger Bench when there is a conflict in decisions was upheld. The Hon'ble Supreme Court's approval of this practice was cited, emphasizing the need for consistency and predictability in judicial decisions.Separate Judgments:- M. Veeraiyan (Member Technical): Rejected the preliminary objection raised by the Department, upholding the referral order's validity and emphasizing the Tribunal's power to regulate its procedure.- D.N. Panda (Member Judicial): Disagreed with the referral order's validity, emphasizing the need for judicial discipline and proper procedure in making referrals to the Larger Bench.- P.K. Das (Member Judicial): Concurred with M. Veeraiyan, emphasizing that the Hon'ble President's discretion in referring matters to the Larger Bench was exercised correctly.Final Order:The preliminary objection raised by the Department was rejected, and the referral to the Larger Bench was upheld. The decision was pronounced in open court on 27-5-2009.