TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 1524
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....nents are not excludible, the Dept issued 22 periodical Show Cause Notices for the period February 2013 to December 2014. After due process of law, the Adjudicating Authority passed the impugned Order-in-Original, confirming the Excise Duty and interest thereon. No Penalty has been imposed since there is no case of fraud or suppression. Being aggrieved by the impugned Order-in-Original, the appellant has filed the present Appeals before the Tribunal. 2. The Ld. Counsel, appearing on behalf of the appellant takes a preliminary stand towards the delayed adjudication and passing of the Orders in Original, on the following grounds: 2.1 At the outset, it is submitted that recently on 25.11.2024 the Principal Bench of Hon'ble CESTAT at New Delhi in the case of Kopertek Metals Pvt Ltd vs. Com of CGST, New Delhi (Final Order no. 59511-59720 of 2024 in Excise Appeal no. 52178 of 2022) has held that where the adjudication orders have not been passed within the timeline as prescribed in Section 11A(11) of the CEA, the same cannot be legally sustained. 2.2 The provisions contained in Section 11A(11) requires that the adjudication order to be passed within six months / one Year of the date o....
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....e Supreme Court in India Cement Limited v State of Tamil Nadu, (1990) 1 SCC 12 ("India Cement") to contend that Royalty is the nature of "tax" and therefore not includible in transaction value. The Appellant further submitted that SED is recovered as a "duty of excise" and therefore not includible in transaction value. Further, all other levies on which demand has been raised were in the nature of "tax" and hence not includible. It was submitted during the adjudication proceedings that the decision of the Hon'ble Supreme Court in the case of India Cements (supra) wherein it was held that royalty is a tax was pronounced by a Seven Judges Bench whereas the judgement in Kesoram Industries was pronounced by a Five Judges Bench and therefore the Larger Bench judgment in India Cement's case would be binding on all the authorities below. 3.4 The Ld. Commissioner in his adjudication orders observed that Royalty and other levies are not "taxes" and therefore includible in the transaction value. With respect to Royalty, reliance has been placed by the Ld. Commissioner on the judgment of Hon'ble Five Judges Bench of the Supreme Court in State of West Bengal vs. Kesoram Industries Limited (20....
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....on in India Cements was holding the field. Thus, the very initiation of proceedings by issuance of the impugned SCN's was bad in law ab-initio. Consequently, the impugned OIO passed pursuant to the SCN's are bound to fail since they are contrary to the settled legal jurisprudence. The entire demand deserves to be set aside. 3.8 The Appellant submits that the deviation in the principle of law pronounced by the Ld. Seven Judges Bench in India Cement case and that pronounced by Ld. Five Judges Bench in Kesoram's case was noted by the Three Judges Bench of Hon'ble Supreme Court in the case of Mineral Area Development Authority and Ors. v. Steel Authority of India and Ors. (2011) 4 SCC 450 (judgment pronounced on 30th March 2011). The Hon'ble Bench requested reference to a Bench of Nine Judges by noting that normally a Bench of Five Learned Judges, in case of doubt, has to invite the attention of the Hon'ble Chief Justice and request that the matter be placed before a Bench of Larger quorum than the Bench whose decision has come up for consideration and doubted placing reliance on the judgment of Central Board of Dawoodi Bohra Community v State of Maharashtra, (2005) 2 SCC 673. 3.9 It....
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.... remanding the matter, but also distinguished the decision of the Tribunal by observing that the decision of the Tribunal had not been agreed to by the Department as an appeal had been filed in the Supreme Court. The Hon'ble Supreme Court observed that as the Assistant Commissioner had not followed the decision of the Tribunal merely because an appeal had been filed by the Department before the Supreme Court, the High Court had rightly criticized the conduct of the Assistant Collector since it resulted in harassment to the assessee caused by the failure to give effect to the order passed by the Tribunal. The Supreme Court also observed that the order of the Tribunal is binding upon the Assistant Collectors who functions under the jurisdiction of the Tribunal and that the principles of judicial discipline require that the orders of higher appellate authorities are unreservedly followed by the subordinate authorities. 3.14 In East India Commercial Co. Ltd, Calcutta and Another v Collector of Customs, Calcutta reported in 1962 SCC Online SC 142 in Civil Appeal No 383 of 1960 decided on 4th May 1962 the Ld. Three Judges Bench of the Hon'ble Supreme Court gave paramount importance to t....
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.... be so, the notice issued by the authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction. 3.15 In Air Conditioning Specialists (P.) Ltd. V Union of India, [1996] 221 ITR 739 (Gujarat), the Hon'ble Gujarat High Court has held that the Commissioner of Income Tax is a "Tribunal" subject to the supervisory jurisdiction of the High Court under article 227 of the Constitution and he is bound to obey the law declared by High Court. The relevant observations are reproduced hereunder: We may, however, add that it was not open to the second respondent to ignore the law laid down by this court when it was an inferior Tribunal subject to the supervisory jurisdiction of this court. It was not proper on his part not to follow a binding decision of this court on the ground that the Department had not accepted that decision and had filed an appeal and the matter was pending in the Supreme Court. It cannot be disputed and is not disputed that the second respondent is a "Tribunal" subject to the supervisory jurisdiction of this court under article 227 of the Constitution. Hence....
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.... governed by law prevailing on the date of such transaction declared by the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra), the subsequent judgment of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) cannot be pressed in service by the assessing officer. The Supreme Court in a case of Ram Bai Vs. Commissioner of Income Tax (supra) considered a situation where the revenue had pressed in service the subsequent judgment delivered much after reopening of the assessment taking a view different than the view taken by the Full Bench of Andhra Pradesh High Court and was holding the field. 67. The Supreme Court held that Income Tax Officer could not have applied the tax different than held by the said Full Bench for determination whether land in that case was an agricultural land. In our view, the principles laid down by the Hon'ble Supreme Court in the said judgment would apply in the facts of this case. Merely because the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (....
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....ll be collected by such agencies and in such manner as may be prescribed. Section 9 of the said Act deals with utilisation of proceeds of duties levied and collected under Section 6 and Section 7 of the said Act. Further, Rule 8 and Rule 9 contained in Chapter III of The Coal Mines (Conservation and Development) Rules 1975 deal with collection of Excise Duty. 4.5 In this connection we place reliance on the judgment of the Hon'ble Supreme Court in Commissioner of C.Ex. & Cus, Bhubaneswar-I v Tata Iron and Steel Co. Ltd reported in 2003 (154) ELT 343 (SC). The Hon'ble Apex Court has dealt with the levy under the aforesaid Act wherein it has been considered to be in the nature of duty of excise. That being the legal position, SED collected by the appellant for depositing with the Coal Controller under the Act would qualify under the expression used in the definition of transaction value "but does not include the amount of duty of excise, sale tax and other taxes" as defined in Section 4(3)(d) of the CEA. 4.6 Thus, it is humbly submitted that the Stowing Excise Duty is a duty of excise which is clearly in nature of a "tax" and clearly not includible in transaction value for the purpo....
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....016 1 year 2 months 29.01.2015 29.02.2016 1 year 1 month 29.01.2015 29.02.2016 1 year 1 month 29.01.2015 29.02.2016 1 year 1 month 16.04.2015 29.02.2016 10 months 21.09.2015 29.02.2016 5 months 26.10.2015 29.02.2016 4 months 24.12.2014 29.02.2016 1 year 2 months 5.4 Above table unmistakably shows that inordinate delay has not occurred in respect of most of the above appeals. Even, in many cases, the timeline of Section 11A (11) of the CEA was strictly followed. 5.5 The Hon'ble Beach should have referred the matter in M/s Kopertek Metals Pvt. Ltd to a larger bench only after acknowledging disagreement with their own orders. Accordingly, the decision in Kopertek Metals Pvt. Ltd, passed violating judicial disciplines, is bad in law and cannot be relied upon. 5.6 The notices were issued on the basis of facts and laws prevailing during the point of time. Moreover, the appellant did not challenge the notices before any judicial forum to make such notices non-est. They participated in the adjudication process and thereby admits the power to issue such notices by a proper officer. Such question cannot be raised before a statutory court like CESTAT. Legality of ....
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....eb-16 Dec 13 to Sept 14 20,78,38,296 Yes Covered 14 V(27)15/Adjn/B-II/111/2014/22607 A dated 22.12.2014 29-Feb-16 Dec 13 to Sept 14 3,50,66,779 Yes Covered 15 V(27)15/Adjn/B-II/114/2014/22604 A dated 22.12.2014 29-Feb-16 Dec 13 to Sept 14 5,29,13,917 Yes Covered 16 V(27)15/Adjn/RKL/09/2015/1526 A dated 29.01.2015 29-Feb-16 Jan 14 to Dec 14 17,26,67,944 Yes Covered 17 V(27)15/Adjn/RKL/10/2015/1529 A dated 29.01.2015 29-Feb-16 Jan 14 to Dec 14 11,45,92,023 Yes Covered 18 V(27)15/Adjn/RKL/11/2015/1532 A dated 29.01.2015 29-Feb-16 Jan 14 to Dec 14 2,41,69,045 Yes Covered 19 V(15)32/Adjn/CE/Commr/RKL/2015/7444 A dated 16.04.2015 29-Feb-16 Apr 14 to Sept 14 6,31,45,433 Yes Covered 20 V(15)54/Adjn/CE/Commr/RKL/2015/6014A dated 21.09.2015 29-Feb-16 Oct 14 to Mar 15 4,75,70,437 No Since adjudicated within 6 months 21 V(15)76/Adjn/CE/Commr/RKL/2015/6740A dated 26.10.2015 29-Feb-16 Oct 14 to Mar 15 34,93,66,491 No Since adjudicated within 6 months 22 V(27)15/Adjn/B-II/117/2014/22657 A dated 24.12.2014 29-Feb-16 Dec 13 to Sept 14 32,13,686 Yes Covered 29-Feb-16 Total 1,86,62,35,966 8. As per the appell....
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....ing this period, provided that the Central Excise Officer shall determine the amount of duty within six months from the date of notice, where it was possible to do so, in respect of cases falling under sub-section (1). However, in respect of cases falling under sub-section (4) or sub-section (5), the Central Excise Officer shall determine the amount of duty within one year from the date of notice, where it is possible to do so. The show cause notice in this appeal was issued under subsection (4) of section 11A. Thus, the Central Excise Officer had to determine the amount of duty within one year from the date of notice, where it was possible to do so. 11. What is important to note is that the show cause notice that was issued on 28.04.2015 was required to be adjudicated latest by 27.04.2016; 12. It was incumbent upon the Adjudicating Authority to determine the amount of duty within one year from 28.04.2015, where it was possible to do so. The discussion and findings in the impugned order start from paragraph 117 but no reason has been given in the impugned order by the Adjudicating Authority for not being able to determine the duty within the stipulated period of one year from t....
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....e adjudication has to be done within a reasonable period. However, what would be a reasonable period would depend upon the nature of the Statute, rights and liabilities thereunder and other relevant factors. 27. The show cause notice, in the present case, was issued on 28.04.2015. It called upon the noticees to show cause within thirty days from the date of receipt of notice, failing which it was specifically provided that the matter would be adjudicated ex parte without any further communication. It is seen that the period one year from 28.04.2015 expired on 27.04.2016. Even if cause was not shown by the noticees to the said notice, the Adjudicating Authority should have proceeded to decide the matter ex parte, but what is seen is that the Adjudicating Authority even let this statutory time limit of one year pass without even adhering to the stipulation contained in the show cause notice that the matter would be decided ex parte even if no cause is shown within thirty days. It appears that it is only on 07.09.2016 i.e. almost after a period of five months after the expiry of one year that the first hearing was fixed by the Adjudicating Authority on 07.09.2016. 42. The aforesai....
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....actors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. 86. When we revert to the facts that obtain in this batch, we find that the respondents have clearly failed to establish the existence of an insurmountable constraint which operated and which could be acknowledged in law as impeding their power to conclude pending adjudications. 11. It would also be important to compare the language used under the unamended Section 11A (11) of the Central Excise Act 1944, Section 28(9) of the Customs Act 1962 and Central Excise Manual. Central Excise Act 1944 : Section 11A(11) The Central Excise Officer shall determine the amount of duty of excise under sub-section (10) - (a) within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4) or sub-section (5). Customs Act 1962 : Section 28 (9) :The proper officer shall determine the amount of duty or interest und....
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.... of duty within six months or within one year, as the case may be, from the date of notice. It only provides certain degree of inbuilt flexibility by incorporating the words "where it is possible to do so". 33. The phrases "as far as possible" and "as far as practicable" appear in other statutes as well came up for consideration before the Apex Court in C.N. Paramasivam and Another v. Sunrise Plaza: (2013) 9 SCC 460/[2013] 30 taxmann.com 320 (SC). It is observed that the words "possible" and "practicable" are more or less interchangeable along with the other words such as feasible, performable etc. The incorporation of such words gives certain degree of flexibility to the Department such as if some circumstances or insurmountable exigencies arise, which makes the recourse unpracticable or not possible, the authorities can deviate from what was required to be done in terms of the statute. When the challenge is laid to the act of the authorities deviating from the rule, the onus shifts on the authority to prove that it was not practicable or possible to follow the rule. The same is to be adjudicated on the facts and circumstances of each case." 14. In the Kopertek Metals Pvt Ltd....
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....f Kopertek Metals. 17. Another objection was on account of two more orders passed by the Delhi Tribunal on similar issue, in the case of M/s Picasso Digital Media Pvt Ltd Vs Commissioner. CGST, East Delhi [2024(2) TMI 1160- CESTAT-New Delhi] and M/s Citicorp Finance India Limited Vs Commissioner of Service Tax, Delhi-11 [2023 (11) TMI 891-CESTAT NEW Delhi, wherein the Tribunal has refused to entertain the request of the appellant to consider the delay in passing the Order in Original for setting aside the Order. As per Revenue, the Tribunal should have referred the matter to the Larger Bench rather than passing a different order on the same issue. 18. On going through the Picasso case, we find that the issue therein was Service Tax demand for the period April 2006 to March 2011 for which show cause notice dated 21.10.2011 was issued and the Order in Original dated 02.05.2022 was passed. We find that only by of amendment brought by Finance Act 2014 (with effect from 6.8.2014), the Section 73 (4B), was inserted to specify the timeframe for adjudication of the Service Tax matters. Hence, there was no time-frame applicable for Adjudication of the SCN issued in 2011. The appellant had....
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....e 22 SCNs have been taken up for PH on the same day, in many cases the PH date itself is between 1 year to 2 years, as against the time-frame of 6 months given to pass the Order in Original 22. In the OIOs there is nothing to indicate that the appellant has in any way delayed the proceedings necessitating the Adjudicating authority to delay the passing of the order at his end. Considering the factual matrix, we take the view the ratio laid down by the Tribunal in the case of Kopertek Metals, would be squarely applicable. Accordingly, in respect of the confirmed demand in respect of SCN listed at Sl No. 1 to 19 and 22 of the above Table, we apply the ratio of this case law [Kopertek] and set aside the confirmed demands and allow the Appeals. 23. The appellant has mainly argued on the ground that in terms of Section 11 A, the Show Cause Notice could not have been issued, since there was no short payment when the goods were cleared. For this stand they submit they were relying on the case of the 7 Member Supreme Court Bench decision rendered in 1990, in the case of India Cements, wherein it was held that the "Royalty" is a tax. Hence, the "Tax" component is excludible while arr....
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.... Revenue], to keep the matter alive by litigating till this stage. If the appellant's present argument is taken as correct, then in all these cases of classification / valuation, no SCN could be issued. In the present case, to justify their different interpretation, the Revenue had the Kesoram judgement favouring their view point, irrespective of the fact as to whether it is correct or erroneous. The Revenue would go by the simple logic that both the decisions are by Supreme Court. The first one being that of India Cement rendered in 1989 and the second one of Kesoram rendered in 2004. The Revenue has applied the principle of "latter the better", without going into the details of the quorum of the Benches. Hence, holding the belief that they are following the correct case law, the Revenue has not considered the case law of Kamalakshi and other cited decisions about the effect of the binding precedents. Therefore, in this case, the balance weighs with the Revenue rather than with the appellant. This argument of the appellant would be useful towards their submissions only about bonafide belief and to overcome the extended period provisions. Upto that stage this will help the appellan....