TaxTMI 
TaxTMI 
2025 (3) TMI 1524
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....th Cess"). On the ground that these components 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 pa....
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....gs had relied on the Hon'ble Seven Judges judgment of the 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 ....
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....ther there was any case of undervaluation when the Seven Judges decision 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 D....
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....this case Assistant Collector, by an order, not only ignored the order of the Collector (Appeals) by 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 ....
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.... ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that 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 responde....
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....and the said M/s ASK Agencies was undertaken in the financial year 2015-2016. Since this Court is of the view that the impugned transaction in question was 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 ju....
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....rent rates of duty may be levied on different grades or description or coal or coke." 4.4 Section 8 of the said Act provides that the duty of excise levied under Section 6 shall 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. ....
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....2016 1 year 11 months 27.08.2014 29.02.2016 1 year 6 months 22.12.2014 29.02.2016 1 year 2 months 22.12.2014 29.02.2016 1 year 2 months 19.12.2014 29.02.2016 1 year 2 months 22.12.2014 29.02.2016 1 year 2 months 22.12.2014 29.02.2016 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 d....
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.... 29-Feb-16 Mar 13 to Dec 13 1,51,66,290 Yes Covered 10 V(27)15/Adjn/B-II/65/2014/14147 A dated 27.08.2014 29-Feb-16 Sep 13 to Mar 14 5,63,88,404 Yes Covered 11 V(27)15/Adjn/B-II/113/2014/22601 A dated 22.12.2014 29-Feb-16 Dec 13 to Sept 14 7,19,66,588 Yes Covered 12 V(27)15/Adjn/B-II/116/2014/22610 A dated 22.12.2014 29-Feb-16 Dec 13 to Sept 14 4,75,80,617 Yes Covered 13 V(27)15/Adjn/B-II/115/2014/22510 A dated 19.12.2014 29-Feb-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/C....
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....rmine 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 subsection (1); (b) within two years from the date of notice, where it is possible to do so, in respect of cases falling under subsection (4). 9. The show cause notice in this appeal was issued on 28.04.2015 by the Principal Additional Director General. It was adjudicated on 14.06.2022 by the Adjudicating Authority. As the notice was issued on 28.04.2015, it would be governed by the provisions of sub-section (11) of section 11A, as it stood during the period from 28.04.2015 to 13.05.2015. Sub-section (11) of section 11A, as it stood during 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 thi....
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....ated within six months or one year, as the case may be, only provides flexibility for extension of the period when it is not practicable or possible to adjudicate it within the said time limit. The time limit period cannot be extended endlessly without any plausible justification; (iv) The indifference of the Adjudicating Authority to complete the adjudicating process within the statutory time limit cannot be condoned to the detriment of the assessee or detrimental to the interest of the exchequer; (v) There is a definite purpose and intention of the legislature to prescribe such time limit. The legislature has clearly intended to avoid uncertainly, which otherwise can emerge; and (vi) Even if no time limit is prescribed for adjudication of a show cause notice, then too the 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, fa....
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....bliged in law to endeavour to conclude adjudication with due expedition. Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time "where it is possible to do so" cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors 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....
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....y and the order portion must contain the correct provision of law under which duty is confirmed and penalty is imposed. Adjudication order shall be issued under the signature of the adjudicating authority. If confiscation during adjudication proceedings, an option shall be given to the owner of redeem the goods on payment of a fine in lieu of confiscation. 12. We find that under both Central Excise and Customs Section and Manual provisions referred above, the words used are "Shall" and "Where it is possible to do so" and in the Manual "as far as possible" 13. The importance and significance of these words have been extensively dealt by the Delhi High Court in the case of Swatch India - 2023 (386) E.L.T. 356 (Del.). It may be useful to go through the relevant portion, which is extracted below : 32. The unamended Section 28(9) of the Customs Act, specifically provides that the proper officer "shall" determine the amount 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" a....
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.... to condone the delay if the appeal is filed within the next 30 days. However, if the appeal is filed even after One day after 90 days, there is no power to condone the delay. He cannot differentiate between the appeal filed with a delay of one or two days delay after 90 days and the appeal filed with higher delay. In all these cases, he has to hold that the condonation period thereon has expired and is required to dismiss the appeal on this ground itself. The Hon'ble Supreme Court in the case of Singh Enterprises [Appeal Civil 5949 of 2007], has held that in case of such appeals, even the Tribunal and Courts have no power to condone the delay. On a factual matrix, we find that even in the present case in many cases the delay is to the extent to 2 years. Therefore, we do not find any merits in the arguments of the Revenue that delay by number of days should be the factor to be considered to apply or otherwise the Tribunal's order in the case of 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....
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....e, we do not find that the Kopertek Metals had taken a contrary view on the issue requiring any LB referral. Accordingly, we proceed ahead with the factual details in the present case to explore as to whether Kopertek can be applied or not. 21. In the present case, the Adjudication orders were required to be passed within 6 months, since the demand was raised for the normal period except in respect of one SCN, without alleging any suppression etc. Hence, as per Section 11 A (11), and instructions contained in the Centeral Excise Manual Chapter 13 - Para 4, the Adjudicating authority was required to pass the Order in Original within 6 months. It is seen from the Order in Original no plausible reason has been adduced by the Adjudicating authority for the delay in taking up the Adjudication proceedings and completing the same within the timeframe. The Personal Hearing was granted on 10th February 2016 and was also attended by the appellant. Since all the 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 indi....
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.... We also agree that Kesoram judgement could not have found fault with the India Cements decision, since the quorum at Kesoram was less than that of India Cements case. Admittedly, this anomaly was noticed in the MADA judgement rendered by a 3 Member Bench, in 2011 who recommended constitution of 9 Member Bench. This 9 Member Bench has finally held that the Royalty is not a "Tax". Thus as on date, on merits the appellants would have no case. 25. But we find that this argument cannot be accepted for various reasons. For example, in case of every classification / valuation dispute, it is always the issue of interpretation. Just because the interpretation of the assessee is based on certain case law, the Revenue cannot be made to stop in tracks and not issue the SCN, if their interpretation is different. All the issues of classification / valuation usually get finally clarified at Supreme Court level only. But it is for any one of the parties [the assessee / the 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, t....
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....n India, such duty of excise, not acceding Rupees ten per tonne as may be fixed from time to time by the Central Government by notification, and different rates of duty may be levied on different grades or description or coal or coke." 7. Imposition of customs duty - During the period in which any duty of excise is being levied under section 6, the Central Government may, by notification, impose on all coal (including soft and hard coke) imported or brought into India from any place outside India, a duty of customs (which shall be in addition to any duty of customs for the time being leviable under any other law), as the rates equivalent to the rates of duty of excise levied under section 6. 8. Collection of excise duties - The duties of excise levied under section 6 shall be collected by such agencies and in such manner as may be prescribed. 28. We find that the CMD Act describes the levy as "Duty of Excise" and under Section 7 a reference is made to Customs Duty, wherein it is stated that the Excise Duty equivalent to the rate referred to at Section 6 may be imposed when the coal is imported. This shows the intent of the Central Govt to treat the levy as "Dut....