Commissioner Of Central Excise vs The on 13 February, 2013

Gujarat High Court Gujarat High Court Commissioner Of Central Excise vs The on 13 February, 2013 Bench: Akil Kureshi Gokani, Sonia Gokani COMMISSIONER OF CENTRAL EXCISE....Appellant(s)V/SGIRISH B MISHRA....Opponent(s) <!-@page { margin-left: 1.5in; margin-right: 1.27in; margin-top: 0.5in; margin-bottom: 0.5in } P { margin-bottom: 0.08in; direction: ltr; color: #000000; text-align: left; widows: 0; orphans: 0 } P.western { font-family: "Arial", sans-serif; font-size: 12pt; so-language: en-US } P.cjk { font-family: "Arial", sans-serif; font-size: 12pt; so-language: zh-CN } P.ctl { font-family: "Arial", sans-serif; font-size: 12pt; so-language: hi-IN } --> O/TAXAP/951/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 951 of 2012 ================================================================ COMMISSIONER OF CENTRAL EXCISE....Appellant(s) Versus GIRISH B MISHRA....Opponent(s) ================================================================ Appearance: MS MANISHA LAVKUMAR, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 13/02/2013 ORAL ORDER (PER : HONOURABLE
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Commissioner Of Central Excise vs The on 13 February, 2013

MR.JUSTICE AKIL KURESHI) 1. The Department has challenged the judgment of Customs, Excise and Service Tax Appellate Tribunal, dated 15.05.2012 raising following questions for consideration:(A) Whether the Honble Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, in order No.A/748/WZB/AHD/2012 dated 15.05.2012, is right in deciding/entertaining an appeal against an order passed under Section 9A of the Central Excise Act,1944, by the Chief Commissioner, where there is no provision under Section 35B of the Central Excise Act, 1944 to appeal against the order passed by the Chief Commissioner under Section 9A(2) of the Act read with Central Excise (Compounding of Offences) Rules, 2005? (B) Whether the order passed by the Chief Commissioner in the case of Compounding of Offence under Section 9A of the Central Excise Act, 1944 can be treated as adjudication order passed under Section 35A of the Central Excise Act, 1944? Whether the Honble Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, in Order No.A/748/WZB/AHD/2012 dated 15.05.2012, is right in treating the order passed by the Chief Commissioner under Section 9A of the Central Excise Act, 1944 at par with the order passed under Section 35 by the Board which are appealed before the Tribunal? Briefly such issue arises in following back-ground:- The respondent-assesse was engaged in manufacture of sanitary wares. A search was carried out at the premises of the respondent, leading to issuance of show-cause notices including for personal penalty on Shri.G.B.Mishra. Shri.G.B.Mishra, applied on 19.11.2009 to the Commissioner of Central Excise for compounding the offence. The Chief Commissioner, Central Excise, Ahmedabad, however, by his order dated 29.03.2010, rejected such an application for compounding on various grounds. Aggrieved by such order, Shri.G.B.Mishra appealed before the Tribunal under Section 35B of the Central Excise Act. Such appeal came to be partly allowed. The departments stand that the appeal would not be maintainable was rejected. On the merits of the order passed by the Commissioner, Tribunal made certain observations and ultimately remanded the proceedings before the Commissioner for passing a fresh order, after giving reasonable opportunity to Shri.G.B.Mishra. This, the order of the Tribunal is challenged by the Department in the present appeal. 3. Counsel Ms.M.L.Shah, submitted that the appeal before the Tribunal was not maintainable in terms of Section 35B of the Central Excise Act. She submitted that order passed by the Commissioner was merely an administrative order and cannot be seen as an order passed by the adjudicating authority under the Act. She further submitted that even on merits, the Commissioner had given proper reasons for not accepting the request of the respondent for compounding the offence. 4. Section 9A of the Central Excise Act,1944, pertains to compounding of certain offences, which are non-cognizable. Sub-section (2) thereof pertains to compounding of such offences and empowers the Chief Commissioner of
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Commissioner Of Central Excise vs The on 13 February, 2013

the Central Excise to permit compounding under specified circumstances. Sub-section (2) of Section 9A reads as under:Any offence under this Chapter may, either before or after the institution of prosecution, be compounded by the Chief Commissioner of Central Excise on payment, by the person accused of the offence to be Central Government, of such compounding amount as may be prescribed. In exercise of powers under Section 37 of the Central Excise Act,1944, read with Section 9A(2) thereof, the Central Excise (Compounding of Offences) Rules, 2005, have been framed. Rule 3 thereof pertains to form and manner of application. Rule 4 thereof pertains to procedure on receipt of application under rule-3 and proviso thereto interalia states that on receipt of an application under rule-3, the compounding authority shall call for a report from the reporting authority with reference to the particulars furnished in the application, or any other information, which may be considered relevant for examination of such application. Sub- rule (3) of Rule-4 provides that the compounding authority, after taking into account the contents of the said application, may pass an order, either allowing the application indicating the compounding amount and grant immunity from prosecution or reject such an application. Under sub-rule (5) of Rule 4, the applicant gets 30 days of time from the date of receipt of order under Sub-rule (3) to deposit the compounding amount. Rule 5 provides for fixation of compounding amount. Rule 6 pertains to power of compounding authority to grant immunity from prosecution. Rule 7 provides for withdrawal of immunity from prosecution, when it is found that the applicant failed to pay any sum specified in the order of compounding within the time specified in the order, or failed to comply with any other conditions subject to which the immunity was granted. Sub-rule (2) of Rule 7 further provides that an immunity granted to a person may, at any time, be withdrawn by the compounding authority, if he is satisfied that such person had, in the course of compounding proceedings, concealed any particulars, which were material, or had given false evidence. Section 35B of the Central Excise Act, 1944, pertains to appeals to the Appellate Tribunal. Sub-section (1) thereof permits any person aggrieved by any of the orders, specified in Clauses (a) to (d) thereof, to appeal to the Appellate Tribunal against such an order. Section 35B(1) which is relevant for our purpose reads as under:Section 35B. Appeals to the Appellate Tribunal:-(1) Any person aggrieved by any of the following order may appeal to the Appellate Tribunal against such order:(a) a decision or order passed by the (Commissioner of Central Excise) as an adjudicating authority; (b) an order passed by the (Commissioner (Appeals) under Section 35A; (c) an order passed by the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (54 of 1963) (hereafter in this Chapter referred to as the Board) or the Appellate (Commissioner of Central Excise) under Section 35, as it stood immediately before the appointed day; an order passed by the Board or the (Commissioner of Central Excise), either before or after the appointed day, under Section 35A, as it stood immediately that day; Clause-a
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Commissioner Of Central Excise vs The on 13 February, 2013

of sub-section (1) of Section 35B thus permits person aggrieved to file an appeal before the Appellate Tribunal against the decision and order passed by the Commissioner of Central Excise as an adjudicating authority. The Adjudicating Authority has been defined in Section 2(a) of the Central Excise Act, 1944 as under:- (a) Adjudicating authority means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (54 0f 1963), (Commissioner of Central (Appeals)) or Appellate Tribunal; Question for consideration before us is whether the order passed by the Commissioner rejecting the application of the respondent for compounding the offence can be stated to be the one passed by the adjudicating authority, as defined under Section 2(a) of the Act. If we analyse the said provision, it defines the term Adjudicating Authority to mean any authority, competent to pass any order or decision under the Act. The question, therefore, arises whether the order rejecting the application for compounding was one passed by the Commissioner under the Central Excise Act, 1944. In this respect, we have noticed statutory scheme pertaining to the procedure for compounding the offence. The power of compounding flows from Section 9A(2) of the Act. The procedure is laid down under the Central Excise (Compounding of Offences) Rules, 2005. Under such rules, the compounding authority has a discretion to grant or not to grant, compounding upon such conditions that may be imposed by him. It is thus, clear that the compounding authority exercises its discretionary power and decides an application filed by the appellant for compounding the offence. By no stretch of imagination, it can be stated that any such order either allowing or rejecting the application for compounding is not an order passed by the Commissioner as adjudicating authority as defined under Section 2(a) of the Act. Any such order would certainly be an order passed under the Act. The words any order or decision under the Act used in Section 2(a) of the Central Excise Act, 1944, defining the term, Adjudicating authority, must take in its fold an order deciding the lis of a party and would not include merely an administrative order. In the present case, however, the Commissioners order does decide the question of compoundability of an offence of the applicant concerned and would therefore, in our view, satisfy the description of any order or decision passed by him under this Act. In that view of the matter, appeal against any such order would lie before the Tribunal in terms of Clause (a) of sub-section (1) of Section 35B of the Central Excise Act. The Tribunal thus, was justified in entertaining such an appeal. With regard to merits of the issue, the Tribunal has merely remanded the proceedings before the Commissioner for fresh consideration and decision in accordance with law, after giving opportunity of hearing to the respondent. In the facts and circumstances of the case, no interference is called for. The Tax Appeal is thus, dismissed. (AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Girish Page 8 of 8

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