Introduction:-
Dispute was going on the issue whether the first Appellate Authority or Tribunal can condone delay for late filing of review order under Section 35E(1) or not? As per Section 35E the Committee of Chief Commissioners is empowered to review an order passed by a Commissioner. The limitation period prescribed for reviewing authority for filing the review order is three months from the date of the communication of the order. Once this time limit expires, there is no option available with Revenue to re-open the case as neither the Board nor the Tribunal can condone the delay in issue of review order as per existing provisions. Also, there are number of Tribunal judgments on the issue in favour of assessees where the Revenue has lost the case merely because the review order was not issued within the time limit of three months. Budget 2014-15 has come up with a great relief for the revenue wherein Government has amended the Section 35E and given power to the board for condoning the delay for a period upto 30 days for review by the Committee of Chief Commissioners. The history of the dispute and the amendment proposed by the Budget, 2014 are the centre of this piece of diction.
The history:-
The section 35E prior to budget 2014-15 read as follows:
“SECTION 35E. Powers of Committee of Chief Commissioners of Central Excise or Commissioner of Central Excise to pass certain orders.—
(1) The Committee of Chief Commissioners of Central Excise may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Central Excise as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Central Excise in its order.
Provided that where the Committee of Chief Commissioners of Central Excise differs in its opinion as to the legality or propriety of the decision or order of the Commissioner of Central Excise, it shall state the point or points on which it differs and make a reference to the Board which, after considering the facts of the decision or order, if is of the opinion that the decision or order passed by the Commissioner of Central Excise is not legal or proper, may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order, as may be specified in its order.
(2) The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority or any Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order.
(3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.
(4) Where in pursuance of an order under sub-section (1) or sub-section (2) the adjudicating authority or the authorised officer makes an application to the Appellate Tribunal or the Commissioner (Appeals) within a period of one month from the date of communication of the order under sub-section (1) or sub-section (2) to the adjudicating authority, such application shall be heard by the Appellate Tribunal or the Commissioner (Appeals), as the case may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of sub-section (4) of section 35B shall, so far as may be, apply to such application.
(5) Omitted”
The proviso to sub section (1) of this section states that where the Committee of Chief Commissioners does not agree to validity of any order passed by the Commissioner, it has to make a reference to Board and on its approval the appeal has to be filed to hon’ble Tribunal. The time period prescribed for the entire formalities is three months from the date of order.
Analysis of pre-budget scenario:-
This section has benefitted the assessees a number of times and Revenue has lost the case merely because the entire formalities like review of order by Committee of Chief Commissioners and its approval from Board took a time of more than three months. This delay causes very often in the jurisdictions where the number of assessees is on higher side. Also, frequent transfer of Revenue officials is also a major cause of this delay. Further, neither the Tribunal, nor the Board was vested with the power to condone any delay in issue of review order. In a number of judgments, it has been held that the Tribunal cannot condone the delay in issue of review order under Section 35E(1) by reviewing authority. It has been held that the Tribunal can condone the delay in filing of appeal only and it has nothing to do with the exercise of the power of superintendence to be exercised by the reviewing authority under Section 35E(1) of the Central Excise Act. It has been held that Tribunal’s duty is limited to verify the fact that the application filed by the Commissioner under Section 35E(4) is backed by a valid order passed by the Committee of Chief Commissioners under Section 35E(1). It has been ruled that when a time limit is prescribed by statute for reviewing authority for exercise of its power of superintendence, if any order is issued beyond the limitation period, it would become invalid and ineffective and the Tribunal has no power to validate and revive such invalid and ineffective order. The following cases of Tribunal underlined the aforesaid analogy:-
++ Commissioner of C.Ex., Raipur V. Monnet Ispat & Energy Ltd. [2010(257) ELT239 (TRI-LB)]
++ Commissioner of C.Ex., Delhi-III, Gurgaon V. Kap Cones [2012(286) E.L.T. 135(Tri.- Del)
++ Collector of C.Ex., V. M.M. Rupper Co. [1991(55) E.L.T. 289 (S.C.)]
The amendment proposed by Budget, 2014:-
The recent budget of year 2014 has proposed the amendment in section 35E as follows:-
In the Central Excise Act, in section 35E, in sub-section (3), the following proviso shall be inserted, namely:—
“Provided that the Board may, on sufficient cause being shown, extend the said period by another thirty days.”.
While issuing the TRU letter vide F.No. 334/15/2014-TRU dated 10.07.2014, it has been clarified that –
"Section 35E is being amended to insert a proviso in sub-section (3) to vest the Board with powers to condone delay for a period upto 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the Commissioner of Central Excise."
The said amendment will come into force from the date of enactment of Finance Bill. Afterwards, if any review order is issued beyond a period of three months, the Board will have power to condone the delay by thirty days on being shown sufficient cause. Thus, now, the Revenue has around four months for review of order passed by the Commissioner.
While winding:-
Now with this amendment, undoubtedly revenue gets “Acche Din” from the new government. It is beneficial for the Department to get 30 more days for reviewing the order passed by the Commissioner. This will benefit the Revenue mostly in the cases where they had strong case which was lost merely on the grounds of delay in review of the order. But looking from different perspective, few questions are still in our minds like will Revenue now wakeup from sleep on time or will this limit also prove on less? Whether the answer to this question is positive or negative, one thing is sure that one area of litigation has closed and Tribunal will no more be required to face the applications on this aspect.
An article by:-
CA. Pradeep Jain
CA. Preeti Parihar
Bharat Rathore
CAclubindia
