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Commissioner(Appeals) Faces The Ire of Tribunal For Not Following The Settled Law

The Honourable Tribunal in the matter of Sunil Sponge Ltd Vs CE&ST, Raipur has passed strong remarks and also imposed penalty on Commissioner(Appeals) to set an example as below :

                                                                Observation

We are also constrained to observe that adjudication and drafting of adjudication orders requires training; and incompetent departmental adjudication ill serves the interests of the State. Apart from accentuating the appellate docket load, such casual orders contribute to faith deficit in the process of departmental education and imperils the due process of law

                                                                           Penalty 

Since Commissioner (Appeals) has not followed the law declared by the Larger Bench, we deem it fit to impose an exemplary cost of ₹ 2500/- for burdening the appellant for unnecessary litigation costs

For burdening the Tribunal as also for showing scant respect for the law declared by the higher authorities.

The cost is required to be paid to the Registry of the Tribunal within a period of 3 months from the date of receipt of the order.

The entire order is re-produced herein below  :

2015 (9) TMI 1336 - CESTAT NEW DELHI

Other Citation: 2015 (318) E.L.T. 150 (Tri. - Del.)

SUNIL SPONGE PVT. LTD. Versus COMMISSIONER OF C. EX. & S.T., RAIPUR

Determination of assessable value - Removal of goods to sister concern - Imposition of penalty - Held that:- In case the appellant has sold the goods to independent buyers as also to their sister concern, by adopting the same assessable value, the provisions of Rule 8 of Valuation Rules cannot be invoked in respect of clearances to sister concern. Though the appellant had taken a categorical stand to that effect, the said fact does not stand examined by the lower authorities. For the said limited purpose, we remand the matter to the original adjudicating authority for examining the said factual position and to decide the issue accordingly.

Since Commissioner (Appeals) has not followed the law declared by the Larger Bench [2007 (2) TMI 5 - CESTAT, MUMBAI], we deem it fit to impose an exemplary cost of ₹ 2500/- for burdening the appellant for unnecessary litigation costs, for burdening the Tribunal as also for showing scant respect for the law declared by the higher authorities. - Decided in favour of assessee.

No.- 52053/2014

Order No.- Final Order No. A/54637/2014-EX(BR)

Dated.- November 21, 2014

Ms. Archana Wadhwa, Member (J) and Shri Rakesh Kumar, Member (T)

Ms. Sukriti Das, Advocate, for the Appellant.

Shri Yashpal Sharma, DR, for the Respondent.

ORDER

After dispensing with the condition of pre-deposit of duty of ₹ 3,07,659/- and penalty of identical amount, we proceed to decide the appeal itself inasmuch as the disputed issue stand covered by the Larger Bench decision which stand followed in number of subsequent decisions.

2. The appellant is engaged in the manufacture of sponge iron and billets, which are being cleared by them to outside independent wholesale buyers as also to their sister concern M/s. Sunil Steel Re-Rollers Pvt. Ltd., who is further using the same for manufacture of re-rollable products which are being cleared by their sister concern on payment of duty. For removing the goods to their sister concern, the appellants have adopted the same assessable value, on which the goods are being sold to independent buyers.

3. However, the Revenue entertained a view that for the clearances made to the sister concern, the appellants should have adopted the assessable value as 110% of the cost of production. Accordingly, the proceedings were initiated against them by invoking the longer period of limitation, though a part of the demand fell within the limitation period for confirmation of differential duty demand as also for imposition of penalty.

4. The appellants took a categorical stand that inasmuch as they are selling their product in the market also, the provisions of Rule 8 of Valuation Rules cannot be pressed into service. For the above proposition, they relied upon the Tribunal’s Larger Bench decision in the case of Ispat Industries v. Commissioner [2007 (209) E.L.T. 185 (Tri.-LB)]. It is seen that attention of the adjudicating authority was also drawn to the other subsequent decisions of the Tribunal, following the Larger Bench decision. The appellants also pleaded that in case the differential duty is required to be paid by them, the same would be available as credit to their sister concern who is entitled to use the same for payment of duty on their final product. As such, the entire situation is revenue neutral.

5. It is seen that though the Commissioner has noted down all the relevant relied upon decisions, as also the appellants submissions but in the impugned order he has nowhere dealt with the same. The Larger Bench decision of the Tribunal clarifying the law on the subject stand ignored by him, for the reasons best known to him only. Similarly, he has not discussed as to how either the said Larger Bench or the other various decisions of the Tribunal relied upon by the appellant are not applicable to the facts of the present case.

6. It may not be out of place to mention here that the legal issues are referred to and placed before the Larger Bench of the Tribunal so as to declare the law on the disputed issue with a purpose of settling the disputed issue. Once the law is declared, all the authorities below are expected to follow the same in deciding the various matters. If such declaration of law by the Larger Bench or by any other decision of the Tribunal is ignored by the authorities, deciding on the issue, the entire purpose of declaring the law gets defeated. Such an action on the part of the lower authorities leads to unnecessary litigations involving litigation cost on the part of the appellant as also unnecessary burdening the higher authorities and increasing the pendency apart from the fact that the same shows the scant respect for the higher judicial authorities. The same also reflects upon attitude and anxiety of the lower authorities to confirm the demands at any costs, without appreciating the law declared by the judicial forums, which behaviour cannot be appreciated and has to be depreciated.

7. Having said so, we hold that in case the appellant has sold the goods to independent buyers as also to their sister concern, by adopting the same assessable value, the provisions of Rule 8 of Valuation Rules cannot be invoked in respect of clearances to sister concern. Though the appellant had taken a categorical stand to that effect, the said fact does not stand examined by the lower authorities. For the said limited purpose, we remand the matter to the original adjudicating authority for examining the said factual position and to decide the issue accordingly. Stay petition as also appeal gets disposed of in the above manner.

8. At this stage, we take note of the Tribunal’s order in the case of M/s. Ultratech Cement Ltd. v. Commissioner of Central Excise, Rohtak - 2014-TIOL-1934-CESTAT-Del) = 2015 (37) S.T.R. 364 (Tri.-Del.) and reproduce the relevant paragraphs for ready reference and better appreciation :-

14. Since the impugned order as analyzed by us in detail earlier, records conclusions without any analysis of the pleadings and the evidence on record, we consider it appropriate to impose costs of ₹ 2,500/- (Rupees Two Thousand Five Hundred), to be remitted by Revenue to the credit of the assessee, within 30 days from today.

15. We are also constrained to observe that adjudication and drafting of adjudication orders requires training; and incompetent departmental adjudication ill serves the interests of the State. Apart from accentuating the appellate docket load, such casual orders contribute to faith deficit in the process of departmental education and imperils the due process of law. The appropriate authorities may consider this pathology writ large in departmental adjudication. For this purpose, we direct that a copy of this judgment be marked to the Board of Central Excise and Customs and to the Secretary (Revenue), Ministry of Finance, Department of Revenue, for consideration.”

Since Commissioner (Appeals) has not followed the law declared by the Larger Bench, we deem it fit to impose an exemplary cost of ₹ 2500/- for burdening the appellant for unnecessary litigation costs, for burdening the Tribunal as also for showing scant respect for the law declared by the higher authorities. The cost is required to be paid to the Registry of the Tribunal within a period of 3 months from the date of receipt of the order.

(Dictated and pronounced in the open Court)

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