SC Remits Matter Back To CESTAT, Says Second Application Could Not Be Considered By Committee Of Disputes

The Supreme Court, on July 28, quashed and set aside the order passed by the Calcutta High Court and remitted the matter back to Customs, Excise and Service Tax Appellate Tribunal, East Regional Bench, Kolkata (CESTAT).

Bench of Justices BR Gavai and Hima Kohli heard an appeal which challenged the order of division bench of Calcutta HC whereby appeal against order of CESTAT.

The application was filed on the ground that while passing the order by CESTAT, did not notice the fact that the application filed by the present appellant was pending before the Committee of Disputes (for short “CoD”).

Facts

Appellant was a Public Sector Undertaking of the Government of India. Appellant was served with a site cause notice in 2005 by Commissioner of Central Excise by invoking the extended period of limitation and proposing to demand duty of Rs.15.66 crore in respect of the clearances made during the period from July 2000 to December 2004.

As per the relevant procedure, the appellant, being a PSU, was required to obtain the clearance from the CoD before taking legal action against other PSUs or Departments of the Government.  The CoD, in its Minutes of Meeting dated 2nd November 2006, granted permission to the Company to pursue the appeal only on penalty aspect. As regards, the duty aspect, the CoD held that in the CENVAT Regime, the dispute was revenue neutral.

Pursuant to the permission granted, appellant preferred an appeal before CESTAT. The appeal was allowed by the CESTAT setting aside the penalty.

Appellant contended that in the meanwhile, the authorities issued a series of letters directing the appellant to deposit the duty amount.  As such, the appellant deposited the duty demand of Rs.15.66 crore under protest.

Appellant filed a fresh application before the CoD, requesting for permission to pursue the abovesaid appeal with respect to duty aspect before the CESTAT.

Decision

The Court noted its decision in Electronics Corporation of India Limited v. Union of India and Others (2011) 3 SCC 404 held that the mechanism which was sought to be invoked for getting approval from the CoD, has outlived its utility. 

Observing that the instant case was one with peculiar facts, the Court noted that the second application of the appellant could not be considered by the CoD.  The question of interest, therefore, the Court noted, had not been addressed by any of the authorities. 

With the above mentioned observations, the Court allowed the appeal and remitted that matter back to CESTAT.