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2014 DIGILAW 392 (JHR)

Hindustan Copper Limited v. Union of India

2014-03-13

R.BANUMATHI, SHREE CHANDRASHEKHAR

body2014
JUDGMENT R.Banumathi, CJ. - The writ petition is filed (i) for quashing the Misc. Order No.M-126/Kol/2013 dated 26.4.2013/1.5.2013, whereby Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dismissed the application filed for restoration of Excise Appeal No.532/2009 to its original file and (ii) for quashing the order dated 18.9.2012 passed in Excise Appeal No.532/2009, in and by which CESTAT dismissed the appeal on the ground that the petitioner did not produce clearance from the Committee On Disputes (COD), nor did it produce any evidence that application for clearance from COD was pending on 17.2.2011, i.e. the date of judgment of Hon’ble Supreme Court in Electronic Corporation of India Limited [ (2011) 3 SCC 404 ]. 2. The petitioner, Hindustan Copper Ltd., a Public Sector Undertaking, is manufacturing in its factory at Ghatshila copper and articles of copper and other by-products. In the manufacture of the said goods, the petitioner uses various inputs and capital goods and avails credit of duty on such inputs and capital goods under the MODVAT/CENVAT Scheme. Acting on intelligence information that HCL is engaged in availing irregular credit, on 6.2.2002, the Officers of DGCEI, Regional Unit, Jamshedpur, visited the factory of the petitioner and started investigation as to the credit availed on various capital goods. Thereafter a show cause notice dated 19.3.2003was issued by the Additional Director, DGCEI, KZU, to recover an amount of Rs.8,23,576/- availed on various capital goods during the period 1998-99 to January, 2002 and further to impose penalty and interest. After hearing the assessee, the Joint Commissioner passed the order on 31.10.2003 confirming the recovery of Rs.8,23,576/- and also imposing penalty of equal amount. Being aggrieved by the said order dated 31.10.2003, the petitioner preferred an appeal before the Commissioner (Appeals), Central Excise, Ranchi, who, by the order dated 18.1.2005, set aside the order of the Joint Commissioner dated 31.10.2003 and remanded the matter to the adjudication authority with a direction to decide the matter on merits as well as on the question of limitation. 3. 3. Pursuant to the remand order dated 18.1.2005, the petitioner submitted written submission on 4.10.2007 before the Joint Commissioner and the Joint Commissioner, by Order-In- Original No.08/JC/2007dated 20.12.2007,denied credit to the tune of Rs.8,08,205/- against the original denial of Rs.8,23,576/- and only allowed credit to the tune of Rs.15371/-for the year 2001-02 against the credit availed to the tune of Rs.87,421/- and disallowed the credit of remaining duty and also confirmed interest and penalty. 4. The petitioner preferred an appeal on 28.2.2008 before the Commissioner (Appeals). Vide order passed in Appeal No.80/JSR/2009 dated 19.8.2009, the Commissioner (Appeals) upheld the Order-in-Original dated 20.12.2007 denying the credit availed. Being aggrieved by the order of the Commissioner (Appeals), the petitioner filed appeal on 14.10.2009 before the CESTAT, Kolkata, in Excise Appeal No.532/2009. Vide order dated 18.9.2012, the CESTAT dismissed the appeal observing that the appellant-petitioner did not produce clearance from COD, nor produced any evidence that their application for clearance from COD was pending as on 17.2.2011(the date of judgment of Hon’ble Supreme Court in ECIL case). The petitioner thereafter filed restoration petition on 21.11.2012 for restoration of appeal and the same was registered as MA(ROA)-460/2012 in Excise Appeal No.532/2009. Observing that the petitioner failed to produce either the permission from COD or any proof that the application has been pending before the COD as on 17.2.2011 and following the decision of the Tribunal in the case of M/s.Burn Standard Co. Ltd. Vs. CCE-Kol-II, (vide order No.M-510/KOL/2012 dated 17.9.2012), the CESTAT dismissed the restoration application by its order dated 26.4.2013. 5. Learned counsel for the petitioner, Mr.Pandey Neeraj Rai, contended that by the judgment rendered in the case of Electronics Corporation of India Limited V. Union of India & Ors. reported in [ (2011) 3 SCC 404 ], Hon’ble Supreme Court scrapped the requirement of clearance from COD and recalled the various orders passed in ONGC cases and Government of India also issued Office Memorandum dated 24.3.2011 stating that the permission of COD is not required and while so, the Tribunal erred in dismissing the appeal on the ground that the permission obtained from COD was not produced, nor shown the evidence that permission was pending before the COD as on 17.2.2011. The contention of the petitioner is that with effect from 17.2.2011, the COD itself having been wiped off on the ground that the very idea of its constitution having failed, the appeal proceeding ought not to have been dismissed for want of COD’s clearance or even on the ground that COD had not been approached within one month of filing of appeal. 6. Drawing our attention to the judgment rendered in the case of Oil & Natural Gas Commission (III) V. Collector of Central Excise [(2004) 6 SCC437], learned counsel appearing for the respondents, Mr. Ratnesh Kumar, submitted that as per ONGC-III case, wherever appeals or petitions are filed without clearance of High Powered Committee so as to save limitation, the appellant or petitioner shall, within one month of such filing, should approach the High Powered Committee for obtaining clearance. It was submitted that the petitioner neither obtained COD clearance, nor applied for obtaining COD clearance and non-compliance of the time frame in ONGC-III case is fatal to the petitioner and the Tribunal rightly dismissed the appeal and the restoration application and the order does not suffer from any error of law warranting interference. 7. We have carefully considered the rival contentions and perused the order of the CESTAT and also the materials on record. The point falling for consideration is that when the petitioner has not obtained clearance from COD, nor applied for obtaining clearance and when no proof was filed showing that the application for clearance has been filed and pending before the COD as on 17.2.2011, whether the petitioner can seek for hearing of the appeal/restoration of the appeal. 8. Taking note of the dispute between the Government Department and the Public Sector Undertakings of Union of India, in ONGC-IIcase [1995 Supp (4) SCC 541], Hon’ble Supreme Court propounded the view of setting up of a Committee on Disputes and directed the Government to set up the Committee on Disputes. In ONGC-III [ (2004) 6 SCC 437 ], Hon’ble Supreme Court directed that in the absence of clearance from the Committee of Secretaries (COS), any legal proceedings shall not be proceeded with. In ECIL case, Hon’ble Supreme Court observed that the mechanism of COD has outlived its utility and has caused delay in filing Civil Appeals, thereby causing loss of revenue and recalled its direction in its various order in ONGC cases. In ECIL case, Hon’ble Supreme Court observed that the mechanism of COD has outlived its utility and has caused delay in filing Civil Appeals, thereby causing loss of revenue and recalled its direction in its various order in ONGC cases. In the case of ECIL, [ (2011) 3 SCC 404 ], Hon’ble Supreme Court held as under:- “10. The above two instances are given only to highlight the fact that the mechanism set up by this Court in its Orders reported in (i) Oil and Natural Gas Commission v. CCE [1995 Suppl.(4) SCC 541] (ONGC-II) dated 11.10.1991, (ii) Oil and Natural Gas Commission v. CCE [ (2004) 6 SCC 437 ] (ONGC-III) dated 7.1.1994; and (iii) Oil and Natural Gas Commission v. City & Industrial Corpn. Maharashtra Ltd. [ (2007) 7 SCC 39 ] (ONGC-IV) dated 20.7.2007 needs to be revisited. 11. The learned Attorney General has submitted that the above Orders have outlived their utility and in view of the changed scenario, as indicated hereinafter, the aforestated Orders are required to be recalled. We find merit in the submission made by the Attorney General of India on behalf of the Union of India for the following reasons. 12. By Order dated 11.9.1991, reported in Oil and Natural Gas Commission v. CCE [1992 Supp (2) SCC 432], this Court noted that "public sector undertakings of Central Government and the Union of India should not fight their litigations in Court" (SCC p.432, para 3). Consequently, the Cabinet Secretary, Government of India was "called upon to handle the matter personally". 13. This was followed by the order dated 11.10.1991 in ONGC-II case [1995 Supp (4) SCC 541] where this Court directed the Government of India to "set up a Committee consisting of representatives from the Ministry of Industry, Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry and public sector undertakings of the Government of India and public sector undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the Committee and its clearance for litigation" (SCC pp. 541-42, para 3). 14. Thereafter, in ONGC-III case [ (2004) 6 SCC 437 ], this Court directed that in the absence of clearance from the "Committee of Secretaries" (CoS), any legal proceeding will not be proceeded with. 541-42, para 3). 14. Thereafter, in ONGC-III case [ (2004) 6 SCC 437 ], this Court directed that in the absence of clearance from the "Committee of Secretaries" (CoS), any legal proceeding will not be proceeded with. This was subject to the rider that appeals and petitions filed without such clearance could be filed to save limitation. It was, however, directed that the needful should be done within one month from such filing, failing which the matter would not be proceeded with. 15. By another order dated 20.7.2007 (ONGC-IV case (2007) 7 SCC 39 ) this Court extended the concept of Dispute Resolution by the High-Powered Committee to amicably resolve the disputes involving the State Governments and their Instrumentalities. The idea behind the setting up of this Committee, initially, called a "High-Powered Committee" (HPC), later on called as "Committee of Secretaries" (CoS) and finally termed as "Committee on Disputes" (CoD) was to ensure that resources of the State are not frittered away in inter se litigations between entities of the State, which could be best resolved, by an empowered CoD. The machinery contemplated was only to ensure that no litigation comes to Court without the parties having had an opportunity of conciliation before an in-house committee. [see SCC paras 3-4 of the order dated 7-1-1994 in ONGC-III case (2004) 6 SCC 437 ] 16. Whilst the principle and the object behind the aforestated Orders is unexceptionable and laudatory, experience has shown that despite best efforts of the CoD, the mechanism has not achieved the results for which it was constituted and has in fact led to delays in litigation. We have already given two examples hereinabove. They indicate that on same set of facts, clearance is given in one case and refused in the other. This has led a PSU to institute a SLP in this Court on the ground of discrimination. We need not multiply such illustrations. 17. The mechanism was set up with a laudatory object. However, the mechanism has led to delay in filing of civil appeals causing loss of revenue. For example, in many cases of exemptions, the Industry Department gives exemption, while the same is denied by the Revenue Department. Similarly, with the enactment of regulatory laws in several cases there could be overlapping of jurisdictions between, let us say, SEBI and insurance regulators. Civil appeals lie to this Court. For example, in many cases of exemptions, the Industry Department gives exemption, while the same is denied by the Revenue Department. Similarly, with the enactment of regulatory laws in several cases there could be overlapping of jurisdictions between, let us say, SEBI and insurance regulators. Civil appeals lie to this Court. Stakes in such cases are huge. One cannot possibly expect timely clearance by the CoD. In such cases, grant of clearance to one and not to the other may result in generation of more and more litigation. The mechanism has outlived its utility. 18. In the changed scenario indicated above, we are of the view that time has come under the above circumstances to recall the directions of this Court in its various Orders reported as (i) ONGC-II [1995 Supp (4) SCC 541] dated 11.10.1991, (ii) ONGC-III [ (2004) 6 SCC 437 ] dated 7.1.1994 and (iii) ONGC-IV [ (2007) 7 SCC 39 ] dated 20.7.2007. 19. In the circumstances, we hereby recall the following Orders reported in : (i) ONGC-II [1995 Supp (4) SCC 541] dated 11.10.1991 (ii) ONGC-III [ (2004) 6 SCC 437 ] dated 7.1.1994, and (iii) ONGC-IV [ (2007) 7 SCC 39 ] dated 20.7.2007” 9. In the present case, challenging the order of the Commissioner (Appeals), the petitioner filed appeal before the CESTAT on 14.10.2009. {In ECIL case, the judgment was passed on 17.2.2011.}When the appeal was filed before the CESTAT, the directions in ONGC-II [1995 Supp (4) SCC 541] (11.10.1991) and ONGC-III [ (2004) 6 SCC 437 ](7.1.1994) were holding the field. In ONGC-II [1995 Supp (4) SCC 541], Hon’ble Supreme Court held as under:- “4. It shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the Committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with.” 10. As per judgment in ONGC-III case [ (2004) 6 SCC 437 ], Hon’ble Supreme Court held that there should be no bar to the filing of appeal or petition so as to save limitation and wherever appeals/petitions are filed without clearance of the High Powered Committee so as to save limitation, the appellant or the petitioner shall, within one month of such filing, raise the matter to the High Powered Committee. In the judgment in ONGC-III case [ (2004) 6 SCC 437 ], Hon’ble Supreme Court observed as under:- “5. It is also clarified that even the pending matters before any court or Tribunal should also be the subject matter of the deliberations of the High-Powered Committee. All the matters pending as of today either instituted by the Union of India or any of the Public Sector Undertakings shall within one month from today be referred by the appellant or the petitioner, as the case may be, to the High-Powered Committee. The High-Powered Committee will deal with these matters most expeditiously and endeavour to resolve the matters. 6. Accordingly, there should be no bar to the lodgment of an appeal or petition either by the Union of India or the Public Sector Undertakings before any court or tribunal so as to save limitation. But, before such filing every endeavor should be made to have the clearance of the High-Powered Committee. 7. ………… 8. Wherever appeals, petitions, etc. are filed without the clearance of the High- Powered Committee so as to save limitation, the appellant or the petitioner, as the case may be, shall within a month from such filing, refer the matter to the High-Powered Committee, with prior notice to the Designated Authority in the Cabinet Secretariat of the Government of India authorised to receive notices in that behalf. Sri. K.T.S. Tulsi, learned Additional Solicitor General stated that in order to coordinate these references of the High-Powered Committee the Government proposes to nominate the Under Secretary (Coordination) in the Cabinet Secretariat as the nodal authority to coordinate these references. The reference shall be deemed to have been made and become effective only after a notice of the reference is lodged with the said nodal authority. The reference shall be deemed to be valid if made in the case of the Union of India by its Secretary, Ministry of Finance, Department of Revenue, and in the case of Public Sector Undertakings by its Chairman, Managing Director or Chief Executive, as the case may be. It is only after such reference to the High-Powered Committee is made in the manner indicated that the operation of the order or proceedings under challenge shall be suspended till the High-Powered Committee resolves the dispute or gives clearance to the litigation. It is only after such reference to the High-Powered Committee is made in the manner indicated that the operation of the order or proceedings under challenge shall be suspended till the High-Powered Committee resolves the dispute or gives clearance to the litigation. If the High- Powered Committee is unable to resolve the matter for reasons to be recorded by it, it shall grant clearance for the litigation”. 11. In the present case, the petitioner, HCL, filed appeal in 2009. As per the ONGC-III [ (2004) 6 SCC 437 ], the petitioner should have approached COD for obtaining clearance within one month after such filing (i.e. on 14.10.2009). But even though the appeal was pending from 2009 to 2012, the petitioner has not approached COD for obtaining clearance. As on the date of the judgment of ECIL, i.e. 17.2.2011, the petitioner has neither obtained COD clearance, nor produced evidence showing that it had approached COD for obtaining clearance. It is a matter of record that the petitioner had applied for COD clearance only on 4.9.2012 just ten days prior to taking up of its appeal. Having not been vigilant in either applying or obtaining COD clearance, the petitioner cannot take advantage of ECIL judgment. 12. Pursuant to the judgment of Hon’ble Supreme Court in ECIL,[ (2011) 3 SCC 404 ], the Central Board of it issued instruction dated 24.3.2011 as follows:- “3. In view of the above there is no requirement of obtaining approval of the Committee on Disputes for pursuing litigations as was being done. Field formations may now pursue their appeals in the respective Tribunals/Courts without obtaining clearance from the Committee on Disputes. Proposals which have already been sent to the Committee and no decisions have been taken till 17-2-2011 shall be deemed to be covered by the decision of the Hon’ble Court dated 17-2-2011, i.e. COD permission is not required in those cases.” As per the above circular of Central Board of Excise, the proposal, which has already been sent to the Committee and where no decision taken by the COD, shall be deemed to be covered by the decision rendered in the case of ECIL, [ (2011) 3 SCC 404 ], dated 17.2.2011. Even as per the decision of the case of ECIL, [ (2011) 3 SCC 404 ], the petitioner having not obtained clearance from COD and not applied for obtaining clearance from COD as on 17.2.2011, the Tribunal rightly dismissed the petitioner’s appeal. 13. In so far as the dismissal of the application for restoration is concerned, learned counsel for the petitioner submitted that the Tribunal erred in placing reliance on the case of M/s.Burn Standard Co. Ltd. Vs. CCE-Kol-II and submitted that the case of M/s.Burn Standard Co. Ltd. was decided on the facts and circumstances of that case and the same is not applicable to the case on hand. 14. The learned counsel appearing for the petitioner has submitted that the application of seeking restoration of the appeal filed by the petitioner being MA(ROA)-460/2012(SP-757/09) has been dismissed erroneously relying on order dated 05.10.2012 passed in M/s. Burn Standard Co. Ltd. Vs. Commr. Central Excise, Kol.II. In M/s. Burn Standard Co. Ltd. (supra) the application of COD clearance moved on behalf of M/s. Burn Standard Co. Ltd. for pursuing its appeal before the Tribunal was rejected by the Committee of Disputes (COD) and an application seeking reconsideration of the decision rejecting the application for COD clearance was pending before the Committee and in that view of the matter the learned Tribunal dismissed the Miscellaneous Application seeking restoration of the Excise Appeal. According to the appellant, in the present case, the Committee of Disputes had not rejected the application seeking COD clearance for the petitioner and therefore, the Tribunal has committed an error in placing reliance upon M/s.Burn Standard Co. Ltd. in dismissing the application seeking restoration of the appeal filed by the petitioner. It is evident from order dated 17.09.2012 in M/s. Burn Standard Co. Ltd. that considering the view of the larger Bench of the Tribunal in order dated M-404/Kol/12 dated 25.07.2012, the learned Tribunal held that COD clearance would not be required in respect of cases pending with COD as on 17.02.2011 and cases arising thereafter. 15. It is pertinent to note that the judgment of the Hon'ble Supreme Court in ECIL (supra) was delivered on 17.02.2011 and in that context, the larger Bench of the Tribunal held that COD permission was not required in cases which were pending for COD clearance as on 17.02.2011. 15. It is pertinent to note that the judgment of the Hon'ble Supreme Court in ECIL (supra) was delivered on 17.02.2011 and in that context, the larger Bench of the Tribunal held that COD permission was not required in cases which were pending for COD clearance as on 17.02.2011. Admittedly, the appeal was filed by the petitioner on 14.10.2009 without any COD clearance. It is not in dispute that as on 17.02.2011 no application on behalf of the petitioner was pending seeking COD clearance and therefore, on facts no distinction can be drawn from the case in M/s. Burn Standard Co. Ltd. and the Tribunal placing reliance upon M/s. Burn Standard Co. Ltd.’s case rightly dismissed the appeal filed by the appellant. 16. The order dated 18.9.2012 dismissing Excise Appeal No.532/2009 and the order dated 26.4.2013/1.5.2013 dismissing the restoration application do not suffer from any error of law warranting interference and this writ petition is liable to be dismissed. In the result, this writ petition is dismissed.