CHAPTER - IV

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Constitution, Powers & Functions of

CESTAT

1. Constitution of CESTAT

Customs, Excise and Service Tax Appellate Tribunal

(CESTAT) in the present form was earlier formed as Customs,

Excise and Gold (Control) Appellate Tribunal (CEGAT) in the

year 19821. After scraping of Gold (Control) Act, 1962 and

introduction of Service Tax by Finance Act, 1994, a need arose

to enhance its jurisdiction to include / entertain appeal of cases

relating to Service Tax also; hence its name was changed to the

present CESTAT2. The Tribunal draws its powers and functions

from the provisions of section 129C of the Customs Act, 19623 to

deal with the matters relating to Customs , section 35D of the

1 CEGAT Notification No. 1/CEGAT/82 dated 25-10-1982 , For reference see R.

K. Jain’s Central Excise Law Manual, Golden Jubilee Edition, 2010 (March), Centax Publication Pvt. Ltd., p 3.12.

2 CESTAT Notification No. 1/2003 dated 06-06-2003, ibid. 3 R. K. Jain’s Customs Law Manual, 38th Edition, 2008 (Nov.), Centax

Publication Pvt. Ltd., p 1.110.

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Central Excise Act, 19444 to deal with the matters relating to

Central Excise and section 86 of Finance Act, 19945 to deal with

matters relating to Service Tax.

2. Nature and scope of CESTAT

The CESTAT is a quasi-judicial authority. The dictionary

meaning of quasi is ‘seemingly but not actually’ and quasi-

judicial means ‘having characteristics of a judicial act but

performed by an administrative agency or official’.6 The Tribunal

hears appeals against the orders of Commissioner as

adjudicating authority and Commissioner (Appeals). Its powers

are limited as compared to the powers of the Tribunal formed

under Article 323B of the Constitution of India.7 However, its

orders are binding on lower authorities. Tribunal is final fact

finding authority, but as this Tribunal is a creature of Statute it

cannot traverse beyond provisions of Statute. The hon’ble 4 Supra note 1, p 1.138. 5 R. K. Jain’s Service Tax Law Guide, 7th Edition, 2009 (September), Centax

Publication Pvt. Ltd., p 1501. 6 Webster’s Encyclopedic Unabridged Dictionary of the English Language,

1989, Gramercy Books, New York / Avenel, New Jersey, p 1177. 7 V. N. Shukla’s Constitution of India Eleventh Edition, 2008, Eastern Book

Company, Lucknow, p 904.

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Supreme Court of India has observed,’ Tribunals, whether they

pertain to income tax or sales tax or excise and customs or

administration, have now become essential part of the judicial

system of the country. Such specialized institutions may not

strictly come within the concept of the judiciary, as envisaged by

Article 50 of the Constitution of India8, but cannot be presumed

that such tribunals are not effective part of the justice delivery

system, like courts of law’.9

(i) Territorial jurisdiction

The territorial jurisdiction of CESTAT extends to whole of

India including the state of Jammu and Kashmir. In order to

function properly and to facilitate public at large to have easy

access, various benches have been established in different cities

of India such as Principal Benches and Zonal Benches. Principal

Bench means a bench constituted at the Principal seat of the

Tribunal i.e. Delhi. Zonal Bench means a bench located at a

place other than Delhi or at Delhi but having jurisdiction over a

specified area under a zone.

8 Id., p 360. 9 Union of India v. Delhi High Court Bar Association, AIR, 2002, SC, p 1347.

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There are seven benches designated as Principal Benches

and four as Zonal Benches, which deal with specified areas

under four zones originally but later on keeping in view the work

load and the convenience of the public, the Western Bench

Bombay has been bifurcated as Western Bench Ahmedabad

and Western Bench Mumbai10, however Ahmedabad Bench

started functioning w.e.f. 11-10-200611 The detailed structure

and the jurisdictions of all the Principal Benches and Zonal

Benches as on 03-03-2006 is shown in Annexure I.

3. Appointments/ Qualifications of President, Vice

President, and members

As per the Constitution of The Tribunal, the President (who

is the apex body), Vice President, Registrar and members of the

Bench carry on the day to day functions of CESTAT.

Appointment and qualifications for the recruitment of President,

Vice President and members is governed by rule 3,6,10,12 of

Rules12. The qualifications for recruitment are that mainly he/she

10 CESTAT notification No.01/2006 dated 03-03-2006, supra note 1, p 3.24. 11 CESTAT notification No.02/2006 dated 28-09-2006, ibid. 12 CESTAT Members ( Recruitment and Conditions of Service) Rules, 1987,

id., p 3.41.

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has held a judicial office in the territory of India at least for 10

years or he/she has been a member of Indian Legal Service and

has held a post in grade 1st of that service or any equivalent or

higher post for at least three years. On the other way he/she has

been an advocate for at least 10 years. For the appointment as a

Technical member the person should be a member of the Indian

Customs & Central Excise Service group ‘A’ and has held the

post of Commissioner of Customs & Central Excise or any

equivalent or higher post at least for three years. However

minimum age for appointment as member is 45 years.

4. Selection procedure

The appointment of the president, vice president and

members of the tribunal is approved a selection committee

consisting of the following members of committee

(i) a judge of the Supreme Court of India as nominated by the

Chief Justice of India.

(ii) The Secretary to the Government of India in the Ministry of

Finance.

(iii) The Secretary to the Government of India in the Ministry of

Law ( Department of Legal Affairs).

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(iv) The President.

(v) Such other persons not more than two as nominated by

the Central Government, is designated the powers to

make appointment as member. In this selection committee

judge of the Supreme Court of India acts as chairman of

the committee and recommends persons as members

only those who are on the list of candidates which is

prepare by the Ministry of Finance after inviting

applications13.

Along with President, Vice President and members of the

Tribunal there are some other officers like Registrar and

Assistant Registrar. These officers are concerned with the official

paper work14. The Registrar can after the approval of the

President delegate any function required to the Deputy Registrar

or an Assistant Registrar, in the absence of the Registrar the

Deputy Registrar or the Assistant Registrar may exercise all the

functions of the Registrar15 and the Registrar has the custody of

the records of the Tribunal and the official Seal.

13 Ibid. 14 Rule 44 of CESTAT (procedure) Rules, 1982, id., p 3.20. 15 CEGAT order no.6/85 (Tech.) dated 21-2-1986, ibid.

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The Assistant Registrars of the respective Benches are

authorised to receive appeals, cross-objections, reference

applications, cross-reference applications and stay petitions etc.

The Head Clerk of the Bench can also receive these documents

in the absence of the Assistant Registrar.16

5. Powers of CESTAT

Power is the ability conferred upon a person or a body by

the law to by his own will directed to that end, the rights, duties,

liabilities or other legal situation or situations within the limits of

Act, law and Rules.

Powers of CESTAT, which are covered here, are:

1. Its powers under The Customs Act, 1962.

2. Its powers under The Central Excise Act, 1944.

3. Its powers under The Service Tax as per Finance Act,

1994.

16 CEGAT order no. 198 of 1983 dated 26-12-1983, id., p 3.30.

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(i) Powers under The Customs Act,1962:

CESTAT consisting of as many judicial and technical

members as it thinks fit, exercises the powers and discharge the

functions conferred upon it in the matters relating to Customs17.

The appointment of the members of CESTAT has already been

discussed under the heading Appointments/ Qualifications of

President, Vice President, and members of CESTAT

(1) The powers are to hear and pass the orders on the

appeals preferred against:

(a) a decision or order passed by the Commissioner of

Customs as an adjudicating authority;

(b) an order passed by the Commissioner (Appeals) under

section 128A18;

(c) an order passed by the Board or the Appellate

Commissioner of Customs under Section 128.19 However,

no appeal shall lie to the Appellate Tribunal and the

Appellate Tribunal shall not have jurisdiction to decide any

17 Section 129A of The Customs Act, 1962, supra note 3, p 1.108. 18 Id., p 1.107. 19 Ibid.

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appeal in respect of any order referred to in clause (b) if

such order relates to, -

(a) any goods imported or exported as baggage;

(b) any goods loaded in a conveyance for importation into

India, but which are not unloaded at their place of

destination in India, or so much of the quantity of such

goods as has not been unloaded at any such destination if

goods unloaded at such destination are short of the

quantity required to be unloaded at that destination;

(c) payment of drawback as provided in Chapter X, and the

rules made thereunder :

It is also provided that the Appellate Tribunal may, in its

discretion, refuse to admit an appeal in respect of an order

referred to in clause (b) or clause (c) or clause (d) where -

(i) the value of the goods confiscated without option having

been given to the owner of the goods to pay a fine in lieu of

confiscation under section 12520; or

20 Id., p 1.102.

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(ii) in any disputed case, other than a case where the

determination of any question having a relation to the rate of

duty of customs or to the value of goods for purposes of

assessment is in issue or is one of the points in issue, the

difference in duty involved or the duty involved; or

(iii) the amount of fine or penalty determined by such order,

does not exceed fifty thousand rupees.

Every appeal against any order of the nature referred to in

the first proviso to sub-section (1), which is pending immediately

before the commencement of section 40 of the Finance Act,

1984, before the Appellate Tribunal and any matter arising out of

or connected with such appeal and which is so pending shall

stand transferred on such commencement to the Central

Government and the Central Government shall deal with such

appeal or matter under section 129DD21 as if such appeal or

matter were an application or a matter arising out of an

application made to it under that section.

21 Id., p 1.112.

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(i) The Board may, by notification in the Official Gazette,

constitute such Committees as may be necessary for the

purposes of this Act.

(ii) Every Committee constituted under clause (i) shall consist

of two Chief Commissioners of Customs or two Commissioners

of Customs, as the case may be.

It has also been provided that where the Committee of

Commissioners of Customs differs in its opinion regarding the

appeal against the order of the Commissioner (Appeals), it shall

state the point or points on which it differs and make a reference

to the jurisdictional Chief Commissioner of Customs who shall,

after considering the facts of the order, if is of the opinion that

the order passed by the Commissioner (Appeals) is not legal or

proper, direct the proper officer to appeal to the Appellate

Tribunal against such order. For these purposes “jurisdictional

Chief Commissioner” means the Chief Commissioner of

Customs having jurisdiction over the adjudicating authority in the

matter.

Every appeal shall be filed within three months from the

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date on which the order sought to be appealed against is

communicated to the Commissioner of Customs, or as the case

may be, the other party preferring the appeal.

On receipt of notice that an appeal has been preferred

under this section, the party against whom the appeal has been

preferred may, notwithstanding that he may not have appealed

against such order or any part thereof, file, within forty-five days

of the receipt of the notice, a memorandum of cross-objections

verified in such manner as may be specified by rules made in

this behalf against any part of the order appealed against and

such memorandum shall be disposed of by the Appellate

Tribunal as if it were an appeal presented within the time.

However, the Appellate Tribunal may admit an appeal or permit

the filing of a memorandum of cross-objections after the expiry of

the relevant period, if it is satisfied that there was sufficient

cause for not presenting it within that period.

Further more under the Act CESTAT has been conferred

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with following ample powers22:

The Appellate Tribunal may, after giving the parties to the

appeal, an opportunity of being heard, pass such orders thereon

as it thinks fit, confirming, modifying or annulling the decision or

order appealed against or may refer the case back to the

authority which passed such decision or order with such

directions as the Appellate Tribunal may think fit, for a fresh

adjudication or decision, as the case may be, after taking

additional evidence, if necessary. The Appellate Tribunal may,

if sufficient cause is shown, at any stage of hearing of an appeal,

grant time to the parties or any of them and adjourn the hearing

of the appeal for reasons to be recorded in writing, no

adjournment shall be granted more than three times to a party

during hearing of the appeal.

The Appellate Tribunal may, at any time within six months

from the date of the order, with a view to rectifying any mistake

apparent from the record, amend any order passed by it and

shall make such amendments if the mistake is brought to its

notice by the Commissioner of Customs or the other party to the

appeal.

22 Section 129B of The Customs Act, 1962, id., p 1.110.

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However, an amendment which has the effect of enhancing

the assessment or reducing a refund or otherwise increasing the

liability of the other party shall not be made, unless the Appellate

Tribunal has given notice to him of its intention to do so and has

allowed him a reasonable opportunity of being heard. The

Appellate Tribunal shall, where it is possible to do so, hear and

decide every appeal within a period of three years from the date

on which such appeal is filed.

But where an order of stay is made in any proceeding

relating to an appeal filed under sub-section (1) of section

129A23, the Appellate Tribunal shall dispose of the appeal within

a period of one hundred and eighty days from the date of such

order. In case such appeal is not disposed of within the said

period the stay order shall, on the expiry of that period, stand

vacated.

The Appellate Tribunal shall send a copy of every order

passed to the Commissioner of Customs and the other party to

the appeal.

23 Ibid.

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The orders passed by the Tribunal on appeal are final except

in cases excluded n section 13024 or section 130E.25

(ii) Powers under The Central Excise Act, 1944

Central Excise is a tax on act of manufacture or production

of goods in India. This tax is collected at the time of removal of

the goods from the factory26. Numerous disputes regarding

classification of goods, valuation of goods, rate of duty

applicable as subject to various concessional notifications in

force, clandestine clearances of goods without payment of duty

and irregular /misuse of CENVAT credit facility etc. CESTAT

exercises following Appellate jurisdiction and powers under the

Act27:

(a) The powers are to hear and pass the orders on the

appeals preferred against a decision or order passed by

the Commissioner of Central Excise as an adjudicating

authority or an order passed by the Commissioner

(Appeals) under section 35A.28

It is also provided that no appeal shall lie to the Appellate 24

Id., p 1.113. 25

Id., p 1.114. 26 Section 3 of The Central Excise Act, 1944, supra note 1, p 1.105. 27 Section 35B of The Central Excise Act, 1944, id., p 1.136. 28 Id., p 1.135.

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Tribunal and the Appellate Tribunal shall not have jurisdiction to

decide any appeal in respect of any order if such order relates

to following categories:

A case of loss of goods, where the loss occurs in transit

from a factory to a warehouse or to another factory, or from one

warehouse to another, or during the course of processing of the

goods in a warehouse or in storage, whether in a factory or in a

warehouse;

A rebate of duty of excise on goods exported to any country

or territory outside India or on excisable materials used in the

manufacture of goods which are exported to any country or

territory outside India;

Goods exported outside India (except to Nepal or Bhutan)

without payment of duty ;

Credit of any duty allowed to be utilised towards payment of

excise duty on final products under the provisions of this Act or

the rules made thereunder and such order is passed by the

Commissioner (Appeals) on or after the date appointed under

section 109 of the Finance (No. 2) Act, 1998:

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It is also provided that the Appellate Tribunal may, in its

discretion, refuse to admit an appeal in respect of an order

referred above in any disputed case, other than a case where

the determination of any question having a relation to the rate

of duty of excise or to the value of goods for purposes of

assessment is in issue or is one of the points in issue, the

difference in duty involved or the duty involved; or the amount

of fine or penalty determined by such order, does not exceed

fifty thousand rupees.

The Central Board of Excise and Customs is empowered to

constitute such Committees as may be necessary for the

purposes of this Act.

Every Committee constituted shall consist of two Chief

Commissioners of Central Excise or two Commissioners of

Central Excise, as the case may be.

(b) The Committee of Commissioners of Central Excise may, if

it is of opinion that an order passed by the Appellate

Commissioner of Central Excise under section 3529, as it

stood immediately before the appointed day, or the

29 Id., p 1.135.

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Commissioner (Appeals) under section 35A30, is not legal

or proper, direct any Central Excise Officer authorised by

him in this behalf (hereafter in this Chapter referred to as

the authorised officer) to appeal on its behalf to the

Appellate Tribunal against such order.

It has also been provided that where the Committee of

Commissioners of Central Excise differs in its opinion regarding

the appeal against the order of the Commissioner (Appeals), it

shall state the point or points on which it differs and make a

reference to the jurisdictional Chief Commissioner of Central

Excise who shall, after considering the facts of the order, if is of

the opinion that the order passed by the Commissioner

(Appeals) is not legal or proper, direct any Central Excise Officer

to appeal to the Appellate Tribunal against such order. For these

purposes, “jurisdictional Chief Commissioner” means the Chief

Commissioner of Central Excise having jurisdiction over the

adjudicating authority in the matter.

(c) Every appeal shall be filed within three months from the

date on which the order sought to be appealed against is

communicated to the Commissioner of Central Excise, or,

30

Ibid.

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as the case may be, the other party preferring the appeal.

(d) On receipt of notice that an appeal has been preferred, the

party against whom the appeal has been preferred may,

notwithstanding that he may not have appealed against

such order or any part thereof, file, within forty-five days of

the receipt of the notice, a memorandum of cross-

objections verified in the prescribed manner against any

part of the order appealed against and such memorandum

shall be disposed of by the Appellate Tribunal as if it were

an appeal presented within the time.

(e) The Appellate Tribunal may admit an appeal or permit the

filing of a memorandum of cross-objections after the expiry

of the relevant period referred herein before, if it is satisfied

that there was sufficient cause for not presenting it within

that period.

Further CESTAT has been conferred with following ample

powers31:

31 Section 35C of The Central Excise Act, 1944, id., p 1.138.

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The Appellate Tribunal may, after giving the parties to the

appeal an opportunity of being heard, pass such orders thereon

as it thinks fit, confirming, modifying or annulling the decision or

order appealed against or may refer the case back to the

authority which passed such decision or order with such

directions as the Appellate Tribunal may think fit, for a fresh

adjudication or decision, as the case may be, after taking

additional evidence, if necessary.

The Appellate Tribunal may, if sufficient cause is shown, at

any stage of hearing of an appeal, grant time, from time to time,

to the parties or any of them and adjourn the hearing of the

appeal for reasons to be recorded in writing. It is also provided

that no such adjournment shall be granted more than three times

to a party during hearing of the appeal.

The Appellate Tribunal may, at any time within six months

from the date of the order, with a view to rectifying any mistake

apparent from the record, amend any order passed by it and

shall make such amendments if the mistake is brought to its

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notice by the Commissioner of Central Excise or the other party

to the appeal. It has also been provided that an amendment

which has the effect of enhancing an assessment or reducing a

refund or otherwise increasing the liability of the other party,

shall not be made, unless the Appellate Tribunal has given

notice to him of its intention to do so and has allowed him a

reasonable opportunity of being heard.

The Appellate Tribunal shall, where it is possible to do so,

hear and decide every appeal within a period of three years from

the date on which such appeal is filed. It is also provided that

where an order of stay is made in any proceeding relating to an

appeal filed under sub-section (1) of section 35B32, the Appellate

Tribunal shall dispose of the appeal within a period of one

hundred and eighty days from the date of such order. In case if

such appeal is not disposed of within the period specified, the

stay order shall, on the expiry of that period, stand vacated.

The Appellate Tribunal shall send a copy of every order

passed under this section to the Commissioner of Central Excise

32 Id., p 1.136.

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and the other party to the appeal.

The orders passed by Appellate tribunal shall be final

subject to the provisions of section 35G33 or section 35L.34

(iii) Powers under The Service Tax as per Finance Act,

1994

Service Tax is an indirect tax imposed on the services35

provided within India except the State of Jammu and Kashmir

under chapter (V) of The Finance Act, 1994, as amended time to

time. Numerous disputes regarding classification of services,

valuation of services, rate of service tax applicable as subject to

various concessional notifications in force, non payment of

Service Tax and irregular /misuse of CENVAT credit facility etc.

CESTAT exercises following Appellate jurisdiction and powers

under The Finance Act, 199436:

33 Id., p 1.141. 34 Id., p 1.142. 35 Sections 65, 66 of The Finance Act, 1994, supra note 5, p 1467-1491. 36 Section 86 of The Finance Act, 1994, id., p 1501.

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(a) Any assessee aggrieved by an order passed by a

Commissioner of Central Excise under section 7337 or

section 83A38 or an order passed by a Commissioner of

Central Excise (Appeals) under section 8539, may appeal to

the Appellate Tribunal against such order. The Board may,

by notification in the Official Gazette, constitute such

Committees as may be necessary for these purposes.

Every Committee constituted shall consist of two Chief

Commissioners of Central Excise or two Commissioners of

Central Excise, as the case may be.

(b) The Committee of Chief Commissioners of Central Excise

may, if it objects to any order passed by the Commissioner

of Central Excise under section 7340 or section 83A41, direct

the Commissioner of Central Excise to appeal to the

Appellate Tribunal against the order. But where the

Committee of Chief Commissioners of Central Excise

differs in its opinion against the order of the Commissioner

of Central Excise, it shall state the point or points on which

37 Id., p 1494. 38 Id., p 1500. 39 Id., p 1500. 40 Id., p 1494. 41 Id., p 1500.

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it differs and make a reference to the Board which shall,

after considering the facts of the order, if is of the opinion

that the order passed by the Commissioner of Central

Excise is not legal or proper, direct the Commissioner of

Central Excise to appeal to the Appellate Tribunal against

the order.

The Committee of Commissioners may, if it objects to any

order passed by the Commissioner of Central Excise (Appeals)

under section 8542, direct any Central Excise Officer to appeal on

its behalf to the Appellate Tribunal against the order. But where

the Committee of Commissioners differs in its opinion against

the order of the Commissioner of Central Excise (Appeals), it

shall state the point or points on which it differs and make a

reference to the jurisdictional Chief Commissioner who shall,

after considering the facts of the order, if is of the opinion that

the order passed by the Commissioner of Central Excise

(Appeals) is not legal or proper, direct any Central Excise Officer

to appeal to the Appellate Tribunal against the order. For these

purposes, “jurisdictional Chief Commissioner” means the Chief

42 Id., p 1500.

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Commissioner having jurisdiction over the concerned

adjudicating authority in the matter.

(c) Every appeal shall be filed within three months of the date

on which the order sought to be appealed against is

received by the assessee, the Committee of Chief

Commissioners or the Committee of Commissioners, as

the case may be.

(d) The Commissioner of Central Excise or any Central Excise

Officer subordinate to him or the assessee, as the case

may be, on receipt of a notice that an appeal against the

order of the Commissioner of Central Excise or the

Commissioner of Central Excise (Appeals) has been filed

by the other party may, notwithstanding that he may not

have appealed against such order or any part thereof,

within forty-five days of the receipt of the notice, file a

memorandum of cross-objections, verified in the prescribed

manner, against any part of the order of the Commissioner

of Central Excise or the Commissioner of Central Excise

(Appeals), and such memorandum shall be disposed of by

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the Appellate Tribunal as if it were an appeal presented

within the time specified.

(e) The Appellate Tribunal may admit an appeal or permit the

filing of a memorandum of cross-objections after the expiry

of the relevant period, if it is satisfied that there was

sufficient cause for not presenting it within that period.

(f) While hearing the appeals and making orders under this

section, the Appellate Tribunal shall exercise the same

powers and follow the same procedure as it exercises and

follows in hearing the appeals and making orders under the

Central Excise Act, 1944.

CESTAT is also vested with the powers to get its orders

implemented in order not to become a toothless tiger.43 This rule

also provides for the remedy to prevent the abuse of process of

law and to secure ends of justice. A bare perusal of the said

provision reveal that the same is essential for effective

administration of justice and as such are covered by the inherent

43 Rule 41 of CESTAT (Procedure) Rules, 1982, supra note 1, p 3.19.

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powers of the judicial or the quasi - judicial authorities.

In the cases of undue hardship and in prima facie good

cases, the CESTAT is empowered to waive or dispense with pre

deposit of duty demanded or penalty levied subject to the

safeguard of revenue and stay the implementation of the order

appealed against.44

Besides all the above mentioned powers of the CESTAT,

for the smooth functioning and exercise of powers conferred on

it, its President is empowered to constitute the different Benches

whether single Member or double Members.45

6. Functioning of CESTAT

The CESTAT hear appeals filed before it by the assessee

and the department as per rules already discussed and pass the

orders on these appeals. All appeals and stay matters are listed

44 Sections 129E of The Customs Act, 1962, 35F of The Central Excise Act,

1944, supra notes 3 & 1, pages 1.113 & 1.140 respectively. 45 Sections 129C of The Customs Act, 1962, 35D of The Central Excise Act,

1944, supra notes 3 & 1, pages 1.110 & 1.138 respectively.

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in the cause lists chronologically page wise. Assistant Registrars

of concerned Benches, while preparing the list for regular

hearing, take care that sufficient number of old cases are

included in the cause list.

Where out of turn hearing has been granted in any Bench in

respect of any appeal, such appeals are listed in the cause list

for hearing accordingly, following the chronological order, unless

the Bench has directed the same to be placed at top of the list.

Adjournment of appeals, particularly old appeals are granted

only in exceptional cases and for sufficient reasons. Further all

appeals in the cause list, which are not reached by the end of

the day, may be adjourned unless the Bench directs any appeal

or appeals to lie over to the next working day. Parties,

Consultants and Advocates may be permitted to make

representation regarding adjournment or lie over.

Whenever work of any Bench collapses for any reason, the

Bench makes requisition to the Registrar who on the orders of

the President or senior most Member present on the day, finds

out if any appeals are available from the other Benches and if

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so, transfers one or more of such appeals to the requisitioning

Bench, to ensure that Bench has sufficient work till the end of the

day and without affecting the work of the Bench from which

appeals are called for.

After conclusion of the hearing of the appeal or stay

application, if the order is not dictated on the Bench, order may

be reserved and while reserving the order, a date may also be

fixed for pronouncement of the order. When the order or orders

are ready for signing, it or they may be signed by the Members

or Members other than the Member or Members who prepared

the order or orders, and the appeal or application should be

included in the cause list on the day already fixed, under the

heading “Pronouncement of Order” and the Member or members

who prepared the order shall sign the order on the Bench or

respective Benches and pronounce the order or orders. It is also

open to the Member who prepared the order to request any of

the members of the Bench who heard the case to pronounce the

order and the Member or Members who prepared the order shall

sign the order and send the order to the other Member for the

purpose of pronouncement who shall sign the order of the Bench

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and pronounce the order. It shall be the responsibility of the

Private Secretaries / Personal Assistants / Stenographers of the

Member who is to pronounce the order to ensure that the case is

included in the weekly cause list or daily cause list or

supplementary cause list for pronouncement of order.

On pronouncement of the order or orders, as the case may

be, the secretary concerned immediately forwards the same to

the Registry. The Registry issues copy of the order or orders in

stay applications within 24 hours of the receipt of the order and

issues copies of the final order or orders within three days of the

receipt of the same.

The private secretary/stenographers clear the arrears at the

earliest and immediately furnish to the Registrar a list of cases in

which orders have been dictated but transcript not prepared or

draft orders have been corrected.

7. Judicial Review of orders of CESTAT

The functioning of CESTAT has always remained a point of

discussion/scrutiny as the orders of CESTAT are subjected to

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following type of judicial review:

(a) If the order of CESTAT involves any question of law then

reference against this order can be filed before the

jurisdictional High Court under section 35G of The Central

Excise Act, 194446, under section 130 of The Customs

Act, 196247 and also in respect of matters relating to the

Service Tax as per The Finance Act, 1994, as the

provisions of The Central Excise Act 1944 have been

made applicable vide section 8348 to it.

(b) If the order of the CESTAT involves among other things to

the determination of any question having a relation to the

rate of duty of Excise or to the value of the goods for the

purpose of assessment, then an appeal against the order

can be filed before the Hon’ble Supreme Court of India

under section 35L49 of the Central Excise Act 1944, under

section 130E50 of The Customs Act, 1962 and also in

respect of matters relating to the Service Tax as per The

46 Supra note 1 , p 1.141 47 Supra note 3 , p 1.113. 48 Supra note 5 , p 1500. 49 Supra note 1 , p 1.142. 50 Supra note 3 , p 1.114.

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Finance Act, 1994, as the provisions of The Central Excise

Act 1944 have been made applicable vide section 8351 to

it.

(c) Further the CESTAT may at any time within six months

from the date of the order, with a view to rectifying any

mistake apparent from the record, amend any order

passed by it, if the mistake is brought to the notice of

CESTAT under section 35C(2) of the Central Excise Act

194452, under section 129B(2) of The Customs Act, 196253

and also in respect of matters relating to the Service Tax

as per The Finance Act, 1994, as the provisions of The

Central Excise Act 1944 have been made applicable vide

section 8354 to it.

Therefore, it has been observed that the orders of CESTAT

are subjected to judicial review only if these involve substantial

question of law or involve a dispute regarding valuation or

classification goods regarding rate of duty. In other words the

decisions involving only the question of fact are final in itself, as

51 Supra note 5 , p 1500. 52 Supra note 1 , p 1.138. 53 Supra note 3 , p 1.111. 54 Supra note 5 , p 1500.

106

there exists no provision in the law or any statute for any appeal

against these orders. It has been observed many a time that

when any decision of CESTAT involves question of fact then

there is a tendency to file an appeal in the jurisdictional High

Court by manipulating such question of fact to look like a

question of law. This results in a long drawn judicial battle

because all orders of High Court are appealable to the Supreme

Court and if such distorted question of fact which was presented

as question of law has not been admitted by the High Court, the

order of the High Court is again appealed against in the Hon’ble

Supreme Court of India.

8. Concluding remarks

The functioning of the CESTAT requires a very high

degree of Integrity, knowledge of law and procedures which is

found many times wanting as has been found that various

judgments are passed without proper appreciation of the fact

and without going into the merits of the case and are passed on

mere technical / legal lacunae. This may be due to lack of

knowledge of legal procedure which is misutilised by the corrupt

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officers and counsels. An appeal was rejected by the Western

Bench merely on the ground that the reviewing authority has

itself preferred the appeal instead of authorising its subordinate

to file the appeal55. It has also observed that when a single

Bench passes an order on the appeal which was to be decided

by the double Bench as per the monetary jurisdiction, there is no

remedy available and even the CESTAT can not rectify the

mistake even if both the parties agree to undo the damage.56

In a glaring procedural lapse the High Court passed

strictures against the President of CESTAT for passing an order

contrary to the provision of law.57 In this case the President of

CESTAT directed one member of the bench to formulate points

of difference as one of member of referral bench had retired. The

court observed while passing strictures that one would have

expected the president to read the provisions and act

accordingly considering the plain language of the provisions.

55 Commissioner of Central Excise v. Shree Ganesh Dying & Printing Works,

(Appeal No. E/602/05) of Western Bench of CESTAT. 56 National Fertilisers Ltd. v. Commissioner of Central Excise Chandigarh, 1983,

ELT, p 2051 & Ashok Kumar v. Commissioner of Central Excise Jaipur , 1998, ELT, p 548.

57 Colourtex v. Union of India, 2010(257), ELT, p 14(Gujrat).

108

Such instances on one hand are mockery of the

procedures and on the other hand lend credence to the

allegations of wide spread corruption, nepotism, favoritism and

miscarriage of justice, because, the job of the CESTAT is very

sensitive one as this is the highest authority in the matters

relating to question of fact. In many cases comments bordering

on strictures have been passed by various courts. Severest of

the strictures on any bench of the CESTAT by any High Court

were passed, on the Division Bench order authored by Shri T.K.

Jayaraman.58 In this case an amount of Rs.99 crores was

involved and CESTAT Bangalore had earlier ordered deposit of

Rs.25 crores as condition for waiver of pre deposit of balance

amount. However, subsequently CESTAT Bangalore modified its

own order and waived even this condition for deposit of Rs.25

crores. It was observed by the court, “… The order is totally

lacking in conforming to the requirement of Section 35F of the

Act…. The argument of non-interference with an order passed

by the Tribunal with jurisdiction is called in aid only to safeguard

and protect the order which the assessee has managed to obtain

before the Tribunal. ….. An order which cannot speak for itself,

58 Commissioner v. McDowell & Co. Ltd., 2005 (186), ELT, p 145 (Kar.).

109

an order which has not taken into consideration all relevant

aspects, particularly, the statutory requirements of the proviso to

Section 35F of the Act, in my view is an order that is not at all

sustainable. It is a clear case of abuse and misuse of the powers

under the proviso to Section 35F of the Act.”

In another case of mis utilisation of power flouting all the

procedures of the CESTAT a case was heard and relief was

granted without even listing the case where a stay was granted

after waiver of pre deposit of Rupees 320 crores on the condition

of deposit of Rupees one crore. 59 In another case a judgment

was delivered only in 11 lines granting relief to the party

involving rupees 440 crores against all the norms even when the

party had not pleaded any financial hardship60

The High Court has also commented upon the statutory

responsibility of the CESTAT to safeguard the interest of the

59 Harsinghar Gutka Pvt. Ltd. v. Commissioner, 2008 (221), ELT, p 77 (Tri.-Del.). 60 Bharti Airtel Ltd. v. Commissioner of Customs, 2009 (237), ELT, p 469.

110

revenue, while granting waiver of pre-deposit and observed as

under:61

“It is not the lip sympathy of the Tribunal which can fulfill

the statutory requirement of ensuring the safeguard of the

interest of the revenue, but a concrete order indicating the

manner in which the interest of the revenue is in fact

safeguarded by imposing commensurate conditions.”

The High Court finally held that the Tribunal’s order in this

case was clearly in violation of statute and fit to be characterized

as arbitrary.

It is also seen that a nexus exist between the corrupt

officers, tax evaders and advocates practicing in these

tribunals. In a case the advocates tried to silence one whistle

blower of corruption in The Tribunal by dragging him to court in

contempt proceedings. The hon’ble Supreme Court of India

while dismissing the petition even awarded costs to respondent

61 Commissioner v. United Telecom Ltd.,2006 (198), ELT, p 12 (Kar.).

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and lambasted the lawyers body.62 The petitioner is a body of

professionals who represent the cause of their clients before

CESTAT and may be other Tribunals and authorities. They are

expected to be vigilant and interested in transparent functioning

of CESTAT. However, instead of doing that, they have come

forward to denounce the editorial and in the process misled the

Attorney General of India in giving consent by suppressing the

factum of appointment of Inquiry Committee by the President,

CESTAT. We are sorry to observe that a professional body like

the petitioner has chosen wrong side of the law.

-o-o-o-o-o-

62 Indirect Tax Practitioners Association v. R. K. Jain, 2010, AIT, p 340(SC).