Adjudicating Authorities Cannot Modify Final Orders After Appeal Period Expires: CESTAT Kolkata

On 8 July, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that an adjudicating authority cannot modify a rebate sanction order after the time limit to challenge the order in appeal has expired as the authority becomes functus officio after passing the order.

A Bench comprising Judicial Member R. Muralidhar dismissed the appeal filed by Wacker Metroark Chemical Pvt. Ltd. against the order passed by the Commissioner (Appeals), which had rejected the company's request for cash payment of the balance rebate amount. He observed:

"Non-filing of appeals against the Rebate sanctioning OIOs proves fatal to the appellant's case. They could not have overcome this error by filing some letter before the Assistant Commissioner on 14.01.2019, after about 1 year 5 months from the date of OIO... I do not find any reason to interfere with the proper and correct decision arrived at by the Commissioner (Appeals)."

Wacker Metroark Chemical had exported 38 consignments after payment of excise duty and claimed rebate of the duty paid. The adjudicating authority sanctioned Rs. 2.10 crore in cash and directed that the remaining Rs. 5.15 lakh be re-credited to the company's CENVAT account.

After the Goods and Services Tax (GST) regime came into force, the company sought payment of the balance amount in cash. It relied on Section 142 of the Central Goods and Services Tax (CGST) Act, which contains transitional provisions for matters arising under the earlier tax regime, and argued that CENVAT credit was no longer available.

The company did not challenge the original rebate sanction orders. Instead, it approached the Assistant Commissioner through a letter dated 14 January 2019, nearly one year and five months after the orders were passed, seeking cash payment of the balance amount. The Assistant Commissioner rejected the request.

Wacker Metroark Chemical then challenged the rejection before the Commissioner (Appeals), who also dismissed the appeal. It subsequently approached the Tribunal.

Before the Tribunal, it argued that the GST regime had replaced the CENVAT credit mechanism and, therefore, the balance rebate amount should have been granted in cash. The Revenue argued that the original rebate sanction orders had attained finality as the company had not challenged them within the prescribed limitation period.

The Tribunal agreed with the Revenue and held that the original rebate sanction orders clearly specified the manner in which the rebate was to be granted. It observed that if the company was aggrieved by the decision to grant part of the rebate through CENVAT credit, it should have challenged those orders by filing an appeal within the statutory period.

It notes hat the company could not bypass the appellate remedy by making a representation before the Assistant Commissioner after the limitation period had expired. Further, it held that the Assistant Commissioner had rightly rejected the request since the authority had no power to reopen or modify the rebate sanction orders after passing them.

Accordingly, the CESTAT dismissed the appeal and upheld the order passed by the Commissioner (Appeals), holding that the company's failure to challenge the original rebate sanction orders within the prescribed limitation period was fatal to its case.

Appearance for the Appellant: Shri Nand Kishore Kothari, Chartered Accountant

Appearance for the Respondent:  Shri A. Mukherjee, Authorized Representative