Rejection of VCES is Appealable
The CBEC in its circular dated 8th August 2013 has stated that Voluntary Compliance Encouragement Scheme has no provision for appeal against the rejection of declaration. It is correct that right to appeal is not a constitutional right but a statutory right. Therefore, the parent law has to be checked to see whether the rejection of VCES declaration is appealable or not. Section 85 of the Finance Act, 1994 states that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise amy appeal to the Commissioner (Appeals). The term ‘adjudicating authority’ has not been defined in the Finance Act. However, in Section 2(a) of the Central Excise Act, 2004, ‘adjudicating authority’ has been defined as any authority competent to pass an order under the Act, except CBEC, Commissioner (Appeals) and CESTAT. Therefore, it has to be seen as to whether the rejection of the VCES application by the designated authority under Section 106 of the Finance Act, 2013 is an order under the Finance Act, 1994. The VES scheme is notified by the Finance Act, 2013. This scheme is not a complete code in itself, but a part and parcel of the Chapter V of Finance Act, 1994. Therefore, the decision of the designated authority is an order under Chapter V of the Finance Act, 1994. hence the appeal against the orders of desiganted authority lies with Commissioner (Appeals). Moreover, the Hon’ble Tribunal in Mohindra & Mohindra Ltd. Vs. CCE, 1988 (33) ELT 517 held that word ‘adjudicating’ has to be given wider and populor meaning.
It is a know fact, that the scheme in question has failed to achieve its targets. The Government is spending crores and crores of rupees in popularizing the scheme. But, such legally unsustainable circulars will certainly drain the public money spent on the scheme. It is expected that better sense will prevail and remedial measures will be taken at the earlies.