2020 (10) TMI 211 - HC - Central Excise

Court rules duty demand not sustainable under Customs Notification No.125/84-C.E.

M/s. Jumbo Bags Ltd., Versus The Deputy Commissioner, Office of the Deputy/Assistant Commissioner of GST & Central Excise, “Ponneri Division”, Chennai, The Maritime Commissioner, Office of the Principal Commissioner of CGST & Central Excise, Chennai, The Commissioner of GST & Central Excise, Chennai North Commissionerate,

The Court ruled in favor of the petitioner, holding that the duty demand was not sustainable under Customs Notification No.125/84-C.E. for sales in the ... Dismissal of the appeal by the Revenue - Doctrine of Merger - Exemption from Customs Duty - benefit of N/N. 125/84-C.E. - exemption from payment of duty against the sales effected by them against the Domestic Tariff Area (DTA) against foreign exchange - HELD THAT:- The writ petitions are on a very narrow campus as to the effect of the dismissal of the appeal by the Revenue. The Tribunal, in the petitioner’s case reported in JUMBO BAG LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2005 (3) TMI 188 - CESTAT, CHENNAI], had held that the supplies made are not covered by Notification No.2/95 at all and the Commissioner was in error in invoking Notification No.2/95, for the purpose of demanding excise duty. The Revenue’s appeal before the Hon’ble Supreme Court was dismissed, in view of the earlier decision of the Hon’ble Supreme Court in COMMISSIONER VERSUS GINNI INTERNATIONAL LTD. [2007 (8) TMI 649 - SC ORDER]. The notable wordings of the Hon’ble Supreme Court is that the matter before them are covered “against the Revenue”, in view of Ginni International Limited and “accordingly” dismissed. Incidentally, the petitioner had earlier claimed pre-deposit made by them for availing their right of appeal before the CESTAT and when the amount was paid belatedly, they had claimed interest on the same, which came to be refunded by both the original authority and the Appellate Commissioner. As against the rejection, they had preferred an appeal before the CESTAT. The Tribunal, in its order dated 29.08.2016, had rightly rejected the Revenue’s claim, holding that the order of the Tribunal had merged in the dismissal order of the Hon’ble Supreme Court and therefore, the CESTAT has no jurisdiction to touch upon the merits of the case again and there is no further scope for the Revenue to open its case - It is rather unfortunate that these Quasi Judicial Authorities have disregarded the underlying principle of judicial decisions and its binding effect. When the Hon’ble Supreme Court had rejected the appeal of the Revenue, the order of the Tribunal, which was in favour of the importer, merges with the order of the Hon’ble Supreme Court, under the principle of ‘Doctrine of Merger’. Judicial discipline mandates Quasi Judicial Authorities to extend sanctity to the binding precedents, more so, when such orders are from the highest Court of the Country. This Court expresses its disappointment on the conduct of the concerned authorities in having scant respect towards the orders of the Hon’ble Supreme Court - Petition allowed. Issues:1. Exemption from payment of duty against sales in the Domestic Tariff Area (DTA) against foreign exchange.2. Interpretation of the decision of the Hon'ble Supreme Court in determining duty liability.3. Effect of the dismissal of the appeal by the Revenue on the Tribunal's decision.4. Jurisdiction of the CESTAT to touch upon the merits of the case after the Supreme Court's dismissal.5. Doctrine of Merger and the binding effect of judicial decisions.Issue 1: Exemption from payment of duty against sales in the Domestic Tariff Area (DTA) against foreign exchange.The petitioner claimed exemption from duty payment under Customs Notification No.125/84-C.E. for sales in the DTA against foreign exchange. The Revenue rejected the claim, leading to unsuccessful challenges before the adjudicating authority and the Commissioner of Appeals. The CESTAT held that the duty demand was not sustainable, citing a similar judgment by the Supreme Court against the Revenue in another case.Issue 2: Interpretation of the decision of the Hon'ble Supreme Court in determining duty liability.A notice accepted the petitioner's entitlement to interest on a refund but set it off against another demand based on the Supreme Court's decision in Virlon Textile Mills Ltd. v. Commissioner of Central Excise. The petitioner argued that the Revenue misinterpreted the Supreme Court's order, especially after the CESTAT's decision against the Revenue.Issue 3: Effect of the dismissal of the appeal by the Revenue on the Tribunal's decision.The Tribunal had earlier held that the supplies made were not covered by a specific notification, and the Commissioner erred in demanding excise duty. The Supreme Court dismissed the Revenue's appeal, upholding the Tribunal's decision, which merged with the Supreme Court's order.Issue 4: Jurisdiction of the CESTAT to touch upon the merits of the case after the Supreme Court's dismissal.The CESTAT rejected the Revenue's claim, stating that its order merged with the Supreme Court's dismissal, limiting the Revenue's scope to reopen the case or raise new grounds. The Revenue's attempt to distinguish the Supreme Court's order in the petitioner's case was deemed unjustified.Issue 5: Doctrine of Merger and the binding effect of judicial decisions.The Court emphasized the Doctrine of Merger, stating that the Tribunal's order in favor of the importer merged with the Supreme Court's order upon dismissal of the appeal. It criticized the Revenue's attempt to reinterpret the Supreme Court's order as contemptuous and highlighted the importance of respecting binding precedents, especially from the highest court.In conclusion, the Court quashed the impugned orders and allowed the Writ Petitions, expressing disappointment at the authorities' lack of respect for the Supreme Court's orders and emphasizing the sanctity of binding precedents.