2025 (12) TMI 94 - HC - Central Excise

Appeal Restored as Tribunal Skipped Key Grounds; Matter Remanded Under Order 41 Rule 23 CPC

The Commissioner of Central Excise & Customs Versus Reliance Industries Ltd.

The HC allowed the appeal, holding that the Tribunal had improperly disposed of the matter solely on a preliminary issue concerning the applicability of ... Disposal of appeal solely on a preliminary point by relying on a High Court judgment - non-adjudication of various grounds - reference made to the provisions of Order 41 Rule 23 of the Code of Civil Procedure, 1908 - HELD THAT:- Since the appeal was disposed of on a preliminary point concerning the applicability of the judgment of this Court, the Tribunal did not examine the other grounds raised. Hence, in terms of the provisions of Order 41 Rule 23 of the CPC, the matter deserves to be remitted to the Tribunal for adjudication of the remaining grounds, which were neither dealt with by the Tribunal nor argued by the respective parties. It is deemed appropriate to set aside the order passed by the Tribunal and the matter remanded for fresh consideration. Accordingly, the Central Excise Appeal Nos.1084 of 2006 and 199 of 2007 are ordered to be restored to their original file. Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the appellate order of the Tribunal, which disposed of the appeals solely on a preliminary point by relying on a High Court judgment later reversed by the Supreme Court and without adjudicating several specific grounds raised before it, ought to be set aside and the matter remanded for fresh consideration under Order 41 Rule 23 of the Code of Civil Procedure, 1908. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Remand where appeal decided on a single preliminary point and other grounds not adjudicated Legal framework: The Court considered Order 41 Rule 23 of the Code of Civil Procedure, 1908, which permits an appellate court to remand a case where the court of first instance has disposed of the matter upon a preliminary point and the decree is reversed in appeal. The Court also relied on the principles laid down by the Supreme Court in Agricultural Produce Marketing Committee, Bangalore v. State of Karnataka and in K. M. Krishna Reddy v. Vinod Reddy, regarding the necessity for courts to decide all material issues/grounds and the appropriateness of remand where only one issue has been decided. The Court additionally noted that the Tribunal had relied exclusively on a High Court judgment which was subsequently reversed by the Supreme Court. Interpretation and reasoning: The Tribunal had decided the central excise appeals solely by placing reliance on a judgment of the High Court in Gujarat Narmada Fertilizer Company, treating the applicability of that decision as a preliminary point, and did not adjudicate specific grounds F, G, H, I and J raised in the appeal memo. It was not disputed before the Court that these grounds-relating, inter alia, to the characterisation of sulphur as a by-product, the applicability of Rule 6(1) of the Cenvat Credit Rules, the relevance of earlier orders and Tribunal precedents, the entitlement to credit on fuel used for nitrogen generation, and the correctness of the calculation of demand-remained undecided. During the pendency of the present appeal, the Supreme Court reversed the very High Court judgment on which the Tribunal had exclusively relied. In these circumstances, the Court held that the Tribunal had disposed of the appeals on a preliminary point, leaving other substantial grounds untouched. Referring to the Supreme Court's observations that where multiple issues/grounds are raised the court ought to decide all of them, and that failure to do so necessitates remand when the sole decided issue is later found untenable, the Court concluded that a remand was warranted so that the remaining grounds could be adjudicated on merits. Conclusions: The Court held that, since the Tribunal had disposed of the appeals only on a preliminary point-namely the applicability of a High Court judgment later reversed by the Supreme Court-without examining and deciding other grounds specifically raised, the requirements of Order 41 Rule 23 CPC for remand were satisfied. The impugned order of the Tribunal was set aside and the related central excise appeals were restored to the Tribunal's file for fresh adjudication on all remaining grounds. The Tribunal was directed to decide the restored appeals expeditiously, preferably within six months, and all rights and contentions of the parties were expressly kept open.