2026 (2) TMI 1224 - HC - Customs

Finality of appellate orders bars re examination of consequential orders absent statutory review power, preserving earlier appellate entitlement.

Finality of appellate orders prevents subordinate or later appellate mechanisms from reopening findings where no statutory review power was invoked and ... Functus officio - issue estoppel / res judicata in quasi judicial proceedings - duty drawback entitlement upon reversal/adjustment of input tax credit - binding effect of an appellate authority's order on subordinate authorities - power of an appellate authority to review or revisit its earlier appellate order - HELD THAT:- No provision of the Customs Act could be brought to notice by the counsel for the opposite parties that the Commissioner (Appeals) at the stage of giving consequential relief arising out of Appellate Order is authorized under law to revisit the Appellate Order and nullify the effect thereof in the garb of challenging the consequential Order-in-Original in the appeal, particularly when the findings and observations adjudicating entitlement of the petitioner in the Appellate Order was accepted by the Department. Though provisions of res judicata as envisaged in Section 11 of the Code of Civil Procedure, 1908 and provisions of estoppel enshrined in Section 121 of the Bharatiya Sakshya Adhiniyam, 2023 (corresponding to Section 115 of the Indian Evidence Act, 1872) do not stricto sensu apply to the quasi judicial proceedings, the principles thereof can be adhered to. In Dredging Corporation of India Vrs. State of Orissa [1994 (5) TMI 250 - ORISSA HIGH COURT], it has been enunciated that the Evidence Act has no statutory application to the Tribunals discharging quasi-judicial function though for better adjudication they are to be guided by the principles of the Evidence Act. Unless contrary intention appears the procedures and principles of the Evidence Act can be adopted to the proceedings under taxing statutes. Perusal of the record and after hearing the counsel for respective parties, no reply could be given nor could the counsel for the opposite parties demonstrate with plausible reason deducing from the Orders of the Appellate Authorities and the Original Authorities. It could not be gainsaid that the entitlement or eligibility of the petitioner for availing benefit of drawback upon reversal of already availed input tax credit with regard to Central Goods and Services Tax and Integrated Goods and Services Tax, which in fact the company had done in obeisance of Appellate Order dated 30.09.2023, was subject-matter in earlier appeal and the same was adjudicated upon by the Principal Commissioner (Appeals) (In-Situ). Rather indubitably it is admitted that the Revenue has never challenged said Appellate Order. Such fact has candidly been placed in the impugned Order at paragraph 5.3. Nonetheless, the Commissioner (Appeals) proceeded to refuse to grant such relief allowed by the Appellate Authority in Order-in-Appeal dated 30.09.2023. Upholding the Order-in-Appeal dated 30.09.2025 (Annexure-1) apropos the present set of facts and circumstances would not only contradict established precedents but would also facilitate the Authorities to revise/review/recall/revisit the findings and observations made in earlier round of litigation. Giving quietus to the issue already decided/adjudicated upon is the policy, or else it would incentivise never-ending/ perpetual litigation on the same issue. The policy described is central to the stability of the legal system, ensuring protection of individuals from ‘double jeopardy’ that once a competent Court has rendered a decision on a specific set of facts qua the parties, the matter is laid to rest permanently. In the wake of above discussions and analysis of legal perspective, the Order-in-Appeal dated 30.09.2025, (Appeal Nos. 123/CUS/CCP/ 2023 and 02/CUS/CCP/2024), issued on 08.10.2025 (Annexure-1) passed by the Commissioner (Appeals), Bhubaneswar cannot withstand judicial scrutiny and hence, it is liable to be set aside. This Court, therefore, does so. Having thus set aside the impugned Order, further order is felt necessary to be given. The matter is now remitted to the Commissioner (Appeals), Bhubaneswar to consider the merit of the grounds of respective appellants before him in Appeal Nos.123/CUS/CCP/ 2023 and 02/CUS/CCP/ 2024 and after affording opportunity of hearing to them may pass appropriate orders keeping in view the observations made hereinabove. Issues: Whether the Commissioner (Appeals) was competent to revisit and set aside a consequential Order-in-Original that gave effect to an earlier Appellate Order which had attained finality, and whether such revisiting amounted to an impermissible review/reconsideration of the earlier appellate decision.Analysis: The issue concerns the finality of an appellate decision and the limits on a subsequent appellate authority or review mechanism to alter that decision when no statutory power of review has been invoked and the department did not challenge the earlier appellate order. Principles and authorities on functus officio, res judicata and issue estoppel, and the requirement of judicial discipline for subordinate revenue authorities to give effect to binding appellate orders are engaged. Where an appellate order has attained finality because it was not appealed, subordinate or co ordinate appellate proceedings arising from the same transaction must not be used to reopen or nullify findings and directions contained in that final appellate order unless a statutory power to review/reopen is available and properly exercised. The admitted reversal/adjustment of input tax credit in compliance with the earlier appellate direction and the absence of any appeal against that appellate order are material to the assessment of entitlement to drawback.Conclusion: The impugned revisional/appellate action that re-examined and set aside the consequential Order-in-Original giving effect to the earlier final Appellate Order was not competent and is set aside; the remedy granted in the writ petition is in favour of the petitioner (assessee).