TaxTMI 
TaxTMI 
2021 (12) TMI 179
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.... incorporated and registered under the Companies Act and the petitioner claims to be one of the larger manufacturing plants at Kutchch, District Gujarat. It manufactures the excisable products such as Electric Energy Saving Lamp, Vitrified Tiles, Quartz Clock, etc. falling under Chapter 69, 85 and 91 of the Central Excise Tariff Act, 1985. The petitioner NO. 2 is a shareholder and Director of the petitioner No.1-Company. 2.2 Massive earthquake in the State of Gujarat and particularly, in the District of Kutch in the year 2001 led the Central Government to issue the Notification No. 39/2001-CE dated 31.07.2001 granting exemption to excisable goods other than those specified in the Notification, cleared from units in Kutch. The said Notification was amended from time to time and the petitioner's unit since is located in the District Kutch, it availed the benefits of the said Notification. 2.3 The petitioner had filed refund claims pursuant to the amendment in the said Notification in respect of Central Excise Duty, Education Cess and Secondary & Higher Secondary Education Cess ('ECSHEC' hereinafter) for the period from June 2007 to March 2008. It was partially sanctioned by the....
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....to the extent that he has rejected the refund claim. The department has not preferred any appeal and has accepted the order of Commissioner (Appeals). 2.10 The petitioners, therefore, filed refund application in the office of the respondent No.2 seeking refund of sum of Rs. 54,10,810/- being the amount of ECSHSEC from June 2007 to March 2008. 2.11 On ascertaining the status of the order dated 19.12.2018 passed by the Commissioner (Appeals), the excise department, cleared by way of pre-audit of the department, refund claim and this had been also reflected in a subsequent refund order dated 01.04.2019 passed by the respondent No.2. 2.12 After about one and half years, respondent No.2 issued a show cause notice dated 08.10.2020 upon the petitioners proposing to recover the amount of Rs. 54,10,810/- which was refunded to the petitioner in respect of ECSHSEC along with interest. The only basis according to the petitioners, for issuance of such show cause notice is that the Notification No.39/2001 as amended provides only for exemption of duties of excise and additional duties of excise and therefore, ECSHSEC is levied by the Government under the relevant Finance Acts, and the s....
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....the show cause notice bearing No.IV / 9 - 10/ SCN / Ajanta Anjar Bhachau 2020-21 (DIN 20201064WX00007W3921), dated 8.10.2020 issued by the respondent No.2, essentially on the ground that the same is QE GUJARAT issued without any authority of law and in clear disregard to the binding precedents with the following prayers: "18. A. This Hon'ble Court be pleased to issue a writ of or in the nature of mandamus or a writ of or in the nature of prohibition or a writ of or in the nature of certiorari or any other appropriate writ, order or direction quashing and setting aside the show cause notice bearing No.IV/9 10/ SCN/Ajanta/Anjar-Bhachau/2020-21 (DIN 20201064WX00007W3921) dated 8.10.2020 issued by the respondent No.2 Annexure E hereto; B. Pending admission, hearing and final disposal of this petition, your Lordships be pleased to stay and suspend the operation and implementation of the show cause notice bearing No.IV/9-10/SCN/Ajanta/Anjar-Bhachau/2020-21 (DIN 20201064WX00007W3921) dated 8.10.2020 issued by the espondent No.2 at Annexure E hereto and be further pleased to restrain the respondent No.3 from proceeding further in any manner in regard to the a....
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....ter one and half THE HIGH COURT years on 8.10.2020, proposing to recover an amount of Rs. 14,86,015/- on the ground that only the exemption of of Central Excise and Additional Central Excise are provided under the Notification No.39/2001 and Education Cess and Secondary & Higher Secondary Education Cess would not be covered under the said Notification. 8. The petitioner is aggrieved by the fact that when there is no challenge to the order of Commissioner (Appeals), Rajkot dated 18.12.2018 and other orders, which have all attained finality, this initiation of the show cause notice is wholly without jurisdiction. The petitioner is, therefore, before this Court with the aforementioned prayers. 9. We have heard learned advocate, Ms.Amrita Thakore, who has taken us through various decisions of the Apex Court as well as of this Court. She has emphasised that the judicial discipline also would require to give effect to the order of the higher appellate authorities and not to once again initiate the actions of recovering the very refund claim, which has been given to the petitioner after a long drawn battle. 10. Issue Notice for final disposal, returnable on 8.3.....
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....s, but also saddle the other side with a heavy cost for making it difficult for the petitioners. She has also urged that it is a settled principles that after once, the finality is attained of decision of the authorities, there has to be a regiment governing judicial discipline whereby again, any subsequent event cannot upset that discipline and the order which has been passed bearing in mind the law which was prevalent at the relevant time. According to her, as there is a well known principle of finality of judicial decision, which is one of the essential ingredients upon which the administration of justice rests. 5.1 Learned advocate, Ms.Amrita Thakore has relied on the following decisions in support of her detailed submissions: Sr No. Judgment 1 Union Of India Versus Kamlakshi Finance Corporation Ltd, reported in 1991 (55) ELT 433 (SC) 2 Commissioner Of Central Excise, Kanpur Versus Kothari Products Ltd., reported in 2008 (229) E.L.T. 12 (S.C.) 3 Commissioner Of Customs, New Delhi Versus Texcomash Export, reported in 2015 (322) E.L.T. 601 (S.C.) 4 Union Of India Versus Vicco Laboratories, reported in 2007 (218) E.L.T. 647 (S.C.) 5 Claris Li....
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....n No.39/2001-CE amended. Central Government - - Challenge made before the Commissioner of Appeals Commissioner of Appeals CESTAT, Ahmedabad Confirmed order of the Assistant Commissioner of Bhuj vide order dated 07.03.2008 and 27.06.2008 Petitioner approached the CESTAT Vide order dated 10.08.2009 and 09.11.2009 remand of the matter to the adjudicating authority. 10.06.2010 Petitioner approached Adjudicating Authority. Deputy Commissioner Central Excise Sanction of the refund claim, but denial Rs. 54,10,810/- pertaining to ECSHSEC. 06.08.2010 Petitioner approached the Commissioner of Appeals. Commissioner of Appeals Allowed the same and granted both EC & SHSEC relying on the Circular dated 10.08.2004 and another Circular dated 08.04.2011 22.01.2019 Petitioner filed refund application seeking refund of Rs. 54,10,810/-. Assistant Commissioner (Audit) This was cleared by per-audit of the department. 29.03.2019 Commissioner of Appeal's order dated 19.12.2018 was challenged by the petitioner to the extent it rejected the part of refund claim. CESTAT, Ahmedabad Pending, no benefit to the petitioner....
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....t Collector and observed that reason given by the Assistant Collector for not following the order of the Collector of Central Excise (Appeals) was unsustainable. He, therefore, directed the Assistant Collector to pass a reasoned and speaking order. 11.3 The Assistant Collector reiterated the conclusion while passing his subsequent order. He also chose not to give the reason as to why the order of Collector (Appeals) was not followed. The assessee also placed before him the decision of the CESTAT in case of another party having similar facts. He distinguished the same observing that the decision had not been agreed to by the Department which had filed an appeal to the Supreme Court. 11.4 In a Writ Petition, the Bombay High Court quashed the order of the Assistant Collector and directed the department to allocate the matter to a competent officer to pass a proper order. The Union of India preferred an appeal before the Apex Court, where the officer concerned was defended by the learned Additional Solicitor General that in passing severe strictures against him, the learned judges had erred. The Apex Court held that the officer was not actuated by any mala fides in passing the im....
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....ficer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35E(1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline a....
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....the Sales Tax to be suffered by the dealer and thereafter deduct the freight element which is charged on equalised basis and also the turnover tax if any payable. Thus the basic price plus excise duty is arrived at. This is bifurcated into basic price (assessable value) and excise duty. Thus while raising the sale invoices for the goods sold, the appellants raise the invoices for basic price (assessable value), excise duty and the equalised freight. The Central Sales Tax is also charged on the same. The appellants do not charge and recover any other amount over and above the amounts indicated in the respective sales invoices. In the proceedings also there is no such allegation raised either in the show cause notice or in the order-in-original." 7. This order of the Commissioner (Appeals) was confirmed by the Tribunal in appeal. Revenue did not carry any further appeal meaning thereby that it has attained finality. 8. In the present case, the Tribunal has set aside the order-in-original passed by the Commissioner and held that in view of the earlier decision given by the Tribunal, revenue was not justified in issuing a fresh show cause notice and the same was barre....
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.... appeal against the same had been dismissed by the Commissioner of Customs (Appeals). The Joint Secretary by way of a revisional powers passed the order and enhanced the value of goods to Rs. 242/-. On the basis of a show cause notice allegedly because of fraud, the entire issue was sought to be re-opened. The Commissioner of Customs confirmed the demand made in the show cause notice, the same had been set aside by the CESTAT and the challenge was made by the department to the said order of CESTAT. One of the reasons why CESTAT had chosen to not uphold the action of reopening the proceedings was because that according to it, would tantamount to questioning the order of the higher officials. The order of the Commissioner had merged into the order of revisional authority and therefore, the principle of res judicata also would apply. 13.2 The Apex Court held that the show cause notice could not have been issued under Section 28 of the Customs Act by the Commissioner for the re-opening of issue, which had been settled by the higher authority i.e. the Joint Secretary. 13.3 Apt would be to reproduce the relevant finding and observation of the Apex Court as follows: "5. Eve....
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....er without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show cause notice. The interference at the show cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out. 31. Case of the respondent that the classification of the said products having attained finality pursuant to the decision of this Court, the appellants have no jurisdiction to issue impugned show cause notice on the ground on which it has been issued and it virtually amounts to re-opening of the issue which stands concluded by the decision of this Court, and that therefore it is an abuse of process of law. The High Court after referring to the history of litigation rightly concluded that the matter stood concluded by judgments of this Court and the High Court in respondents' case. 32. In the earlier judgment this Court had given liberty to the Department ....
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....nt is regarding calculation of the excise duty leviable on the clearances made by the petitioners as EOU to the domestic tariff area suggesting that Education Cess as well as Secondary and Higher Education Cess are leviable on sum total of the customs duties and above cesses. In other words, the case of the Department is that the Education Cess and Secondary and Higher Education Cess to be computed second time would be inclusive of the customs duty and such cesses. Previously, such issue was raised by the Department against the petitioners. The adjudicating authority having ruled against the petitioners, the matter was carried further in appeal. Finally, the Customs, Excise & Service Tax Appellate Tribunal, ("the Tribunal" for short) in the case of this very petitioners ruled in favour of the petitioners by an order dated 21-6-2010. In such order, the Tribunal held and observed as under :- "2. The issue that has arisen is whether the appellant is liable to pay education cess again on the amount which has been worked out by calculating the customs duty payable on the goods in respect of clearances made by 100% EOU to domestic tariff area. The lower authorities have held tha....
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....t to the provisions contained in the Income-tax Act, 1961 where against an order passed by the assessing officer, the Department has no right to appeal. Only remedy available to the Revenue is by way of a revision against the order of the assessing officer that too only if it is found that such order is erroneous and prejudicial to the interest of the Revenue. Such rigors however, are not applicable insofar as the Department's right to appeal against the order of the adjudicating authority is concerned under the Central Excise Act, 1944. 8. The adjudicating officer acts as a quasi judicial authority. He is bound by the law of precedent and binding effect of the order passed by the higher authority or Tribunal of superior jurisdiction. If his order is thought to be erroneous by the Department, the Department can as well prefer appeal in terms of the statutory provisions contained in the Central Excise Act, 1944." 15.2 The Court for so holding relied on the decision of the Apex Court rendered in the case of Union of India vs. Kamlakshi Finance Corporation Ltd. reported in 1991 (55) E.L.T. 433 (S.C.) 16. The Court in case of Claris Lifesciences vs. Union of India, repor....
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....hat such decision of the Tribunal remains unchallenged. xxx 25. Thereafter, as mentioned hereinabove in Special Civil Application No. 12686 of 2012, once again order of adjudicating authority was struck down by a clarification that it would not be seen as a stamp on the part of the High Court, of upholding the view of the Tribunal contained in its decision dated 21-6-2010 and it would be open for the Department to call in question such a view in appropriate proceedings as permissible under the law. While so holding the adjudicating officer was reminded that he acts as quasi-judicial authority and is bound by the law of precedence and regarding the binding effect of the order of the higher authority which is the Tribunal in the instant case. It was held that if such order is found to be erroneous by the Department, it needs to prefer an appeal as per the statutory provisions contained in the Central Excise Act. The decision of the Apex Court rendered in Union of India v. Kamlakshi Finance Corporation Ltd. (supra) holds in unambiguous terms that the Revenue officers are bound by the decision of the appellate authorities. 26. Despite such clear and specific ....
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....statutory Tribunals. Even if, the decision of Tribunal was not carried further in appeal on account of low tax effect, it was not open for the adjudicating authority to ignore the ratio of such decision. The only choice open for adjudicating authority was to decide the case in consonance with the judgment of Tribunal and thereafter leave it to Departmental Authorities to decide the question of filing appeal against such an order, if otherwise permissible in law. 17.1 Relevant findings and observations of this Court are as follow: "6. In our opinion, the Assistant Commissioner committed a serious error in ignoring the binding judgment of superior Court that too in case of the same assessee. The principle of precedence and judicial comity are well established in our legal system, which would bind an authority or the Court by the decisions of the Coordinate Benches or of superior Courts. Time and again, this Court has held that the departmental authorities would be bound by the judicial pronouncements of the statutory Tribunals. Even if the decision of the Tribunal in the present case was not carried further in appeal on account of low tax effect, it was not open for the a....
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....o prefer appeal to the Tribunal and the High Court. Additionally, we are informed that in case of other assessees, similar issues have been dropped at the show cause notice itself within the same Commissionerate." 18. In case of Commissioner Of Customs Versus Millat Fibers, reported in 2011 (271) E.L.T. 512 (Guj.) the refund claim was allowed initially, with directions to adjust it against other dues of assessee, but without verifying the aspect of binding precedent, on the ground of undue enrichment, after implementation of that order, show cause notice was issued for rejection of refund allegedly "erroneously granted", in absence of proof of passing of duty burden. The Court held that issuance of later show cause notice amounted to the adjudicating authority reviewing its earlier order. The impugned order crediting the amount to Consumer Welfare Fund, in effect and substance, amounted to setting aside earlier order, which was impermissible as adjudicating authority as the authority concerned has no power to review or sit in appeal over its earlier order. Proper course of action was for Department to seek review of earlier order. 18.1 Relevant findings and observations of th....
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....t suffer from any legal infirmity so as to warrant interference. No question of law, much less any substantial question of law can be stated to arise out of the impugned order of the Tribunal." 19. In case of Lupin Limited vs. Union Of India, reported in 2013 (293) E.L.T. 354 (Guj.) the Court while considering the scope of interference by High Court at show cause notice stage held that first round of show cause notice on issue of excisability resulted in dropping of proceedings, on the very set of facts the fresh show cause without any new material had been issued which could not prima facei suggest that product could be as marketable. The Court held that permitting department to proceed with such show cause notice would be wholly futile, prejudicial to the assessee and amounts to abuse of process of law. The Court held that the second show cause notice was also without jurisdiction and hence, interference under Article 226 of Constitution of India was necessary. It has also further held that Alternative remedy is not a bar in case of inherent lack of jurisdiction or failure of natural justice or action being opposed to statutory provisions. 19.1 Relevant findings and observa....
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....L of the Central Excise Act, appeal would lie before the Supreme Court to the exclusion of the High Court. It was in this background that the Apex Court found that it would not be appropriate for the writ court to entertain the writ petition under Article 226 of the Constitution. Notably even in such decision, the Apex Court did not hold that the writ petition is not maintainable. It was in this very background that we had in our order dated 20-6- 2012, following the decision of the Apex Court in the case of Union of India v. Guwahati Carbon Ltd. (supra), non-suited the petitioners. The petitioners had approached in writ petitions challenging the decision of the Tribunal which looking to the controversy involved, was appealable before the Supreme Court. We, therefore, came to the conclusion that ordinarily though it may be open for the High Court to by-pass appellate remedy and entertain the writ petition directly ignoring such alternative remedy available, in the present case, petitioners must take the appeal route. 40. In the present case, facts are different. The petitioners have approached at a stage where show cause notice has been issued. Such show cause notice, we h....
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....t the exemption under Notification No. 39/2001-CE dated 31.07.2001 is also applicable to Education Cess and Secondary & Higher Education Cess and hence, they are eligible for refund/recredit of Education Cess and Secondary & Higher Education Cess. I find that the appellant, a manufacturing unit situated in District of Kutch, availed benefit of exemption under Notification No. 39/2001-CE dated 31.07.2001, as amended. The said notification is reproduced as under: "Kutch (Gujarat) - Exemption to excisable goods (except those specified in Annexure) and cleared from Units in Kutch District of Gujarat In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) other than go....
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....isions of this Chapter as surcharge for purposes of the Union, a cess to be called the Education Cess, to fulfil the commitment of the Government to provide and finance universalisd quality basic education. (2) The Central Government may, after due appropriation made by Parliament by law in this behalf, utilise, such sums of money of the Education Cess levied under sub-section (11) of section 2 and this Chapter for the purposes specified in sub-section (1), as it may consider necessary. 92. Definition. The words and expressions used in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) or Chapter V of the Finance Act, 1994 (32 of 1994), shall have the meanings respectively assigned to them in those Acts or Chapter, as the case may be. 93. Education Cess on excisable goods. - (1) The Education Cess levied under section 91, in the case of goods specified in the First Schedule to the Central Excise Tariff Act 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on th....
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....e, it is inconsistent with the policy intention of the Government to exempt education cess in addition to service tax, where 'whole of service tax stands exempted. According to section 95(1) of Finance (No. 2) Act, 2004 and section 140(1) of Finance Act, 2007, Education Cess and Secondary and Higher Education Cess are leviable and collected as service tax, and when whole of service tax is exempt, the same applies to education cess as well. Since Education Cess is levied and collected as percentage of service tax, when and wherever service tax is NIL by virtue of exemption. Education Cess would also be NIL. 3. This being the principle, field formations are directed not to initiate proceedings to recover the education cess, where whole of service tax stands exempted under the notification. Extending the same principle, where education cess has been refunded to exporters along with service tax, by virtue of exemption notifications where whole of service tax is exempt, the same need not be recovered." 7.6 In view of above, Education Cess and Secondary & Higher Education Cess were part of the Central Excise duty and since the central excise duty was exempted by way....
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....eals and hold that the appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy. There shall, however, be no order as to cost." (Emphasis supplied) 7.7 In view of above, I hold that the appellant is eligible for refund Education Cess and Secondary & Higher Education Cess." 21. Allowing the appeal, by the officer concerned on 19.12.2018 allowed the refund claim pertaining to the ECSHSEC, this had also been challenged before the CESTAT by the petitioners only on a limited ground of rejection of a part of a refund claim, however, the department had preferred no appeal and accepted the decision of the Commissioner (Appeals). Therefore, when the petitioner had preferred the refund claim on 22.01.2019, after ascertaining the status of the order dated 19.12.2018 of the Commissioner (Appeals), the same had been allowed on the ground that the department had accepted the order of Commissioner (Appeals) and hence, the claim had been cleared by the pre-audit of the department. This has also been reflected in its refund order dated 01.04.2020 and the petitioner had also rec....
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....nsidered when the exemption is granted under the particular provision; it would not cover any other kind of duty of excise imposed under separate Acts. This Court observed thus: "10. We may incidentally mention that in the appeals a question of interpretation was also raised in regard to the Notification bearing No. 249/67 dated November 8, 1967 exempting tyres for tractors from "so much of the duty leviable thereon under item 16 of the First Schedule to the Central Excises and Salt Act, 1944 as is in excess of 15 per cent". The argument of the respondents in the appeals was that the exemption granted under this notification was not limited to the duty of excise payable under the Central Excises and Salt Act, 1944 but it also extended to special duty of excise, additional duty of excise and auxiliary duty of excise leviable under other enactments. This argument plainly runs counter to the very language of this notification. It is obvious that the exemption granted under this notification is in respect of "so much of the duty leviable thereon under item 16 of the First Schedule to the Central Excises and Salt Act, 1944 as is in excess of 15 per cent" and these words describ....
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....re of the duty of excise. The duty on NCCD, education cess and secondary and higher education cess are in the nature of additional excise duty and it would not mean that exemption notification dated 9.9.2003 covers them particularly when there is no reference to the notification issued under the Finance Act, 2001. There was no question of granting exemption related to cess was not in vogue at the relevant time imposed later on vide Section 91 of the Act of 2004 and Section 126 of the Act of 2007. The provisions of Act of 1944 and the Rules made thereunder shall be applicable to refund, and the exemption is only a reference to the source of power to exempt the NCCD, education cess, secondary and higher education cess. A notification has to be issued for providing exemption under the said source of power. In the absence of a notification containing an exemption to such additional duties in the nature of education cess and secondary and higher education cess, they cannot be said to have been exempted. The High Court was right in relying upon the decision of threeJudge Bench of this Court in Modi Rubber Limited (supra), which has been followed by another three Judge Bench of this Court....