TaxTMI 
TaxTMI 
2008 (1) TMI 350
X X X X Extracts X X X X
X X X X Extracts X X X X
....xcise duty? 2. Whether unjust enrichment by an individual company is permissible in law only for the reason that a demand notice under section 28(1) of the Customs Act was not issued for recovery of erroneous refund when the Department followed the appellate remedy available under section 129D of the Customs Act, 1962 for recovery of erroneous refund, without considering the settled law emerging from the apex Court's decision in the case of Mafatlal Industries Ltd. v. UOI, 1997 (89) E.L.T. 247 (S.C.) = 1997 (5) SCC 536 and Sahakari khand Udyog Mandal Ltd., v. CCE, 2005 (181) E.L.T. 328 (S.C.) = 2005 (3) SCC 738? 2. Mr. Udayakumar, learned Standing Counsel for the appellant contended that the order of the appellate Tribunal is erroneous in law and against the ratio of the Supreme Court judgment in the case of Mafatlal Industries Ltd. v. Union of India, 1997 (89) E.L.T. 247 in which the Supreme Court has enunciated the law relating to claim of refund whether made under the provisions of the Act as contemplated in proposition (i) or in a suit or writ petition in the situation contemplated by proposition (ii) can succeed only if the petitioner/plaintiff alleges and establishes th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appeals) by his order dated 28.07.2006 allowed the appeal on the premise that the doctrine of unjust enrichment would apply to the case of the respondent that mere submission of the Chartered Accountant's certificate was not sufficient. The respondent carried that order to the CESTAT. 6. The Tribunal, after consideration of the legal issue, accepted the submission made by the respondent and set aside the order of the Commissioner dated 28.07.2006 and remanded the case to the Commissioner (Appeals) with the direction to him to examine the legal issue raised by the respondent and thereafter proceed to dispose of the appeal taking into account the observations made by the Tribunal. 7. The Commissioner (Appeals) once again, on the ground that the respondent has not established with corroborative evidence that the duty element has not been passed on to others and that the Chartered Accountant's certificate could not be regarded as a conclusive evidence to establish that there was no unjust enrichment, has allowed the appeal. The respondent being aggrieved by the order of the Commissioner (Appeals) filed an appeal before the CESTAT, which by its order dated 02.08.2007 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act, it was not open to the revenue on the ground of erroneous refund to proceed for recovery of the amount from them under section 129D of the Act after expiry of the period of limitation prescribed for demand notice under section 28(1) of the Act. We held that the right recourse for the revenue was to issue a show cause notice within the prescribed period. Had we found that, in the earlier round, learned Commissioner (Appeals) had at least attempted examination of the issue, we would not have remanded the matter. The remand was occasioned by our finding that the appellate authority had sidestepped the above issue. It would have been graceful on its part, if the appellate authority had abided by the definite view expressed by the Tribunal in the remand order. In this context, it is significant to note that the revenue did not choose to appeal against our remand order. Thus, it is clear that the remand order of the Tribunal became final and binding on the department. In that event, the Commissioner (Appeals) who is placed lower in the hierarchial system has to follow the directions given by the appellate Tribunal whose decision is binding on him. As observed by the Supreme Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... invests power on the appellate Tribunal to pass orders as it thinks fit confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be. Thus, the appellate Tribunal is placed vertically over the Commissioner (Appeals) and conferred an appellate power. The failure on the part of the latter to carry out such direction or show disrespect to or to question the propriety of such direction would, it is obvious, be destructive of hierarchial system in the administration of justice. The seekers of remedy would lose faith in both. 12. The binding nature of the orders passed by the superior forum has been considered by the apex Court in the following cases : In the case of Union of India v. Kamalakshi Finance Corporation Ltd., 1992 Supp (1) S.C.C. 443, the Supreme Court considered a case in which the respondent manufactured electrical insulation tapes. According to the department, the goods manufactured by the assessee fell under tariff heading 85.47 of the schedule to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department, in itself an objectionable phrase-and is subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35-E confers adequate powers on the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch other incidental and ancillary powers without which the conferral of the principal power shall be rendered redundant. As held by Their Lordships of the Privy Council in Nagendra Nath Dey v. Suresh Chandra Dey and others, AIR 1932 Privy Concil 165 (Sir Dinshah Mulla speaking for the Bench of five), an appeal is an application by a party to an appellate court asking it to set aside or revise a decision of a subordinate court. The appeal does not cease to be an appeal though irregular or incompetent. Placing on record his opinion, Subramania Ayyar, J. as a member of the Full Bench (of five Judges) in Chappan v. Moidin Kutti, (1899) 22 ILR Mad 68 (at p.80) stated inter alia that appeal is "the removal of a cause or a suit from an inferior to a superior judge or court for re-examination or review". According to Wharton's Law Lexicon such removal of a cause or suit is for the purpose of testing the soundness of the decision of the inferior court. In consonance with this particular meaning of appeal, "appellate jurisdiction" means "the power of a superior court to review the decision of an inferior court." "Here the two things which are required to constitute appellate juri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssioner that the respondent has not discharged the onus of proving that the refund is not hit by the doctrine of unjust enrichment. In the refund order, the Assistant Commissioner (Refund) stated as follows : "Under Section 27(2) of the Customs Act, the amount as determined by the Assistant Commissioner under provisions of section 27(2) of Customs Act, 1962 shall be credited to fund. Under first proviso to Section 27(2) of Customs Act, 1962 instead of being credited to the fund, be paid to the applicant, if such amount is relatable to the duty and interest, if any paid on such duty paid by the importer, if he had not passed on to any other person. The importers have produced a certificate dated 20.05.2005 obtained from S.S. Subramanian, Chartered Accountants, Madurai stating that the importers have shown a sum of Rs.36,13,700/- under heading "Duty Receivable from Customs" in their books of accounts and it is further confirmed that the said amount has not passed on to any other person. Hence, the unjust enrichment under section 27 of the Customs Act, 1962 does not arise in this case." 16. It is on record that in the cross objection dated 15.07.2006 filed by the respondent t....