TaxTMI 
TaxTMI 
2021 (9) TMI 1478
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....d by the present appellant for refund of accumulated CENVAT credit to the tune of Rs.1,80,26,559/- at the time of closer of their factory in 2017 as utilisation of the same was otherwise impossible consequent upon such closer of its factory. The said application was filed before the Assistant Commissioner of Central Excise, Division-IV, Range-I, New Panvel who after following the required procedural formalities had refused the same on 24.01.2018 in his newly designated capacity of the Assistant Commissioner, CGST & CX, Division-IV, Raigad. Appeal filed before the learned Commissioner of Central Tax (Appeals), Raigad by the present appellant yielded no fruitful result as he was unable to form an opinion concerning admissibility of such refund since the issue of refund of unutilised credit in case of closer of factory had not attained finality then in view of divergent findings of the Bombay High Court that led to the formation of a Larger Bench before whom the issue was pending for a final verdict. Appellant is before us challenging the legality of such order of the Commissioner of Central Tax (Appeals) who followed the latter Division Bench Order on the Hon'ble Bombay High Cour....
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....ompany, for which Rule 5 cannot be invoked for the purpose of rejection of refund as rightly ruled by CESTAT and therefore refund is fully justified in the case of closer of factory in the light of assessee switching over from MODVAT to CENVAT scheme, which facts also bears resemblance to the appellant, for which he sought intervention of this Tribunal to set aside the order of the Commissioner (Appeals) by allowing refund to the appellant. 3.2 In response to such submissions, learned Authorised Representative for the Respondent-Department Shri Sanjay Hasija, with reference to the judgment of Gauri Plasticulture Pvt. Ltd. Vs. Commissioner of Central Excise reported in [2018 (360) ELT 967 (Bom.)] para 26 and Larger Bench of CESTAT judgment in the case of M/s Steel Strips reported in [2012 (26) STR 70 (Tri.-LB)] para 5.16 argued that SLP agasint Slovak India Trading Co. Pvt. Ltd. was dismissed only on the basis of concession made by the Revenue that decisions relied upon by the Hon'ble Karnataka High Court had not been appealed against. He also submitted that refund results in outflow from treasury, which needs sanction of law for which order for refund cannot be passed in the....
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....ider it as our onerous duty to attempt a ruling on the judicial precedent that would govern the field and hold good for us so as to be guided by the conclusion arrived at, that would atleast remove the myth from the judicial circle that 'certainty of law is a legal myth'. 5. 'March of law' on this issue is manifest through various judicial pronouncements and to top the list, reference to the judgment of Slovak India Trading Co. Pvt. Ltd. (supra) passed by the Hon'ble Karnataka High Court is worthmentioning where the following points of law were answered in the affirmative. They are ... "(a) Whether under the facts and circumstances of the case the Tribunal is right in ordering for refund even if there is no provision in Rule 5 of Cenvat Credit Rules 2002, to refund the unutilized Credit? (b) Whether under the facts and circumstances of the ease the Tribunal is right in ordering for refund even if there is no production and there is no clearance of finished goods? (c) Whether under the facts and circumstances of the case the Tribunal is right in holding that respondent is entitled for refund even if it goes out of Modvat Scheme or Company is closed?....
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....e Tribunal, which were relied upon by the Tribunal, have not been appealed against. In view of the concession made by the Learned ASC, this special leave petition is dismissed." 5.3 In the case of Jain Vanguard Polybutylene Ltd. (supra), the same question arose before the Appellate Tribunal as to whether a refund under Rule 5 of the Cenvat Credit Rules, 2004 of the unutilized Cenvat credit availed by the assessee can be allowed on the ground of the closure of the factory. The Tribunal relied upon the decision of the Karnataka High Court in the case of Slovak India Trading Company and noted that the said decision has been confirmed by the Apex Court and therefore, allowed the Appeal of the assessee. This order was carried by the Revenue to the Hon'ble Bombay Court. The Appeal was dismissed in-limine by a Division Bench of Court." (para 5.1 onwards is borrowed from M/s. Gauri Plasticulture Pvt. Ltd. referral judgment) 5.4 Among the observations made by the Division Bench of the Hon'ble Bombay High Court, it is worth-reproducing the most relevant portion noted in para 3 of the said judgment which reads: "3 ... Notwithstanding this concession, it is n....
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..../s. Gauri Plasticulture Pvt. Ltd. on 23rd April 2018 primarily for the reason that dismissal of SLP would not help the Doctrine of Merger enforceable as a binding precedent, in view of the categorical pronouncement of the Hon'ble Supreme Court in the case of Kunhayammed and Others Vs. State of Kerala and Another. In paragraph 44 of the said order the findings of the Hon'ble Apex Court had been crystallised and it is imperative to reproduce sub para V of the said order "(V) If the order refusing leave to appeal is a speaking order, i.e.it gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal o....
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....Hon'ble High Court of Bombay on 14.06.2019, reported in [2019 (6) TMI 820 (Bombay - H.C.)] (hereinafter to be referred as Gauri-2). All the three questions of law frame as above were answered in the negative. Hon'ble Bombay High Court had dealt with both point of law on the issue of admissibility of credit and on judicial precedent including Doctrine of Merger and arrived at the conclusion. 9. Now the issue before us is whether to follow the order as passed the Hon'ble Bombay High Court, which is also the jurisdictional High Court as the correct precedent or to follow the principle as set in Slovak India Trading Co. Pvt. Ltd. case by the Hon'ble Supreme Court, since, there is a district finding in the order of Gauri Plasticulture Pvt. Ltd. (Gauri-2) that order dated 25.01.2007 of the Apex Court is not a declaration of law under Article 141 of the Constitution of India. This Tribunal is not competent to scrutinise either of the judgments but is bound by the rule of precedent as well as guided by its own Larger Bench decisions in this connection. It is pertinent to refer a paragraph of the decision of Hon'ble Supreme Court passed in the case of Assistant Commis....
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....y back in [2003 (153) ELT 686 (Tri.-LB)] had laid down the norm to the effect that if there is conflict between law laid down by the Hon'ble High Court and ratio of the decision of the Tribunal, whether it is a Larger Bench or not, Hon'ble High Court decisions will prevail over Tribunals decisions unless the same is inflict with a decisions of the Apex Court. In another decision of a five member Bench of this tribunal way back in 1987 [RLT-LB-CEGAT-87], it was also held that in case of conflicting decisions of different High Courts including that of the particular High Court where the assessee or the Jurisdictional Officer is residing, Tribunal while dealing with Central Acts, will have the independence to analyse the issue objectively and arrive at a finding. The relevant para 70 of the said Larger Bench Judgment reads: "We also feel that as a Tribunal, working on all-India basis, we have the freedom to consider judgments holding conflicting views given by different High Courts, and then see for ourselves as to which authority, applied more fully and aptly to the facts of a given case, before us. For, in view of the scheme of the Act, under which we are functionin....
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....the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the Court, (iv) the conduct of the petitioner having no disentitling him to any indulgence by the Court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the Apex Court of the country and so on. The expression often employed by this Court while disposing of such petitions are - "heard and dismissed", "dismissed", "dismissed as barred by time" and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the meritworthiness of the petitioner's prayer seeking leave to file an appeal and having formed an opinion may say "dismissed on merits". Such an order may be passed even ex-parte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the....
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....tion only and not to be equated with Doctrine of Merger but it is still a binding precedent as per Article 141 of the Constitution of India and third, which would govern the rule in the field, is the effect of the order refusing leave to appeal with reason (speaking order), then the implication of that order is that it takes away the jurisdiction any other court on point of fact or law. 12.1 Hon'ble Supreme Court further clarified that implication of that order is a declaration of law within the meaning of Article 141 of the Constitution of India and that it would bind the parties as well as any other Court, Tribunal and Authorities in any proceeding subsequent there to by operation of judicial precedent. 13. The issue before the Larger Bench of Hon'ble High Court of Bombay in Gauri Plasticulture Pvt. Ltd. (Gauri-2) was that whether what has been stated by the learned ASG that 'no appeal was preferred against in all those four judgements of the Tribunal referred by the Hon'ble Karnataka High Court' was a concession as held by a later Bench or was an order with reason, as held by the previous Division Bench in Jain Vanguard Polybutylene Ltd. in which the question o....
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....s merger or orders. Unfortunately, this judgment of Hon'ble Supreme Court in Gangadhara Palo (Supra), wherein the decision of Kunhayammed and Others Vs. State of Kerla was further referred and clarified, was not brought to the knowledge of the Hon'ble Bombay High Court. Be that as it may, as has been held by Kunhayammed and Others (supra) whether the order passed by the Hon'ble Supreme Court merges with itself the order passed by the Court/Tribunal bellow it or not, its decisions with a reason (may be one sentence in view of Gangadhar Pala, Supra) will have binding effect on all Courts, Tribunal etc. in view of the mandate in Article 141 of the Constitution of India. 14. In obedience to the judicial precedent set by the highest Court of the land, we allow the appeal with consequential relief. Hence the order. ORDER 15. The appeal is allowed and the order passed by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigarh in Order-in-Appeal No. MKK/28/RGD APP/2019-20 dated 26.04.2019 is here by set aside. The appellant is entitled to get cash refund of CENVAT credit of Rs.1,80,26,559/- available with it at the time of closer of factory wit....
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....en the assessee goes out of the Modvat scheme or their unit is closed. 2. The learned DR opposes the prayer and submits that there has to be provision of law for grant of refund in such cases. Therefore the order is correct in law. 3. On a careful consideration the submissions made by both the sides, I find that the Tribunal has consistently held that the refund claim is eligible and refund has to be made in cash when the assessee goes out of the Modvat scheme or when the company is closed. In view of these judgments, the impugned order is set aside and the appeal is allowed with consequential relief if any." 18.2 Tribunal as is apparent from the above has not stated the facts of the case that was before it in this case but have relied upon certain decisions referred to by the Counsel for appellant for granting the relief. Thus the decision of learned Single Member, even without referring to the facts of the case in hand and by just granting relief on the basis of certain decisions is sub-silento and could not have been binding precedent. 18.3 The decision in the case of Sri Prakash Textiles (Guj) Ltd [2004 (169) ELT 162 (T)], does not decide the issue but e....
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.... It is up to that authority to verify the duty-paid nature of the inputs and to ascertain whether the inputs had actually been utilised in or in relation to the manufacture of final products prior to 16-12-1998." 18.4 In case of Eicher Tractors, Babu Textile Industries and Arcoy Industries referred in the decision, the issue was in respect of the amount debited from the MODVAT Credit Account towards payment of Central Excise duty as is evident from the following: i. Eicher Tractors [2002 (147) ELT 457 (T)] "2. The appellants had filed a refund claim dt. 11-4-2000 for Rs. 3,84,129.70 being excess Central Excise duty paid by way of debit in RG 23A Part II during November, 1995 to April, 1996. The jurisdictional Deputy Commissioner rejected the claim on the ground of unjust enrichment. The aggrieved party preferred appeal to the Commissioner (Appeals). The lower appellate authority held that the claim was not hit by unjust enrichment, but rejected the claim on another ground viz. that duty paid through Modvat account could not be refunded in cash. The present appeal is against the order of the Commissioner (Appeals)." ii. Babu Textiles Industries [2003 (1....
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....aking the debit form the MOVAT Credit account. It was not the case for the refund of the amount available as balance in the MODVAT Credit Account. Undoubtedly the refund of the excess duty paid, is governed by the Section 11B of the Central excise Act, 1944. Once the person making such a claim is eligible for refund of such excess payment of duty, the same needs to be refunded to him. The dispute was whether this amount was to be refunded by way of credit in the MODVAT Account or in cash. Since the time when the matter was decided in their favour they for the reasons stated in the respective applications for refund were not in position to utilize the amount sought to be credited in their MODVAT Credit Account. In case the amount was refunded by way of credit in RG 23A part II, the refund would be nullity for the inability of the unit to utilize the same, hence the refund of excess duty paid was ordered to be made by way of cash refund. The facts of the case in hand are not identical to that of this case. As this in the case before us the issue is not in respect of the amount debited from the MODVAT Credit Account maintained by the Appellant, but is in respect of the credit lying un....
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..... Refund claim was also rejected in terms of Section 11B of the Act. It was stated that there is no provision in Rule 5 of Cenvat Credit Rules 2002 with regard to refund. An unsuccessful appeal was filed by the assessee. Thereafter, he moved the Tribunal and the Tribunal has chosen to allow the appeal in terms of the impugned order. It is in these circumstances, the Revenue is before us raising the above referred questions of law. 3. Heard the learned Counsel appearing for the appellant and perused the material placed on record. 4. Admitted facts would reveal of a claim of cash refund and admitted facts would reveal of rejection at the hands of the Assistant Commissioner and also the appellate authority. The Tribunal has chosen to allow the claim application on the ground that refund cannot be rejected when the assessee goes out of Modvat scheme or when the Company is closed. The argument is that there is no provision for refund in terms of Rule 5 of Cenvat Credit Rules 2002. Rule 5 reads as under? Rule 5. Refund of CENVAT Credit: When any inputs are used in the final products which are cleared for export under bond or letter of undertaking, as the case m....
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.... they can, they must take care in this formulation of principles to limit themselves to the requirements of the case in hand. That is to say, they must not lay down principles which are not required for the due decision of the particular case, or which are wider than is necessary for this purpose. The only judicial principles which are authoritative are those which are thus relevant in their subject-matter and limited in their scope. All others, at the best, are of merely persuasive efficacy. They are not true rationes decidendi, and are distinguished from them under the name of dicta or obiter dicta, things said by the way. The prerogative of judges is not to make law by formulating and declaring it - this pertains to the legislature - but to make law by applying it. Judicial declaration, unaccompanied by judicial application, is of no authority." 18.8 Stating the same principle Hon'ble Supreme Court has in case of Synthetics And Chemicals Ltd. [1991 SCC (4) 139] "39. But the problem has arisen due to the conclusion in the case of Synthetic and Chemicals. The question was if the State legislature could levy vend fee or excise duty on industrial alcohol. The bench answe....
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....9;precedents subsilentio and without argument are of no moment'. The Courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi. In Shama Rao v. State of Pondicherry, AIR 1967 SC 1680 it was ob- served, 'it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law." In case of Hyder Consulting (UK) Ltd [(2014) SCC On Line SC 490], relying on the decision of....
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....e facts with the decision rendered in that case. The issue as I have observed earlier, in the case of the Slovak, was a refund arising on account of the disputed credit which could not have been utilized at the time when the unit was in operation. 19.1 The issue of refund of accumulated credit at the time of closure of the unit was considered by the larger bench of the tribunal in the case of Steel Strips [2012 (26) STR 270 (T-LB)]. Larger Bench observed as follows: "Scheme of Modvat 5.1 Scheme of Modvat dealing with input credit was subject matter of analysis in Ichalkaranji Machine Centre Pvt. Ltd. v. Collector of Central Excise, Pune 2004 (174) E.L.T. 417 (S.C.). It has been held that Modvat is basically a duty-collecting procedure, which aims at allowing relief to a manufacturer on the duty element borne by him in respect of the inputs used by him. It was introduced w.e.f. 1-3- 1986. The said scheme was regulated under Rules 57A to 57J of Central Excise Rules, 1944. Rule 57A entitled a manufacturer to take instant credit of the central excise duty paid on the inputs used by him in the manufacture of the finished product, provided that the input and the fini....
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....v. Modi Sugar Mills, AIR 1961 SC 1047, p. 105, CIT v. M. G. Mills - AIR 1971 SC 2434, p. 2435]. Construction Preserving Workability and Efficacy should be preferred 5.4 In construing provisions designed to prevent tax evasion, if the Legislature uses words of comprehensive import, the courts cannot proceed on an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Legislature - Ref : C.A. Abraham v. ITO, Kottayam, AIR 1961 SC 609, p. 612. The principle behind this rule is that an enactment designed to prevent fraud upon the revenue "is more properly a statute against fraud rather than a taxing statute, and for this reason properly subject to liberal construction in the Government favour" - Ref : CRAWFORD, Statutory Construction, p. 508. So in interpreting a provision to plug leakage and prevent tax evasion a construction which would defeat its purpose should be eschewed and a construction which preserves its workability and efficacy should be preferred - Ref : Commissioner of Sales Tax, Delhi v. Sri Krushna Engg. Co., (2005) 2 SCC 695, p. 703. Non-Filing of Appeal by Revenue is not a Bar for Scrutiny in anothe....
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....Rule 1 of the C.P.C. act as guidelines) are not necessarily the same on which this court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of special leave petition does not take away the Jurisdiction of the court, tribunal or forum whose order forms the subject matter of petition for special leave to review its won order if grounds for exercise of review Jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate Jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take awa....
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....t the SLP stage obviously that order cannot also be affirmed at the SLP stage. 44. To sum up our conclusion are : (i) Where an appeal or revision is provided against an order passed by a court. Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. (ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage Is up to the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal. (iii) Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable....
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....s where Hon'ble Supreme Court while dismissing Revenue's Civil Appeal did not go into merits of the issues but had dismissed the appeal only on the ground that there was no appeal by Revenue previously on similar cases. But it has been held by Apex Court in the case of CCE, Raipur v. Hira Cement, reported in 2006 (194) E.L.T. 257 (S.C.) = 2007 (8) S.T.R. 96 (S.C.) that nonfiling of an appeal against an order in any event would not be a ground for refusing to consider the matter on its own merit. Merely because in some cases revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher Court when divergent views are expressed by the Tribunals or the High Courts as has been held in the case of C.K. Gangadharan v. CIT, Cochin, reported in 2008 (228) E.L.T. 497 (S.C.) = 2009 (16) S.T.R. 659 (S.C.). In Gauri Piasticulture (P) Ltd. (supra) except the claim being permitted under equitable considerations the controversy remained unanswered on the point of law while grant of refund of the nature claimed was not mandate of the ....
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....re lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive noncompliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. Substance and Essence of Statute are Paramount Considerations 5.9 The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if t....
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....an be raised as plea to claim refund in absence of statutory mandate in that behalf and no equity or good conscience influence fiscal courts without the same being embedded to the statutory provisions. 5.12 The question before the Larger Bench in Gauri Plasticulture (P) Ltd. - 2006 (202) E.L.T. 199 (Tri.-LB.) was whether duty debited in RG23A part II can be refunded in cash when the refund becomes otherwise due. The Larger Bench without recording the submissions of either side merely discussed outcome of various decisions beginning from Para 3 to 7 of the order and came to the conclusion in Para 10 of the reported order that if denial of credit has compelled an assessee to pay duty out of PLA, the refund of the same would be in cash to the extent of payment of duty in cash during that period. It was further held that if no cash payment towards duty were made through PLA and credit would have remained unutilized in the account books, such credit cannot be allowed by way of cash. 5.13 While arriving at the aforesaid conclusion, the Larger Bench in Para 11 of the order recorded the fact that in the case before them debit entry in credit account was made by the Appell....
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....se the Department was of the view that the same is not available for utilization. This is a simple and basic principle of equity, justice and good conscience. Had the Department not prevented the assessee from utilizing the credit otherwise available to him, they would have been in a position to use the same towards payment of duty on their final product, which obligation they had to discharge from their PLA account. As such, on the success of their claim subsequently, if the assessee is maintaining Modvat credit and is in a position to use the same for future clearances, it should be normally be credited back in the same account from where it was debited i.e. RG-23A Part II account However, if an assessee is not able to use the credit on account of any reasons, whatsoever (which may be closure of his factory or final products being exempted, etc.) the refund becomes admissible in cash or by way of credit entry in PLA to the extent duty paid in cash or out of PLA during the relevant period." 5.15 The decision made in Gauri Plasticulture (P) Ltd. was called for on the question before the Larger Bench as framed in Para 1 thereof. At the cost of repetition it may be stated th....
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....is only permissible in case of export of goods and for no other reason whatsoever that may be. As has been stated earlier that equity, justice and good conscience are the guiding factors for Civil Courts, no fiscal Courts are governed by these concepts, the present reference is bound to be answered in favour of Revenue and it is answered accordingly." 20. The decision of larger bench of tribunal in case of Gauri Plasticulture [2006 (202) E.L.T. 199 (Tri.-LB.)] referred in the para 5.12 of the decision in case of Steel Strips, supra, was considered by a larger Bench of Hon'ble Bombay High Court [2019 (030) GSTL 0224 (Bom)] and Hon'ble High Court has held as follows: "3. The facts are already set out succinctly in the referring order. A very brief reference is required to be made thereto in order to appreciate the challenge to the order passed by the said Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short "the CESTAT"). The appellant in Central Excise Appeal No.13 of 2007 was engaged in manufacturing of reisin PVC pipes and fittings. There was a dispute regarding availability of small scale industries exemption ("SSI" for short) unde....
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....n made. 7. Before we proceed, we must note certain provisions of the Central Excise Act, 1944, which is an Act to consolidate and amend the law relating to Central duties of excise. The levy and collection of duty is dealt with by Chapter II. By section 2A, which appears in Chapter I, it is stated that in this Act, save as other wise expressly provided and unless the context otherwise requires, references to the expressions "duty", "duties", "duty of excise" and "duties of excise" shall be construed to include a reference to "Central Value Added Tax (CENVAT)". There is a power to grant exemption from duty of excise and it is undisputed that there is a distinct provision (section 11B) enabling the claiming of refund. That section reads as under:- "11B.Claim for refund of duty and interest, if any, paid on such duty- ........" 8. A bare perusal of this provision and particularly proviso to subsection (2) would denote that instead of crediting the amount of refund to the fund, it can be paid to the applicant seeking refund, if such amount is relatable, inter alia, to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules....
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.... Modvat Scheme or their unit is closed. The view is taken because of the consistent approach of the tribunal. The consistent approach was that such refund claims are logical and a refund has to be made in cash when the assessee goes out of the Modvat Scheme or the company is closed. Thus, appeal of Slovak was allowed. 11. The Union of India, aggrieved and dissatisfied with this view of the tribunal, preferred an appeal, namely, Central Excise Appeal No.5 of 2006 before the High Court of Karnataka at Bengaluru. In the judgment reported in 2006 (201) ELT 559 = 2006-TIOL-469-HCKAR- CX, the Division Bench of the Karnataka High Court took a view that there is no express prohibition in Rule 5. Once there is a manufacture referred to in Rule 5 and in the case on hand, there is no manufacture or closure in the light of closure of the company, then, Rule 5 is not available for the purpose of rejection of the claim. The claims have been allowed on the basis of closure of the factory and in the light of the assessee going out of Modvat scheme. With this conclusion, the appeals of the Revenue were dismissed. 12. Aggrieved and dissatisfied with this judgment and order of the H....
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....ecial Leave Petition is dismissed leaving the question of law open would not mean that the later Division Bench in this case was free to differ from the view taken by the earlier Division Bench in Jain Vanguard (supra). Mr.Patil, therefore, would submit that the referring order, with great respect, is uncalled for, as even thereafter, several orders have been passed by tribunals all over India taking the same view. Once such view is accepted by the Revenue, then, it cannot be selective in its approach. The Revenue does not appeal or rather accepts the view taken by the other Benches of the CESTAT in India. It cannot then request the Division Bench of this court deciding the present appeals to adopt a different approach. Thus, we should not disturb this trend and emerging from the judgments of the Division Benches of atleast two High Courts. It is argued that we must uphold the consistent views of the tribunal. 15. Mr.Patil also submits that the lack of consistency in the approach of the Revenue would disable it from questioning the correctness of the view taken by the tribunal. Mr.Patil has relied upon the Modvat Scheme and invited our attention to Rule 57H and 57AG of the....
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.... tried to emphasise before us that the doctrine of merger could not have been deviated from. Today, the judgment in the case of Slovak India (supra) has merged with the view taken by the Hon'ble Supreme Court. Hence, we should not reopen the controversy. 18. On the other hand, Mr.Jetly appearing for the Revenue would submit that the referring order has rightly noted the controversy. In the referring order, this court has found that the attempt is to claim something which the law does not permit to be claimed at all. If the law does not permit something, no provision therein should construed to hold that it is also not prohibited. It not being prohibited, the provision has been erroneously construed as permitting the refund. This would amount to rewriting the provisions or reading into them something which they themselves do not provide. In these circumstances, according to Mr.Jetly, we must proceed to answer the questions referred accordingly. He submits that this court should hold that a refund of unutilised amount of Cenvat Credit on account of closure of manufacturing activities or inability to utilise input credit is not permitted. The order passed by the Hon'ble Supre....
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....be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows: "11. .....In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency." 21. Therefore, the attempt of the High Court to read down the provision by way of substituting the word "or" by an "and" so as to give relief to the assessee is found to be erroneous. In that regard the submission of the counsel for the appellant is well founded that once the said credit is taken the beneficiary is at liberty to utilise the same, immediately thereafter, subject to the Credit Rules." ....
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....tions, as may be specified, by the Central Government, by notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty. Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill, under the Provisional Collection of Taxes Act, 1931, the force of law, shall be utilised for payment of service tax on any output service. Explanation : For the purposes of this rule, the words 'output service which are exported' means any output service in respect of which payment is received in India in convertible foreign exchange and the same is not repatriated from, or sent outside, India. Provided that the CENVAT credit or inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ....
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....ucts are charged to additional duties of excise, it would not be possible to utilise the said un-utilised credit and the assessee was liable for cash refund. This plea was not accepted in the order-in-original, but came to be accepted by the appellate authority. The Revenue approached the CESTAT against the appellate authority's view, but the CESTAT dismissed the Revenue's appeal. Now, if the cash refund was not permissible, then, it is evident that by reading into the provision something which is expressly not there, such a refund was sought. 25. In the case of Commissioner of Central Excise vs. Gujarat Narmada Fertilizers Company Limited (2009) 9 SCC 101 = 2009- TIOL-96-SC-CX, the Hon'ble Supreme Court construed the provisions and held as under:- "15. As can be seen from the submissions, the contention of the assessee is that exclusion of fuel inputs from the purview of sub-rule (2) of Rule 6 would mean that such inputs are also automatically excluded from sub-rule (1) whereas according to the Department sub-rule (1) is a general rule which provides, that except for the circumstances mentioned in sub-rule (2), CENVAT Credit shall not be allowed on such quantity ....
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....g raw material into finished goods. It was further held that where any particular process (generation of electricity) is so integrally connected with the ultimate production of goods, that, but for such process, manufacture of goods would be inexpedient, then goods required in such process would fall within the expression "in the manufacture of goods". 30. In Union Carbide India Ltd. v. CCE [(1996) 86 ELT 613 (Tri)] = 2002-TIOL-439-CESTAT-KOL-LB a larger Bench of CEGAT observed that a wide impact of the expression "used in relation to manufacture" must be allowed its natural play. Inputs (raw materials) used in the entire process of conversion into finished products or any other process (like electricity generation) which is integrally connected with the ultimate production of final product has to fall within the above expression. It was observed that the purpose was to widen the scope, ambit and content of "inputs". According to the Special Bench of CEGAT, the purpose behind the above expression is to widen the ambit of the definition so as to attract all goods, which do not enter directly or indirectly into the finished product, but are used in any activity concerned wit....
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....day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value of quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. (3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said fina....
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....e refunded in cash. 29. We do not think that by taking assistance of this provision, we will be able to hold as contended by Mr.Patil that the Cenvat Credit can be refunded even in relation to those inputs which have not been used in the manufacture of the final product or the exported goods. We are called upon to read something in the substantive rule and which is totally absent therein. When Rule 5 follows Rule 4, which is titled as "Conditions for Allowing Cenvat Credit", then, we must understand the scheme in such manner as would make the law workable and consistent. Refund of Cenvat Credit in terms of Rule 5 is permissible only when there is a clearance of a final product of a manufacturer or of an intermediate product for export without payment of duty under a bond or letter of undertaking of a service provider, who provides an output service which is exported without payment of tax and by applying the format which is carved out with effect from 1st April, 2012 by the substituted Rule 5. 30. Prior to such substitution, we have not seen anything in Rule 5 permitting refund of un-utilised credit. We are not dealing with a situation or case of a manufacturer or....
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....urer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly rules by the Tribunal. The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. In these circumstances, we answer all the three questions as framed in para 17 against the Revenue and in favour of the assessee." 32. Thus, the High Court of Karnataka took the view that there is no express prohibition in terms of Rule 5 and that rule refers to a manufacturer. Thus, even if there is no manufacture in the light of the closure of the factory, the assessee being a manufacturer is construed as one coming out of the Modvat scheme but still eligible for cash refund. The factory is closed and the inputs were not used in the manufacture of a final product is, thus, overlooked. So long as the assessee is a manufacturer even if his factory is closed, the input credit was ....
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....ent High Courts were either not filed or filed but not entertained. Thus, the tribunals have taken a consistent view and the Revenue could not succeed in having that set aside. It is in these circumstances, the Rajasthan High Court negatived the contention of the Revenue that the tribunal under the jurisdiction of that High Court could have distinguished the orders and judgments of its Benches. That was found to be contrary to the judicial discipline. It is in these circumstances so also when there was a larger Bench view of the tribunal having a binding effect, that the principle of judicial discipline was pressed into service. 36. After the view taken in Steel Strips Ltd. (supra) and which was also fairly brought to our notice, it is evident that this principle has no application to the facts and circumstances before us. 37. Finally, we do not find any merit in the arguments of Mr.Patil to the effect that if the earlier judgment is not appealed against, an appeal against the subsequent order or judgment passed relying upon the earlier judgment cannot be sustained. He pressed into service the judgment of the Hon'ble Supreme Court in the case of Birla Corporation ....
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....he negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon'ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India." 21. Tribunal has in case of Saera Electric Auto Pvt Ltd [2020 (372) ELT 452 (T-Chand) has in similar circumstances taking into account the changes made in the rule 5 of CENVAT Credit Rules, 2004 with effect from held as follows: "9. A plain reading of Section 11B shows that it provides for refund of excise duty paid. It does not provide for the refund of unutilized Cenvat Credit. The entire Cenvat credit is governed by the Cenvat Credit Rules, 2004, which provide for availment/utilization of the Cenvat credit. In some specific cases, refund of unutilized Cenvat credit in cash has also been provided under Rule 5 of the Cenvat Credit Rules, 2004. The appellant's case is not under this rule. The appellant has applied for refund under Section 11B of the Central Excise Act, 1944 read with Rule 10 of the Cenvat Credit Rules, 2004. This rule o....
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....e the correct position in law. 13. It is a well-settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. 14. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See Institute of Chartered Accountants of India v. Price Waterhouse - 1977 6 SCC 312). The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner (1846) 6 MOO PC 1, the courts cannot aid the legislature's defective phrasing of an Act, they cannot add or mend, and by constructio....
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.... every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. "An intention to produce an unreasonable result", said Danckwerts, L.J. in Artemiou v. Procopiou - (1965) 3 ALL ER 539 (All ER p. 544 I) "is not to be imputed to a statute if there is some other construction available". Where to apply words literally would "defeat the obvious intention of the legislation and produce a wholly unreasonable result", we must "do some violence to the words" and so achieve that obvious intention and produce a rational construction. [Per Lord Reid in Luke v. IRC - (1963) AC 557 where at AC p. 577 he also observed : (All ER p.664 I) "This is not a new problem, though our standard of drafting is such. 19. It is then true that : "When the words of a law extend not to an inconvenience rarely happening, but due to those which often happen, it is good reason not t....
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....hted in Sangeeta Singh v. Union of India and Ors. [2005 (7) SCC 484]." 23. A five Judges bench of Hon'ble Supreme Court has in case of Dilip Kumar & Company [2018 (366) ELT (SC)] laid down the law in respect of interpretation of taxing statutes as follows: "18. It is well accepted that a statute must be construed according to the intention of the Legislature and the Courts should act upon the true intention of the legislation while applying law and while interpreting law. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the Legislature. In this connection, the following observations made by this Court in District Mining Officer v. Tata Iron and Steel Co., (2001) 7 SCC 358, may be noticed : "... A statute is an edict of the Legislature and in construing a statute, it is necessary, to seek the intention of its maker. A statute has to be construed according to the intent of them that make it and the duty of the Court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation w....
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....urts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. 21. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a ....
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....ict construction, literal interpretation; literal construction; restricted interpretation; interpretatio stricta; interpretatio restricta; interpretatio verbalis. 3. The philosophy underlying strict interpretation of statutes. - Also termed as close interpretation; interpretatio restrictive. See strict constructionism under constructionism. Cf. large interpretation; liberal interpretation (2). "Strict construction of a statute is that which refuses to expand the law by implications or equitable considerations, but confines its operation to cases which are clearly within the letter of the statute, as well as within its spirit or reason, not so as to defeat the manifest purpose of the legislature, but so as to resolve all reasonable doubts against the applicability of the statute to the particular case.' Wiliam M. Lile et al., Brief Making and the use of Law Books 343 (Roger W. Cooley & Charles Lesly Ames eds., 3d ed. 1914). "Strict interpretation is an equivocal expression, for it means either literal or narrow. When a provision is ambiguous, one of its meaning may be wider than the other, and the strict (i.e., narrow) sense is not necessarily the strict (....
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....xtual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute." 24. In view of the discussions as above I do not find any merits in the appeal and the same needs to be dismissed following the decision of larger bench of CESTAT in the case of Steel Strips and also the larger bench of Hon'ble Bombay High Court (Jurisdictional High Court) in case of Gauri Plasticulture. (Sanjiv Srivastava) Member (Technical) POINTS OF DIFFERENCE On the point of application of binding precedent for the Tribunal vis-à-vis revisiting to the legality of the issue ....