TaxTMI 
TaxTMI 
2025 (1) TMI 664
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....ption Notification] , as subsequently amended by Notification No. 12/2013CE dated 01.03.2013, by the appellant on the manufacture of mehandi paste. The said Exemption Notification exempts the excisable goods of the description specified in Column (3) of the Table from so much of the duty of excise specified thereon under the First Schedule to the Excise Tariff Act, as is in excess of the amount calculated by the rate specified in the corresponding entry in Column (4) of the said Table. 3. The relevant portion of the Exemption Notification dated 17.03.2012 is reproduced below: TABLE Sl. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. (1) (2) (3) (4) (5) xx xx xx xx xx 134 33 Henna powder, not mixed with any other ingredient 6% - 4. The Central Government made an amendment in the Notification dated 17.03.2012 and the relevant portion of the amended Exemption Notification dated 1.03.2013 is reproduced below: "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of ....
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....other than henna powder/leaves present in the samples and thus henna paste manufactured and cleared by the appellant did not satisfy the description given for claiming exemption under the Exemption Notification. The show cause notice also alleges that the appellant is mixing other ingredients like Benzyl Alcohol, Terpineol, Clove Oil, Eucalypts Oil in mehandi powder to manufacture mehandi paste. The appellant was, therefore, required to show cause as to why central excise duty should not be demanded and recovered from the appellant for the period August 2014 to June 2017 with interest and penalty. 8. The appellant submitted a reply dated 23.012.2019 to the show cause notice. The appellant pointed out that the Tribunal, by an order dated 19.12.2018 in Prem Henna Pvt. Ltd. vs. C.C.E. & S.T.- Jaipur-I [2019 (3) TMI 847- CESTAT New Delhi] , had decided the issue in favour of the appellant and that reliance placed by the department on the two test reports dated 27.08.2014 and 22.01.2016 was misplaced. The appellant also pointed out that the test report dated 27.08.2014 was relied upon in another show cause notice dated 26.03.2015 that was earlier issued to the appellant, which show c....
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.... "14.5 xxxxxxxxxxxxx In the instant case, CESTAT Final Order No. 53529/ 2018 dated 19.12.2018 in the case of M/s Prem Mehandi Centre Vs CCE, Jaipur and Final Order No. 53561/2018 dated 19.12.2018 in their own case have been accepted by Department on ground of monetary limit which. Hence, in terms of the provisions of Section 35R of the Central Excise Act, 1944, such non filing of appeal did not mean that the Department had acquiesced in the decision on the disputed issue. Accordingly, final order passed by Hon'ble Tribunal did not have binding effect in so far as on the instant case involving similar issue. 14.6. The matter of precedent value of such orders of Hon'ble Tribunal or Hon'ble High Court and binding effect thereof, where the Department has either not filed an appeal to the higher appellate forum due to low tax effect or has withdrawn the appeal already filed due to revision in the monetary limits, has been clarified by the Central Board of Indirect Taxes and Customs vide Instruction F.No.390/Misc./163/ 2010-JC, dated 20.10.2010. xxxxxxxxx. In view of these instructions, it is evident that in cases where the Department decides ....
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....ent. In view of the concrete and conclusive CRCL report dated 27.08.2014 exhibiting that extra spot on the Chromatogram have been found which indicates extraneous dyes are present in the sample. I hold that the Henna paste manufactured by the noticee during the impugned period is mixed with other ingredients and is not genuine (pure) henna. Thus, the benefit of effective rate of duty on Henna paste under the Notification No. 12/2013-CE dated 01.03.2013 (S. No. 134) is not available to the noticee. I reject the request for retest of the sample in view of the concrete and conclusive test results under the CRCL Test Report vide No.35\ CRCL\2014-CL-50(CE)/29.05.2014 Dated 27.08.2014 and No. 35-CUSICRCL\2015-CL-459-C.Ex/ 04.11.2015 dated 22.01.2016. Anyway the noticee has not accepted the order of CESTAT for retest of their samples and gone appeal before Hon'ble Supreme Court. 18.7. Thus, I find that the noticee has manufactured Henna paste mixed with other ingredients during the impugned period and was therefore not eligible to avail benefit of Notification No. 12/2013-CE dated 01.03.2013 (S.No. 134)." (emphasis supplied) 13. It is this order dated 30.12.2020 p....
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....le goods as "henna powder, not mixed with any other ingredient". This was subjected to six percent excise duty. The amendment made on 17.03.2012 substituted serial no. 134 as "henna powder or paste, not mixed with any other ingredient". It was subjected to Nil rate of duty. It is the said amendment that would be applicable to the facts of the present case. 18. The Commissioner has found that the appellant was using henna powder, water and oils to manufacture henna paste and addition of oils to henna powder to make henna paste would deprive the appellant from taking the benefit of the Exemption Notification. According to the Commissioner, the benefit of the Exemption Notification would accrue to the appellant only if water was added to henna powder for making henna paste. Using oils, in the opinion of the Commissioner, would amount to adding "any other ingredient" for making henna powder into henna paste. To arrive at such a conclusion the Commissioner relied upon the two test reports dated 27.08.2014 and 22.01.2016 submitted by the Central Revenue Control Laboratory, New Delhi. 19. The Tax Research Unit in the Department of Revenue explained the scope of the Exemption Notific....
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....rd both the sides, we note that we are constrained by the lack of clarity in the proceedings initiated by the Revenue. First of all, when the nature of product is in dispute, it is necessary to have it tested by the competent laboratory to get a clear view. Such tests were done by the Chemical Examiner. Unfortunately, the methodology adopted is apparently not proper. The standard specified for testing the Henna Powder cannot be applied to paste. The IS Standard clearly states that the comparison of samples should be done with the standard plants source, which has not been got done. We note while re-testing, such comparison of proper sample has been made and the report, in fact, came in favour of the claim made by the appellant/assessee. In such scenario, we are constrained that the basic facts of the case have not been found in chromatography test so that the Tribunal will be able to pass an order on legality of the claim of the appellant. That being the case, we are left with no alternative except to set aside the impugned orders and remand the matter to the Original Authority for a due process to be followed including re-testing of the product manufactured and cleared by the appe....
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....ons of the order dated 31.01.2023 passed by the Commissioner, after the remand by the Tribunal by order dated 13.03.2018, in respect of the show cause notice dated 06.04.2015 issued for the period 01.04.2014 to 31.08.2014 and the show cause notice dated 06.10.2015 issued for the period 01.09.2014 to 31.03.2015 are reproduced below: "10.1. In view of the fact that the CESTAT order dated 18.03.2018 has been accepted by the department the third report dated 17.11.2022 and 22.11.2022 for the sample drawn on 19.10.2022 (Para 8.5 above), which are also the latest reports in this case, are most relevant to decide the present case. The said reports says that the Heena Powder and Heena paste manufactured by the does not contain any extraneous dyes/chemical dyes. xxxxxxxxxxx 11.2 In the present case as per the CRCL report dated 17.11.2022 and 22.11.2022 the Heena p0aste and Heena Powder manufactured by the assessee does not contains any extraneous dyes/chemical dyes. I find that Heena Paste and Heena Powder in present case did not contain any other ingredient except mixed with a liquid, so the liquid was a medium to change the Heena powder into paste. 11.3....
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....uid. I also find that in the notice as well as in impugned OIO, the allegations and findings are not that it is Heena dye or cosmetic, therefore benefit of board's circular deserves to be extended". 11.7.1 The above mentioned order of the Commissioner (Appeals) has already been accepted by the Committee of Commissioners on 24.05.2021 on merit. 12. In view of the above discussions and findings, I hold that:- 12.1 I find that Heena powder and Heena paste manufactured by the assessee in this case does not contain any other ingredients except that Heena powder is mixed with oils, this is in consonance with the clarification issued under Board's D.O.F. No. 334/15/2014 TRU dated - 10.07.2014, I also find that in the show cause there was no allegations that it is Heena dye or cosmetic, therefore, benefit in terms of board's D.O.F. No. 334/15/2014 TRU dated-10.07.2014, can be extended in this case." (emphasis supplied) 28. In Prem Mehandi Centre decided on 19.12.2018, the Tribunal held as follows: "2. The appellant is engaged in the manufacture of henna powder and heena paste in cone falling under Chapter 33 ....
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.... to file appeal in pursuance of these instructions, which are aimed solely at reducing Government litigation, such cases shall not have any precedent value. In such cases, Commissioners should specifically record that "even though the decision is not acceptable, appeal is not being filed as the amount involved is less than the monetary limit prescribed by the Board." Further, in such cases, there will be no presumption that the Department has acquiesced in the decision on the disputed issues in the case of same assessee or in case of any other assessees, if the amount involved exceeds the monetary limits. Thus, in case any prior order is being cited on facts and law, it must be checked whether such order(s) were accepted only on account of the monetary limit before following them in the name of judicial discipline. In respect of an order where it is decided not to file appeal in pursuance of these instructions, a data base needs to be created so that all the Commissionerates are made aware of the orders that are accepted solely on the ground that the revenue involved is below the threshold prescribed herein and which should not be taken as having precedent value. The detai....
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....ns of law. (3) Notwithstanding the fact that no appeal, application, revision or reference has been filed by the Central Excise Officer pursuant to the orders or instructions or directions issued under sub-section (1), no person, being a party in appeal, application, revision or reference shall contend that the Central Excise Officer has acquiesced in the decision on the disputed issue by not filing appeal, application, revision or reference. (4) The Commissioner (Appeals) or the Appellate Tribunal or court hearing such appeal, application, revision or reference shall have regard to the circumstances under which appeal, application, revision or reference was not filed by the Central Excise Officer in pursuance of the orders or instructions or directions issued under sub-section (1). (5) Every order or instruction or direction issued by the Central Board of Excise and Customs on or after the 20th day of October, 2010, but before the date on which the Finance Bill, 2011 receives the assent of the President, fixing monetary limits for filing of appeal, application, revision or reference shall be deemed to have been issued under sub-section (1) and the provis....
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....ould not have any precedent value. A decision of a Tribunal cannot be rendered ineffective merely because the department takes a decision not to file an appeal because of the monetary restrictions or otherwise. Unless a decision of the Tribunal is set aside by the High Court or the Supreme Court, it will continue to bind the revenue authorities empowered to decide matters under the provisions of the Central Excise Act. The Circular dated 20.10.2010, which was issued by the Central Board of Indirect Taxes after the insertion of section 35R of the Central Excise Act on 20.10.2010, cannot also render any decision of the Tribunal to have no precedence value if a decision is taken by the department not to file an appeal against the decision of the Tribunal because of monetary restrictions. At best, in such cases, a party would be precluded from contending that the decision against which appeal was not filed had attained finality. It cannot, under any circumstances, be contended by the department that the decision of the Tribunal in such cases would not have any binding effect. 38. In such circumstances that portion of the Circular that provides that "wherever it is decided not to fil....
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.... by the Supreme Court and the High Courts on the issue relating to judicial discipline. 43. It would be pertinent to refer to the decision of Supreme Court in The Bhopal Sugar Industries Ltd. vs. the Income-Tax Officer, Bhopal [AIR 1961 SC 182]. The Supreme Court pointed out that it would result in chaos in the administration of justice if a subordinate Tribunal refuses to carry out directions given to it by a superior Tribunal as this would be destructive of one of the basic principles of administration of justice. The observations of the Supreme Court are as follows: "By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have inde....
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....ent...................." 45. In Smt. Kaushalya Devi Bogra and others vs. The Land Acquisition Officer and another [AIR 1976 SC 1433], the Supreme Court also observed that the direction of the Appellate Court is binding on the courts subordinate thereto and that judicial discipline requires and decorum known to law warrants that appellate directions should be taken as binding and followed. In this connection, the Supreme Court referred to the observations made by the House of Lords and the relevant portion of the judgment of the Supreme Court is reproduced below: "The direction of the appellate court is certainly binding on the courts subordinate thereto. That apart, in view of the provisions of Article 41 of the Constitution, all courts in India are bound to follow the decisions of this Court. Judicial discipline requires and decorum known to law warrants that appellate directions should be taken as binding and followed. It is appropriate to usefully recall certain observations of the House of Lords in Broom v. Cassell & Co.(1) Therein Lord Hailsham, L. C. observed: "The fact is, and I hope it will never be necessary to say so again, that in the hierarchi....
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.... criticized the conduct of the Assistant Collector since it resulted in harassment to the assessee caused by the failure to give effect to the order passed by the Tribunal. The Supreme Court also observed that the order of the Tribunal is binding upon the Assistant Collectors who functions under the jurisdiction of the Tribunal and that the principles of judicial discipline require that the orders of higher appellate authorities are unreservedly followed by the subordinate authorities. The relevant portion of the order of the Supreme Court is reproduced below: "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching in their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tr....
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....vs. Ralson Industries Ltd [(2007) 2 SCC 326]. and it has been observed that when an order is passed by a higher authority, the lower authority is bound, keeping in view the principles of judicial discipline. 48. Recently, a Division Bench of the Madras High Court in Royal Sundaram General Insurance Company Limited vs. Commissioner of Central Excise and Service Tax [(2007) 2 SCC 326] consisting of the Acting Chief Justice R. Mahadevan (now Hon'ble Judge of the Supreme Court) and Justice Mohammed Shaffiq also examined this issue. What was assailed before the Madras High Court was a reference order in which Member (Judicial) and Member (Technical) differed in their views. The Madras High Court noticed that the issue that had come up for consideration before the Division Bench of the Tribunal had been dealt with and decided by co-ordinate benches of the Tribunal and so there was no reason to make a reference to a third Member. In this connection, the Madras High Court also made reference to various decisions and the observations made by the Madras High Court are reproduced below: "14. Referring to the decisions of the Honourable Sup....
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....tangible reason. Likewise, there have been instances in which smaller Benches of this Court have either ignored or bypassed the ratio of the judgments of the larger Benches including the Constitution Benches. These cases are illustrative of non-adherence to the rule of judicial discipline which is sine qua non for sustaining the system." (emphasis supplied) 49. The Madras High Court also placed reliance on the decision of the Supreme Court in Official Liquidator vs. Dayanand and others [(2009) 1 SCC (L&S) 943] , in which the aspect of judicial discipline has been discussed in detail. Paragraph 90 of the decision of the Supreme Court in Official Liquidator, on which reliance has been placed by the Division Bench of the Madras High Court, is reproduced below: "90. We are distressed to note that despite several pronouncements on the subject, there is substantial increase in the number of cases involving violation of the basics of judicial discipline. The learned Single Judges and Benches of the High Courts refuse to follow and accept the verdict and law laid down by coordinate and even larger Benches by citing minor difference in the facts as the ground for doing so. Th....