TaxTMI 
TaxTMI 
2026 (2) TMI 1224
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.... Commissioner (Appeals), Bhubaneswar (hereinafter referred to as "impugned order") setting aside the Order-in-Original dated 24.01.2024 of the Assistant Commissioner of Customs Division, Bhubaneswar, giving effect to Order-in-Appeal No. 100-101/CUS/CCP/2023, dated 29.09.2023 (issued on 30.09.2023) of the Principal Commissioner (Appeals) (In-Situ), Bhubaneswar ("Appellate Order", for convenience), the writ petition is filed for grant of following relief(s): "Under the facts and circumstances, the petitioner, humbly prays: a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or any other appropriate writ/order/ direction under Article 226 or Article 227 of the Constitution of India, calling for the records and proceedings pertaining to the impugned Order dated 08.10.2025 under Annexure-1 and after going into the validity and legality thereof, to quash and set aside the same; b) that this Hon'ble Court may kindly graciously be pleased to restore the Appeal No. 123/CUS/CCP/ 2023 filed on 21.03.2024 by the petitioner; c) for costs of this petition; d) for such and other reliefs as the nature and circumstances of the case may re....
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....itle the petitioner from receiving duty drawback, subject however to the corresponding ITC reversal. The Authority sanctioned duty drawback amounting to Rs. 162,00,11,729/- in favour of the petitioner subject to reversal of corresponding ITC pertaining to export covered under the aforesaid four Bills of Export. Since the remaining five Bills of Export were assessed after 01.10.2017, the petitioner was not found eligible for brand rate of 15.61%. Against said Order dated 30.09.2023, the Customs Department has not preferred further avenue available to it under the Customs Act; rather upon review, the Commissioner of Customs (Preventive) accepted the Order-in-Appeal dated 30.09.2023. 2.2. Addressing the Deputy Commissioner of Customs the petitioner vide Letter dated 03.10.2023 and 03.01.2024 intimated that it had already reversed/adjusted ITC to the tune of Rs. 40,25,70,556/- in terms of Order-in-Appeal, and requested for disbursal of duty drawback as sanctioned by the Appellate Authority. Notwithstanding the Appellate Authority had observed no interest is payable in respect of reversal/adjustment of ITC, as the Department insisted for payment of the same, the petitioner by Letter ....
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....rity of the Commissioner (Appeals), Bhubaneswar in nullifying the Order-in-Original by which duty of drawback was granted giving effect to Appellate Order of the Principal Commissioner (Appeals) (In-Situ), Bhubaneswar has been raised, and no counter affidavit/affidavit in opposition has been filed even though copy of writ petition was served on the opposite parties on 09.01.2025, the matter is heard accordingly on the date of admission. 4. Shri Vishal Agarwal, learned Advocate along with Prashanta Kumar Nayak submitted that the Order-in-Appeal dated 30.09.2023 being not carried to the higher forum, and the Assistant Commissioner vide Order-in-Original dated 24.01.2024 having given consequential effect to the issues adjudicated upon in the Appeal, there is no scope or occasion for the Revenue to question the veracity of entitlement of duty drawback of the petitioner. 4.1. He submitted that the Commissioner (Appeals) as if sitting over the appeal against Order-in-Appeal of the Principal Commissioner (Appeals) (In-Situ), passed impugned Order nullifying the consequential grant of duty drawback by adjusting the amount of ITC with respect to Central Goods and Services Tax and Inte....
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....llate Order and nullify the effect thereof in the garb of challenging the consequential Order-in-Original in the appeal, particularly when the findings and observations adjudicating entitlement of the petitioner in the Appellate Order was accepted by the Department. 6.1. The underlying principle of functus officio is highlighted in the case of Ajay Mohan Vrs. H.N. Rai, (2008) 2 SCC 507, wherein at paragraph 24 the following observation has been made: "The order of the City Civil Court dated 13.10.2006 may be bad but then it was required to be set aside by the Court of Appeal. An appeal had been preferred by the appellants thereagainst but the same had been withdrawn. The said order dated 13.10.2006, therefore, attained finality. The High Court, while allowing the appellant to withdraw the appeal, no doubt, passed an order of status quo for a period of two weeks in terms of its order dated 23.11.2006 but no reason therefor had been assigned. It ex facie had no jurisdiction to pass such an interim order. Once the appeal was permitted to be withdrawn, the Court became functus officio. It did not hear the parties on merit. It had not assigned any reason in support thereof. ....
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.... becomes functus officio and disentitled to entertain a fresh prayer for the same relief unless the former order of final disposal is set aside by a court of competent jurisdiction in a manner prescribed by law. The court becomes functus officio the moment the official order disposing of a case is signed. Such an order cannot be altered except to the extent of correcting a clerical or an arithmetical error.' 94. The doctrine of functus officio exists to provide a clear point where the adjudicative process ends and to bring quietus to the dispute. Without it, decision-making bodies such as courts could endlessly revisit their decisions. With a definitive endpoint to a case before a court or quasi judicial authority, parties are free to seek judicial review or to prefer an appeal. Alternatively, their rights are determined with finality. Similar considerations do not apply to decisions by the State which are based entirely on policy or expediency." 6.3. The doctrinaire concept of functus officio can be perceived in the judgment rendered by the Hon'ble Supreme Court of India in the case of State of Punjab Vrs. Davinder Pal Singh Bhullar, (2011) 15 (Addl.) SCR 540; relevant....
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....u Vrs. State of Rajasthan, AIR 1987 Raj. 83 (F.B.); B Swarth Mahto & Anr. Vrs. Dharmdeo Narain Singh, AIR 1972 SC 1300; Makkapati Nagaswara Sastri Vrs. S.S. Satyanarayan, AIR 1981 SC 1156; Asif Kumar Kar Vrs. State of West Bengal & Ors., (2009) 2 SCC 703; and Vishnu Agarwal Vrs. State of U.P. & Anr., AIR 2011 SC 1232). 28. This Court by virtue of Article 137 of the Constitution has been invested with an express power to review any judgment in Criminal Law and while no such power has been conferred on the High Court, inherent power of the court cannot be exercised for doing that which is specifically prohibited by the Code itself. (Vide: State Represented by D.S.P., S.B.C.I.D., Chennai Vrs. K. V. Rajendran & Ors., AIR 2009 SC 46). 29. In Smt. Sooraj Devi Vrs. Pyare Lal & Anr., AIR 1981 SC 736, this Court held that the prohibition in Section 362 Cr.P.C. against the Court altering or reviewing its judgment, is subject to what is 'otherwise provided by this Code or by any other law for the time being in force'. Those words, however, refer to those provisions only where the Court has been expressly authorised by the Code or other law to alter or review its judgment. Th....
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....ubaneswar in garb of sitting in appeal against the Order-in-Original dated 24.01.2024 sought to modify or nullify the effect of Order-in-Appeal, dated 30.09.2023 passed by the Commissioner (Appeals) (In-Situ), Bhubaneswar even while said Appellate Order had not been carried to higher fora. The Commissioner (Appeals) in the impugned Order nullifying the Order-in-Original giving consequential effect held as follows: "Hence, the drawback should have been sanctioned only if no ITC was availed and if the ITC was availed, then paid back along with interest before the drawback was applied." 6.7. This Court is of the opinion that such an observation by revisiting/reviewing earlier Order-in-Appeal dated 30.09.2023 is unwholesome and cannot be countenanced in law. No objection is raised by the learned Deputy Solicitor General nor the Senior Standing Counsel as against following contents found reflected in paragraph 4.21 of the writ petition: "That the petitioner, thereafter, vide its Letters dated 03.10.2023 and 03.01.2024 addressed to the Deputy Commissioner of Customs, Bhubaneshwar, sought disbursal of the duty drawback, sanctioned under the Order-in-Appeal dated 30.09....
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....such Modvat credit was ever taken or utilised. Even the earlier Modvat credit which was utilised was returned or paid back on 10.01.2005. In this scenario, question arose as to whether the assessee fulfils the aforesaid condition in order to become eligible to get the benefit of the exemption notification. 3. We note that five-Member Bench of the Tribunal in Franco Italian Co. (P) Ltd. Vrs. CCE, 2000 SCC OnLine CEGAT 1026 = (2000) 120 ELT 792 had taken the view that even if the Modvat credit was utilised but, thereafter, refunded, it would amount to not utilising the said Modvat credit. Same view has been taken by the High Court of Allahabad in Hello Minerals Water (P) Ltd. Vrs. Union of India, 2004 SCC OnLine All 2187 = (2004) 174 ELT 422. 4. On a specific query put by the Court, we were informed that as far as the aforesaid two judgments are concerned, they were accepted by the Department and no appeal was filed thereagainst. In the impugned judgment [Precot Mills Ltd. Vrs. CCE, 2006 SCC OnLine CESTAT 1256 = (2006) 201 ELT 356], the Tribunal has decided the issue in favour of the assessee relying upon the aforesaid two decisions." 6.10. It is put forth by Sri....
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....the Tribunal is not required to be entertained on the merits considering the fact that the said order is not an independent order made for the first time. The said order had already been made on June 5, 2003. It was only because the intervening order dated September 19, 2003 of the Commissioner (Appeals), that the adjudicating authority was required to pass the consequential order once again on January 4, 2006 pursuant to the order made by the Tribunal. In the circumstances, once the order of the Tribunal had attained finality, the petitioner cannot claim any relief." 6.12. This Court is, therefore, one with the submission of learned counsel for the petitioner that after the Appellate Order dated 30.09.2023 holding that the petitioner is entitled to the benefit of drawback, which being not challenged by the opposite parties attained finality, the impugned Order seeking to revisit the said issue and holding to the contrary by unsettling such finding of fact is erroneous and faulted with. 6.13. Another significant factor which needs to be highlighted herein is power to re-examine/review/recall by the Appellate Authority to vary with the issue adjudicated in the earlier round of....
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....revents the parties to a judicial determination from litigating the same question over again even though the determination may even be demonstratedly wrong. When the proceedings have attained finality, parties are bound by the judgment and are estopped from questioning it. They cannot litigate again on the same cause of action nor can they litigate any issue which was necessary for decision in the earlier litigation. These two aspects are 'cause of action estoppel' and 'issue estoppel'. These two terms are of common law origin. Again, once an issue has been finally determined, parties cannot subsequently in the same suit advance arguments or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is to approach the higher forum if available. The determination of the issue between the parties gives rise to, as noted above, an issue estoppel. It operates in any subsequent proceedings in the same suit in which the issue had been determined. It also operates in subsequent suits between the same parties in which the same issue arises. Section 11 of the Code of Civil Procedure contains provisions of res judicata but these are not exhaustive of....
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....any further appeal, therefore, at least inter se between the parties, the said issue attained finality and this finding was binding on the Commissioner and, therefore, it was not open to the Commissioner to revisit the issue all over again and come to a contrary finding. 7. The learned Attorney General made an endeavour to show that "cocoa powder" would not be covered by the term "flour". In view of the aforesaid facts emerging from the records, we refrain from going into the issue at all. Thus, insofar as the facts of this case are concerned, since the earlier order of the Tribunal was not challenged by the Department, the impugned order warrants no interference. We, thus, dismiss this appeal." 6.17. Impugned Order dated 30.09.2025 (issued on 08.10.2025) of the Commissioner (Appeals), Bhubaneswar (Annexure-1) on a careful reading reveals the following: "5.3. I find that the instant drawback claim was sanctioned after the decision of the Commissioner (Appeals), Bhubaneswar vide Order-in-Appeal No. 100-101/CUS/CCP/2023 dated 30.09.2023, wherein the party has been allowed drawback of Rs. 162,00,11,728/- in respect of four numbers of Bills of Export subject to con....
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....or drawback, question of interest does not arise. 6.0. Accordingly, (i) the appeal filed by M/s. Vedanta Limited is rejected. (ii) the appeal filed by the Department is allowed by setting aside the Order No. 01/CUS/ BBSR/DRAWBACK/ASST. COMMR./2024, dated 24.01.2014 of the Assistant Commissioner, Bhubaneswar Customs Division." 6.19. Such conclusion arrived at by the Commissioner (Appeals), Bhubaneswar apparently depicts as if he is sitting in review against the earlier Appellate Order dated 30.09.2023 of the Principal Commissioner (Appeals) (In-Situ), Bhubaneswar and threw the earlier observations made in "peculiar facts" to winds. Nevertheless, he revised and/or nullified the decision rendered in appeals, bearing Nos. 39/CUS/CCP/2023 and 110/ CUS/CCP/2020, which were allowed vide Order-in-Appeal dated 30.09.2023 (Annexure-2). 6.20. Under the above premise, regard may be had to the following principle reiterated in Sulthan Said Ibrahim Vrs. Prakasan, (2025) 5 SCR 2185: "53. The High Court, in its impugned order, held the application of the appellant under Order I, Rule 10 to be barred by res judicata and thus not maintainable on that ground.....
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....directions contained therein are to be implemented in true letter and spirit. 6.22. In Union of India Vrs. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711 the Supreme Court of India had directed the Department to adhere to the judicial discipline and give effect to the orders of higher Appellate Authorities which are binding on them. The relevant observations of made therein are required to be noted, which read thus: "6. *** The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of 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 discip....
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....iction, are the existence of the relation of superior and inferior court and the power on the part of the former to review decisions of the latter. This has been well put by Story: 'The essential criterion of appellate jurisdiction is, that it revises and corrects the proceedings in a cause already instituted and does not create that cause. In reference to judicial Tribunals an appellate jurisdiction, therefore, necessarily implies that the subject-matter has been already instituted and acted upon by some other court, whose judgment or proceedings are to be revised, (Section 1761, Commentaries on the Constitution of the United States). ***" 6.24. In Orissa Forest Corporation Ltd. Vrs. Assistant Collector, 1982 SCC OnLine Ori 209 this Court made the following observation: "4. We do not think this should be the attitude of the Union Government. The demand is under the Statute and the statutory appellate authority, on the set of facts which are common both to the period when relief was granted and the period for which the impugned demand has been made, has already determined that no levy is exigible. As long as the appellate order stands, it must be duly respected....
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....ese gateways, may yet differ with the view expressed and refer the matter to a Bench of superior strength or in some cases to a Bench of superior jurisdiction." 6.26. Therefore, this Court is of the considered view that the Order-in-Appeal (Nos. 123/CUS/CCP/2023 and 02/ CUS/CCP/2024), dated 30.09.2025, issued on 08.10.2025 (Annexure-1) is flawed and pernicious and the Commissioner (Appeals), Bhubaneswar in the said appeals arising out of the subject-Bills of Export could not take a different view than what had already been taken by the Principal Commissioner (Appeals) (In-Situ), Bhubaneswar vide Order-in-Appeal dated 30.09.2023 in Appeal bearing Nos. 39/CUS/CCP/2023 and 110/CUS/ CCP/2020. Conclusions: 7. Upholding the Order-in-Appeal dated 30.09.2025 (Annexure-1) apropos the present set of facts and circumstances would not only contradict established precedents but would also facilitate the Authorities to revise/review/recall/revisit the findings and observations made in earlier round of litigation. Giving quietus to the issue already decided/adjudicated upon is the policy, or else it would incentivise never-ending/ perpetual litigation on the same issue. The policy descri....