AI Structured Summary
Not yet generated for this judgment
Judgment
K.A. Puj, J.—Rule. Mr. Y.N. Ravani, learned Standing Counsel appearing for Excise Department waives service of rule.
With the joint request of parties the matter is taken up for final hearing.
The petitioner has filed this petition under Article 226 of the Constitution of India praying for quashing and setting aside the Order In Appeal Nos. 169 to 172 of 2009 dated 31.3.2009 (Annexure-J).
This Court has issued notice on 6.5.2009. Pursuant to the notice Mr. Y.N. Ravani, learned Standing Counsel appears on behalf of the Revenue. An affidavit-in-reply was filed on behalf of respondent No. 3 to which rejoinder affidavit was filed by the petitioner. Thereafter reply to the rejoinder is also filed.
The brief facts giving rise to the present petition are that the petitioner Company is engaged in manufacturing sophisticated machineries like Induction Melting/Heating Furnace and Welder, and also parts thereof. The Central Government has issued Notification No. 10/97-CE granting exemption to goods, namely, scientific and technical instruments, apparatus, equipments when supplied to public funded research institutes and such similar customers if a certificate was issued for such requirement to the institution by the Central Government Officer as specified in the said Notification. The petitioner Company has been receiving certificates as above from institutes like Indian Institute of Technology, National Physical Laboratory, Electro Optical Instruments Research Academy, Vikram Sarabhai Space Center, etc. for goods like Vacuum and Air Induction Melting and Casting facility, induction coil for furnace, etc., and accordingly the petitioner has been selling and supplying such scientific instruments and apparatus against these certificates availing exemption of above Notification.
The Commissioner of Central Excise issued a show cause notice on 18.10.2007 for above types of clearances made from September, 2005 to October, 2006 demanding duties from the petitioner on the ground that the goods delivered against the certificates were in the nature of industrial machines for production of goods and were not in the nature of scientific and technical instruments etc. The Commissioner of Central Excise issued another show cause notice on 24.10.2007 for the period from November, 2006 to July, 2007. He passed an Order In Original on 19.3.2008 deciding the above two show causes notices against the petitioner and demanding duties and imposing penalties.
Being aggrieved by the said Order In Original, the petitioner preferred an Appeal before CESTAT. The petitioner also preferred stay applications which were decided in favour of the petitioner. During the pendency of the Appeal before the CESTAT, two more show-cause notices were issued on 22.2.2008 and 25.7.2008 covering the period from August, 2007 to June, 2008. The Assistant Commissioner passed Order In Original in respect of these two show causes notices on 21.7.2008 and 31.10.2008 respectively and demanded duties and imposed penalties.
The CESTAT, Ahmedabad allowed the petitioner''s Appeals on merits holding that the above goods supplied against the certificates as specified in the Notification were exempt and the Appeals came to be allowed with consequential benefit in the petitioner''s favour.
So far as Appeals filed by the petitioner against the Order In Original passed by the Assistant Commissioner in respect of subsequent two show cause notices are concerned, the petitioner appeared before the Commissioner (Appeals), Ahmedabad on 25.3.2009 and submitted a copy of the final order of the CESTAT, Ahmedabad and also various other decisions of various Benches of the CESTAT in respect of Notification dated 10/97-CE. The Commissioner (Appeals), however, dismissed the petitioner''s Appeals vide his order dated 31.3.2009 on the ground that though the decision of the CESTAT, Ahmedabad in the petitioner''s own Appeal was in its favour and the previous demand was set aside, benefit of this order could not be accorded to the petitioner at this stage because the Revenue had option to prefer Appeal against this order and the Appeal period was not over.
Mr. Paresh M. Dave, learned advocate appearing for the petitioner has submitted that the Commissioner (Appeals) had no jurisdiction to bypass a directly applicable decision of the CESTAT, Ahmedabad while deciding petitioner''s Appeals and Appellate Authority is not at all concerned with the revenue''s option for filing an Appeal against a final decision of the CESTAT though it may be a concern of the Executive/Administrative Officers of the Central Excise Department, and thus, the reason given by the Commissioner (Appeals) for not following the binding decision of the CESTAT in the petitioner''s own case shows revenue bias and lack of impartiality. He has further submitted that the order passed by the Commissioner (Appeals) is not only wholly without jurisdiction but also unreasonable and arbitrary and hence it offends the constitutional guarantees enshrined under Article 14 of the Constitution of India. He has, therefore, submitted that this ex-facie illegal order is non est and hence the petitioner approached this Court for appropriate order, relief or direction in the peculiar facts of this case.
In support of his submissions, Mr. Dave relied on decision of this Court in the case of Milcent Appliances Pvt. Ltd. v. Union of India, reported in 2006 (205) E.L.T. 130 (Guj.) wherein it is held that the order of the Appellate Commissioner disregarding directions of the tribunal was liable to be set aside in a writ petition under Article 226 of the Constitution of India. This principle is also affirmed by this Court in the case of Topland Engines Pvt. Ltd. Vs. Union of India (UOI), He further relied on the decision of Bombay High Court in the case of Kamlakshi Finance Corporation Ltd. v. Union of India reported in 1990 (47) ELT 231 (Bom.) which is affirmed by the Apex Court in Union of India and others Vs. Kamlakshi Finance Corporation Ltd.,
As against the submission of Mr. Dave on this issue, Mr. Ravani, learned Standing Counsel appearing for the Revenue has submitted that the Commissioner (Appeals) has not merely referred to the earlier order of the CESTAT in the petitioner''s own case, but he has also pointed out three more aspects on the basis of which he came to the conclusion that the petitioner is not entitled to exemption from payment of excise duty. Mr. Ravani further pointed out that the petitioner is challenging the order of the Commissioner (Appeals) in the present petition against which the Appeal lies to the CESTAT. Since an alternative remedy is available to the petitioner, this Court should not entertain the present petition.
Having heard the learned Counsels appearing for the parties and having considered their rival submissions in light of the judicial decisions cited before the Court, we are of the view that the Commissioner (Appeals) has committed an error in not following the order passed by the CESTAT in the petitioner''s own case. While disposing of the Appeal which is decided by the Commissioner (Appeals) it is observed as under:
I have also gone through the decision of Hon''ble CESTAT, WZB, Ahmedabad in the case of M/s. Inductotherm (India) Pvt. Ltd., v. CCE, Ahmedabad wherein the parties appeal allowed and demand is set aside. I find that in the said order a CESTAT is relied on the following judgments. (i) 2004 (172) ELT 212 (ii) 2005 (124) ECR 1 68 (iii) Voltamp Transformers Pvt. Ltd. 2007 (218) ELT 217 (Tri. Ahmd.) (iv) 2006 (113) ECC 121 It appears that the order No. A/438-439/WZD/Ahd/2009 was issued on 5.2.2009 by Hon''ble CESTAT, Ahmedabad. Though, it is in favour of the appellant but there are options with the Revenue to review the same and to prefer an appeal against the said order. Therefore, the benefit of the said order cannot be accorded to the appellant at this stage because the appeal period is not over. In view of above facts, I do not find any reason to interfere with the decision of the lower authority.
It is true that the above observations are made by the Commissioner (Appeals) after discussing the facts before him in the Appeal wherein he has observed that the notification has provided the exemption from excise duty on the goods which are scientific and technical instruments, apparatus and equipments etc., whereas the appellant was not manufacturing the goods used as scientific and technical instruments, apparatus and equipments etc. though the institute has issued certificate in this regard. He has, therefore, observed that the said exemption is not available on the basis of the certificate issued by the institute. The Commissioner (Appeals) has further observed that there is condition relating to value of goods purchased by the institute which is in respect of Serial No. (1) and (2) not exceeding Rs. 50,000/- in a financial year, whereas, the appellant has cleared the goods under the said notification amounting to Rs. 14,39,250/-. The Commissioner (Appeals) has further observed that the appellant cleared the said goods to various institutions. After making the above observations the Commissioner (Appeals) has clearly observed that though the decision of the CESTAT is in favour of the appellant there are option with the revenue either to review or to prefer an Appeal against the said order. It is only on this ground the Commissioner (Appeals) has not given the benefit of the said order to the petitioner.
From the tenor of the order passed by the Commissioner (Appeals) we are of the view that the course adopted by him is not justified. Judicial propriety demands that when there is an order of higher forum available in the assessee''s own case, the same has to be followed by the lower authority unless certain distinguishing features are pointed out by such lower authority or the order of the higher authority is reversed or suspended. Nothing of this sort has happened in the present case. It is true that the Excise Department has preferred an Appeal before the Apex Court against the order of CESTAT. However, the Appeal is filed belatedly and only notice for condonation of delay is issued on the other side. This fact itself is not sufficient to empower the Commissioner to take different view and not to follow the order passed by the CESTAT.
In Kamlakshi Finance Corporation Ltd.,(Supra) the Bombay High Court has strongly criticized the conduct of the Excise Officers. It is observed therein that in the remand order the Assistant Collector did not give any reasons as to why he differed from the decision of the Collector of Central Excise (Appeals), Bombay on which the appellant placed reliance before him. It is pointedly indicated that the ground given was untenable. The Assistant Collector of Central Excise was on remand directed to issue a reasoned and speaking order. The reply of the Department was that since they had preferred an appeal to the Supreme Court from that decision the said decision should not have been followed. The fallacious reasoning has appealed to the Assistant Collector. This is totally unacceptable and amounts to indiscipline of the worst sort by the people who are not qualified to exercise the same. The Court further observed that although it is not the business of the High Court to function as a Court of Appeal for Excise matters, it is the function of the High Court to hold and observe that the officers who are performing quasi-judicial functions will not behave in the manner in which the Assistant Collector on remand has behaved in the instant case.
When the above decision was challenged before the Apex Court, the Apex Court in Union of India v. Kamlakshi Finance Corporation Ltd. (Supra) not only dismissed the department''s Appeal but also observed that the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not ''acceptable'' to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.
Even with regard to the Revenue''s argument about non-maintainability of this petition on the ground of alternative remedy to file an Appeal before the CESTAT, this Court in Milcent Appliances Pvt. Ltd. (Supra) has observed that the question is not as to whether a particular circular is or is not applicable to the facts of the case that is incidental. In a case where a superior forum had issued direction, can it be said that it is open to the inferior Tribunal to disregard the same in any manner whatsoever. After discussing the settled legal position the Court took the view that it is not possible to accept the contention of the revenue that the petitioner must be relegated to avail of statutory right of appeal as an alternative remedy.
Having regard to the facts of the case and keeping judicial principles in mind, and without expressing any opinion on the controversy between the parties, we quash and set aside the order passed by the Commissioner (Appeals) only on the short ground that the Commissioner (Appeals) is bound to follow the order of the CESTAT in petitioner''s own case in earlier year so long as the said decision is not reversed or suspended by the High Court or Supreme Court, or any distinguishing feature is not pointed out by him. We, therefore, remand this matter to the Commissioner (Appeals) with a direction to decide the Appeal afresh in conformity with the CESTAT''s order or in the alternative by passing a speaking order as to how the CESTAT order in the earlier year in petitioner''s own case is not applicable to the facts of the case before him. By the time the fresh order is passed, if the order of CESTAT is either reversed or suspended by the Apex Court, the Commissioner will take appropriate view in the matter.
Subject to the aforesaid directions and observations this petition is accordingly allowed to the above extent without any order as to cost.