2010 (6) TMI 711 - HC - Central Excise

Whether the product, namely, Sodium Rosinate is not assessable to Excise duty and as such the detention orders passed on failure of the petitioners to pay the amount of excise duty levied on the goods, are liable to be quashed and set aside? Held that - In the present cases, the petitioners have accepted the adjudicatory orders and not preferred appeals challenging the same. In that view of the matter, merely because subsequently in the year 1991, the learned CEGAT has held that the said product Sodium Rosinate is not assessable to payment of Excise duty, cannot entitle the petitioners, as a matter of right, to the benefit of the said judgment. Merely because some matters were pending before the learned CEGAT cannot give a right to the petitioners to claim, as a matter of right, the refund of excise, when, as a matter of fact, they have failed to challenge the adjudicatory orders. In that view of the matter, no merit is found in the petitions. The petitions are therefore, rejected. Rule is discharged.

Summary

Issues:
Contention regarding the assessability of "Sodium Rosinate" to Excise duty leading to detention orders challenged in two petitions.

Analysis:
In both Writ Petition No. 3860/1993 and W.P. No. 3918 of 1993, the petitioners, Aurangabad Paper Mills Ltd. and Nath Pulp and Paper Mills Ltd., respectively, contested the imposition of Excise duty on "Sodium Rosinate," a by-product used in manufacturing craft paper. The dispute arose from show cause notices issued by the authorities demanding payment of Excise duty for specific periods. The Collector confirmed the demands, leading to detention orders against the petitioners for failing to pay the amounts owed, resulting in the petitions being filed.

The petitioners argued that since the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) had previously held that "Sodium Rosinate" was not liable for Excise duty, the subsequent imposition of duty was erroneous. However, the High Court noted that despite the CEGAT's decision in 1991, the adjudicatory orders against the petitioners were issued in 1989 and 1990. Furthermore, the petitioners had not appealed these orders, leading to the detention orders being passed based on the accepted assessments.

Referring to the "Mafatlal Industries v. Union of India" case, the High Court emphasized that a person cannot claim a refund or challenge assessments based on decisions in other cases. The court highlighted the principle that individuals must contest their own cases and cannot seek refunds or reopen assessments based on judgments in unrelated matters. As the petitioners had not challenged the adjudicatory orders and accepted them, the subsequent CEGAT decision did not automatically entitle them to a refund or relief from Excise duty payment.

Consequently, the High Court rejected the petitions, stating that the petitioners could not claim a right to refund based on the CEGAT judgment when they had not challenged the original assessments. The court discharged the rule but granted a stay on the order for eight weeks, considering the interim relief previously granted to the petitioner in one of the cases where the Excise Duty amount had been deposited with the court.

In conclusion, the High Court's judgment emphasized the importance of challenging assessments individually and not relying on decisions in unrelated cases for claiming refunds or relief from tax liabilities, ultimately dismissing the petitions but providing a temporary stay on the order in one case.