2014 (5) TMI 128 - HC - Central Excise

Denial of refund claim - CENVAT Credit - Denial on the ground that claimant has not physically exported the goods but merely supplied the goods to 100% EOU , the provision of Rule 5 of the Rules are not applicable and therefore, there are not entitled for refund of CENVAT credit under Rule 5 - Held that - on inputs used in manufacture of goods cleared by TDA units to 100% EOU refund of CENVAT credit would be available to the assessee and it would not be denied on the ground that it was the case of deemed export and refund could be granted only in case of physical export - Following decision of CCE&C v. NBM Industries 2011 (9) TMI 360 - GUJARAT HIGH COURT . Contempt of Court - Importance not given to precedents cases - Assistant Commissioner, Central Excise and Customs Division, Vapi by impugned orders has rejected the refund claims of the claimant on the ground inter alia that the decision of this Court in NBM Industries (Supra) is in the case of another assessee and not in the case of claimant and each one must fight its own battle and must succeed or fail in such proceedings - Held that - It is required to be noted that the decision of Division Bench of this Court in the case of NBM Industries (Supra) is binding upon the respondent No.4 . Merely because the said decision is in the case of another assessee , the respondent No.4 could not have ignored the same and/or not followed the same by holding that it is not binding ruling as the same is in case of another assessee . It appears that the respondent No.4 has not properly understood the decision of the Hon ble Supreme Court in the case of Mafatlal Industries Ltd. (1996 (12) TMI 50 - SUPREME COURT OF INDIA). In the case of Mafatlal Industries Ltd. (Supra), the Hon ble Supreme Court has never held that a decision of the higher appellate authorities/courts which may be in the case of another assessee are not binding to the lower authorities, on the ground that the same is in the case of another assessee . It is also not held by the Hon ble Supreme Court that it is not open for a person to make refund claim on the basis of a decision of a court or tribunal rendered in the case of another person. On the contrary, there are direct decisions of the Hon ble Supreme Court as well as various High Courts. We are constrained to strongly disapprove such arbitrary act on the part of the lower adjudicating authority and/or lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Time and again the Hon ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities - It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts. Being a part of the justice delivery system, all efforts should be made by the authorities/quasi judicial authorities and judicial authorities to see that there is no multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure - Decided in favour of assessee.

Issues Involved:
1. Applicability of Rule 5 of the CENVAT Credit Rules, 2004 for refund claims on inputs used in goods supplied to 100% EOU.
2. Binding nature of judicial precedents on adjudicating authorities.
3. Interpretation of the Supreme Court decision in Mafatlal Industries Ltd. vs. Union of India.
4. Contempt of court proceedings for not following binding judicial decisions.

Detailed Analysis:

1. Applicability of Rule 5 of the CENVAT Credit Rules, 2004:
The petitioner, M/s. EI Dupont India Pvt. Ltd., submitted refund claims for CENVAT credit on inputs used in manufacturing goods supplied to a 100% Export Oriented Unit (EOU). The adjudicating authority rejected these claims, arguing that Rule 5 of the CENVAT Credit Rules, 2004, does not apply because the goods were not physically exported but supplied to a 100% EOU. The court noted that this issue had already been settled in favor of the assessee by a previous decision in Commissioner of Central Excise and Customs vs. NBM Industries, which held that refunds are available even if the goods are supplied to a 100% EOU.

2. Binding Nature of Judicial Precedents:
The court emphasized that the decision in NBM Industries is binding on the adjudicating authority. The authority erred in rejecting the refund claims by not following this binding precedent, arguing that each assessee must succeed or fail in their own proceedings. The court clarified that the binding nature of judicial decisions is not limited to the parties involved in the original case but applies broadly to similar cases.

3. Interpretation of the Supreme Court Decision in Mafatlal Industries Ltd. vs. Union of India:
The adjudicating authority misinterpreted the Supreme Court's decision in Mafatlal Industries Ltd., believing it precluded them from granting refunds based on decisions in other cases. The court clarified that the Supreme Court did not establish such a rule and that lower authorities must follow binding precedents unless overruled or stayed by a higher court.

4. Contempt of Court Proceedings:
The court considered initiating contempt proceedings against the adjudicating authority for willfully disregarding the binding decision in NBM Industries. However, given the authority's recent appointment and unconditional apology, the court decided not to pursue contempt charges but strongly disapproved of the authority's actions. The court directed the Central Board of Excise and Customs to issue a circular to all adjudicating authorities to ensure compliance with binding judicial decisions to prevent future occurrences.

Conclusion:
The court quashed the impugned orders rejecting the refund claims and directed the adjudicating authorities to process the refunds in accordance with the decision in NBM Industries. The court also imposed exemplary costs on the respondent authorities and emphasized the importance of following binding judicial precedents to avoid multiplicity of proceedings and unnecessary harassment to the parties involved.

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