2015 (12) TMI 242 - AT - Customs

Demand of recovery of consequential refund sanctioned consequent to the Hon ble High Court of Madras orders which attained finality - Denial of exemption under Notification No.133/85 - Department disputed the appellant s claim on the ground as per the amended Notification vide Notfn No.306/86, the power project shall mean such project whose output or end product is power but shall not include captive power plant set up by the units engaged in activities other than power generation - High Court declared the Explanation under Notification No.306/86 to Notification No.133/85, dated 19.04.1985 is unconstitutional, void and ultra vires and also directed refund in excess of 25%. Held that - Revenue having failed in both writ appeal as well as in review application vide the High Court s orders dt. 17.7.2000 and 8.10.2009 respectively, the Hon ble High Court s order dt. 2.3.1995 has attained finality and binding on the department as far as this appellant is concerned. Therefore, we do not see any error in the adjudicating authority s order who diligently complied the Hon ble High Court s Order. The adjudicating authority while sanctioning the refund had clearly brought out in his order dt. 8.4.2011, all aspects including the Hon ble Supreme Court judgment by relied by Revenue in the case of Union of India Vs Indian Charge Chrome (1999 (8) TMI 69 - SUPREME COURT OF INDIA). - Revenue has power to review any order of the lower authority under Section 129B of Customs Act whereas in the present case the adjudicating authority had sanctioned the consequential refund as per the Hon ble High Court order which attained finality. In this scenario, the Revenue has no valid grounds to say that the adjudicating authority has erred in sanctioning the refund both on merits as well as on unjust enrichment. Further, the LAA has no power to go beyond the High Court s order to set aside the refund sanctioned by L.A. The jurisdictional High Court Order is binding on the Revenue and the LAA and the appellant. - Decided in favour of assessee.

Summary

Issues Involved:
1. Refund claim of customs duty.
2. Applicability of Notification No.133/85 and Notification No.306/86.
3. Implementation of High Court orders.
4. Doctrine of unjust enrichment.
5. Compliance with Supreme Court judgments.

Detailed Analysis:

1. Refund Claim of Customs Duty:
The appellant filed a refund claim on 12.01.1987 for customs duty amounting to Rs. 1,50,99,362.95, paid under protest during the period 29.05.1996 to 22.09.1996. The claim was based on the exemption under Notification No.133/85, which allowed a 'nil' rate of Basic Customs Duty. The Customs department disputed this, denying the benefit due to the amended Notification No.306/86, which excluded captive power plants from the exemption. The appellant paid the duty under protest and sought a refund, which was not sanctioned initially, leading to a series of legal proceedings.

2. Applicability of Notification No.133/85 and Notification No.306/86:
The appellant's claim for exemption under Notification No.133/85 was denied by the department based on Notification No.306/86, which excluded captive power plants from the exemption. The High Court quashed the part of Notification No.306/86 that denied benefits to captive power plants. Despite the High Court's order, the department continued to deny the refund, leading to further legal actions by the appellant.

3. Implementation of High Court Orders:
The High Court, in its order dated 02.03.1995, allowed the appellant's writ petitions and quashed the part of Notification No.306/86 affecting captive power plants. The department's subsequent writ appeals were dismissed by the High Court on 17.07.2000 and 13.10.2008, making the High Court's order final. Despite this, the department issued a show-cause notice demanding recovery of the sanctioned refund, which the appellant challenged successfully.

4. Doctrine of Unjust Enrichment:
The department argued that the doctrine of unjust enrichment, incorporated into the Customs Act from 20.09.1991, applied retrospectively. They cited several Supreme Court judgments to support this claim. However, the appellant contended that the High Court's order, which had attained finality, did not consider unjust enrichment, and thus the refund should be granted without this consideration.

5. Compliance with Supreme Court Judgments:
The department relied on the Supreme Court's decision in Union of India Vs Indian Charge Chrome, which upheld the validity of Notification No.306/86. However, the appellant argued that this decision was not applicable to their case, as the High Court's order had already attained finality, and no stay was granted against it. The Tribunal agreed with the appellant, stating that the High Court's order was binding and could not be circumvented by the department.

Conclusion:
The Tribunal concluded that the High Court's order dated 02.03.1995 had attained finality and was binding on the department. The adjudicating authority's order sanctioning the refund was in compliance with the High Court's order. The Tribunal rejected the department's appeal and allowed the appellant's appeal, directing the department to return the refunded amount to the appellant without further delay. The Tribunal emphasized the importance of judicial discipline and the binding nature of the High Court's orders on subordinate authorities.