2015 (12) TMI 1156 - SC - Central Excise

Clim of refund of duty paid where the demand of duty has been set aside in another case holding the activity is not amount to Manufacture - cutting of marble blocks into marble slabs and tiles - Held that - Duty was paid by Respondent after proper adjudication and a particular view was taken which was upheld by the Tribunal as well. As mentioned above, no further appeals were brought by the respondents and, therefore, such proceedings had attained finality. The order of refund of this amount, merely because this Court took different view thereafter in some other case, would not permissible. Thus, insofar as direction contained in the impugned judgments to refund the amount of duty, interest and penalty is concerned, the same is set aside. However, once this Court has settled the position of law holding that the aforesaid process would not amount to manufacture, from the date of the judgment of this Court, the Excise Department is not entitled to recover any such excise duty from the respondents - Decided in favor of revenue.

Summary

Issues:
Challenging quashed excise duty and penalty judgments of High Court of Rajasthan.

Analysis:
The case involved two appeals challenging the judgments of the High Court of Rajasthan that had quashed the excise duty and penalty paid by the respondents. The issue arose from Show Cause Notices issued to the respondents regarding cutting marble blocks into slabs and tiles, alleging it amounted to manufacturing activity without payment of excise duty. The Order-in-Original confirmed the demand, upheld by the Tribunal, and the respondents did not further appeal, leading to the recovery of excise duty and penalty. However, a similar issue was decided differently by the Supreme Court in a previous case, stating that such activity did not amount to manufacturing. Subsequently, the respondents filed writ petitions seeking a refund, which the High Court granted, directing the Union of India to refund the duty, interest, and penalty.

The main argument presented by the Union of India was that the writ petitions for refund were not maintainable as the proceedings had reached finality, and the amount had been recovered. The Union contended that a subsequent judgment by the Supreme Court altering the legal position was not a valid ground for the respondents to claim a refund under Article 226 of the Constitution. The Court agreed with this submission, emphasizing that the duty was paid after adjudication, upheld by the Tribunal, and no further appeals were pursued by the respondents, leading to finality in the proceedings. Therefore, the direction in the impugned judgments to refund the duty, interest, and penalty was set aside. However, the Court clarified that following its judgment establishing that the activity did not amount to manufacture, the Excise Department was not entitled to recover any excise duty from the respondents from the date of the Supreme Court's decision.

In conclusion, the appeals were allowed based on the directions provided, setting aside the refund order but preventing the Excise Department from recovering excise duty following the Supreme Court's clarification on the legal position.