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2021 (9) TMI 1478 - AT - Central ExciseRefund of unutilised CENVAT credit on closer of factory in the form of cash, for which no provision exist in the CENVAT Credit Rules vis a vis Section 11 of the Central Excise Act - divergent judicial decisions are available in all hierarchy of Courts where tax disputes are decided including that of the Apex Court - applicability of binding judicial precedent that would govern the field than the statutory enactments - Difference of opinion. HELD THAT - On the point of application of binding precedent for the Tribunal vis- -vis revisiting to the legality of the issue involved and applicability of stare decisis, there emerged certain difference of opinion between learned Member (Judicial) and learned Member (Technical). To settle the issues and give finality to the divergent opinion emerged, the Registry is directed to place the matter before the Hon ble President. The following points are required to be settled to give a finality to the issue - i. Whether the decision of the Hon ble High Court of Karnataka in case of Slovak India Trading Co Pvt, 2006 (7) TMI 9 - KARNATAKA HIGH COURT and affirmed by the Hon ble Supreme Court in 2007 (1) TMI 556 - SC Order , is applicable to the facts of the case in hand as held by Member (Judicial); or The decision of the Hon ble Karnataka High Court is clearly distinguishable and not applicable to the facts of the case as held by Member (Technical) ii. Whether the order passed by the Hon ble Supreme Court is to be accepted as binding precedent in view of KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER 2000 (7) TMI 67 - SUPREME COURT read with GANGADHARA PALO VERSUS REVENUE DIVISIONAL OFFICER 2011 (3) TMI 252 - SUPREME COURT in view of operation of Article 141 of the Constitution of India irrespective of the merger or no merger of the judgment of Hon ble High Court with the judgment of the Hon ble Supreme Court; or CESTAT is bound to follow the decision of the larger Bench of CESTAT ( in the case of Steel Strips 2011 (5) TMI 111 - CESTAT, NEW DELHI and larger Bench of the Hon ble Bombay High Court (Jurisdictional High Court) in the case of Gouri Plastic Culture 2019 (6) TMI 820 - BOMBAY HIGH COURT which has dealt with the findings of Kunhayammed. iii. After the decision of the Hon ble Supreme Court in case of Mafatlal Industries 1996 (12) TMI 50 - SUPREME COURT , and subsequent decisions, can CESTAT which is an authority created under the statute, decide any claim of the refund in terms of Rule 5 of CENVAT Credit Rules, 2004, filed for the reason beyond the reason of export of goods under bond. Member (Judicial) has held in favour of appellant and Member (Technical) has held in negative. iv. Whether the decision of the Hon ble Karnataka High Court will hold goods after amendments made in the Rule 5 of CENVAT Credit Rules, 2004 in the year 2012, Member (Judicial) has held in favour of the Appellant while Member (Technical) disagrees and holds that the refund claim needs to be filed and adjudged as per the provisions of Rule 5 as they existed when the refund claim was filed. v. Whether the refund claim is barred by limitation, Member (Judicial) has not dealt with the issue as not in adjudication order whereas Member (Technical) has held the refund claim to be hit by limitation. vi. Whether the larger Bench orders of the Tribunal passed in the case of Mira Silk Mills Vs. Commissioner of Central Excise, Mumbai 2003 (3) TMI 142 - CEGAT, NEW DELHI and Atma Steel Private Limited and others Vs. Collector Central Excise, Chandigarh and others 1984 (6) TMI 60 - CEGAT, NEW DELHI on the application of binding precedent is to be followed by the Tribunal to arrive at a conclusion as held by the Member (Judicial); or Observation of the larger Bench of the Hon ble Bombay High Court upon non-application of Article 141 in the context of the findings of the Hon ble Supreme Court is to be followed by this Tribunal, as held by the learned Member (Technical) though ratio of the judgment in Gangadhar Pal had not been brought to the knowledge of the Hon ble Bombay High court. vii. Whether legality of the issue involved in the present appeal concerning cash refund upon closer of factory can be revisited after the same is given a finality by the Hon ble Supreme Court with a reason, may be meager, in confirming the order of the Hon ble Karnataka High court, which is opined in the negative by the Member (Judicial) and In the affirmative and in express analysis of the provisions of the relevant Act and rules by the Member (Technical).
Issues Involved:
1. Refund of unutilized CENVAT credit on the closure of the factory. 2. Applicability of binding judicial precedent and the principle of stare decisis. 3. Interpretation of Rule 5 of the CENVAT Credit Rules, 2004. 4. Whether the decision of the Karnataka High Court in Slovak India Trading Co. Pvt. Ltd. is applicable. 5. Impact of amendments to Rule 5 of the CENVAT Credit Rules in 2012. 6. Limitation period for filing a refund claim. 7. Application of the doctrine of merger and Article 141 of the Constitution. 8. Revisiting the legality of the issue after the Supreme Court's decision. Detailed Analysis: 1. Refund of Unutilized CENVAT Credit on Closure of Factory: The primary issue revolves around whether the appellant is entitled to a cash refund of unutilized CENVAT credit amounting to Rs. 1,80,26,559/- on the closure of their factory in 2017. The appellant argued that the accumulated credit could not be utilized due to the factory's closure and sought a refund based on previous judicial decisions, including Slovak India Trading Co. Pvt. Ltd. The adjudicating authority and the Commissioner (Appeals) denied the refund, citing the absence of a specific provision in Rule 5 of the CENVAT Credit Rules, 2004, for such refunds. 2. Applicability of Binding Judicial Precedent and Principle of Stare Decisis: The Tribunal examined the principle of binding precedent and stare decisis, highlighting that judicial decisions, especially those of the Supreme Court, must be followed. The appellant relied on the decision in Slovak India Trading Co. Pvt. Ltd., where the Karnataka High Court allowed a refund of unutilized CENVAT credit on the closure of the factory. The Supreme Court dismissed the SLP against this decision, which the appellant argued should be binding. 3. Interpretation of Rule 5 of the CENVAT Credit Rules, 2004: The Tribunal analyzed Rule 5, which allows for the refund of CENVAT credit in specific circumstances, primarily related to exports. The appellant contended that there was no express prohibition against granting refunds on factory closure. However, the respondent argued that refunds require explicit statutory provisions, which were absent in this case. 4. Applicability of the Decision in Slovak India Trading Co. Pvt. Ltd.: The Tribunal considered whether the decision in Slovak India Trading Co. Pvt. Ltd. was applicable. The appellant argued that this decision, affirmed by the Supreme Court, supported their claim. However, the Tribunal noted that subsequent decisions, including those of the Bombay High Court, had taken a different view, emphasizing the need for express statutory provisions for refunds. 5. Impact of Amendments to Rule 5 of the CENVAT Credit Rules in 2012: The Tribunal discussed the amendments to Rule 5 in 2012, which restricted refunds to specific circumstances, primarily related to exports. The appellant's claim did not fall within these circumstances, and the Tribunal had to consider whether the pre-amendment provisions or the amended rule applied. 6. Limitation Period for Filing a Refund Claim: The Tribunal addressed the issue of whether the appellant's refund claim was barred by limitation. The appellant did not raise this issue, but the respondent argued that the claim was time-barred under Section 11B of the Central Excise Act. 7. Application of the Doctrine of Merger and Article 141 of the Constitution: The Tribunal examined the doctrine of merger and Article 141, which mandates that the law declared by the Supreme Court is binding on all courts. The Tribunal considered whether the Supreme Court's dismissal of the SLP in Slovak India Trading Co. Pvt. Ltd. constituted a binding precedent. 8. Revisiting the Legality of the Issue After the Supreme Court's Decision: The Tribunal debated whether it could revisit the legality of the issue after the Supreme Court's decision in Slovak India Trading Co. Pvt. Ltd. The Tribunal noted that subsequent judicial pronouncements, including those of the Bombay High Court, had taken a different view, leading to the formation of a Larger Bench to resolve the conflicting decisions. Conclusion: The Tribunal allowed the appeal, setting aside the order of the Commissioner (Appeals) and directing the respondent to refund the unutilized CENVAT credit with applicable interest. The decision was based on the binding precedent set by the Supreme Court in Slovak India Trading Co. Pvt. Ltd., despite the divergent views in subsequent judicial decisions. The Tribunal emphasized the need to follow the highest court's decisions and provided relief to the appellant accordingly. However, the Member (Technical) dissented, arguing that the decision in Slovak India Trading Co. Pvt. Ltd. was not applicable and that the refund claim was barred by limitation, among other points. The matter was directed to be placed before the President for final resolution of the divergent opinions.
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