2016 (5) TMI 274 - HC - Central Excise

Valuation - inclusion of pre-inspection charges in the assessable value of goods - Petitioner submitted that the Assistant Commissioner committed a serious error in confirming duty demand contrary to the decision of the Tribunal in case of the petitioner itself which is a breach of the principles of judicial discipline - Held that - the Assistant Commissioner committed a serious error in ignoring the binding judgment of superior Court that too in case of the same assessee. The principle of precedence and judicial comity are well established in our legal system, which would bind an authority or the Court by the decisions of the coordinate Benches or of superior Courts. Time and again, this Court has held that the departmental authorities would be bound by the judicial pronouncements of the statutory Tribunals. Even if the decision of the Tribunal in the present case was not carried further in appeal on account of low tax effect, it was not open for the adjudicating authority to ignore the ratio of such decision. It only means that the Department does not consciously agree to the view point expressed by the Tribunal and in a given case, may even carry the matter further. However, as long as a judgment of the Tribunal stands, it would bind every Bench of the Tribunal of equal strength and the departmental authorities taking up such an issue. An order that the adjudicating authority may pass is made appealable, even at the hands of the Department, if the order happens to aggrieve the Department. This is clearly provided under Section 35 read with Section 35E of the Central Excise Act. Therefore, even after the adjudicating authority passes an order in favour of the assessee on the basis of the judgment of the Tribunal, it is always open to the Department to file appeal against such judgment of the adjudicating authority. Therefore, only choice open for the adjudicating authority, was to decide the case in consonance with the judgment of the Tribunal dated 16.06.2014 and thereafter leave it to the Departmental authorities to decide the question of filing appeal against such an order, if otherwise permissible in law. Impugned order dated 16.10.2015 is set aside. No opinion is expressed on the legal issue of includability of the predelivery inspection charges in the assessable value of the goods. - Decided in favor of assessee.

Summary

Issues involved:
Challenging an Order in Original regarding central excise duty demand, inclusion of pre-delivery inspection charges in assessable value, reliance on Tribunal judgment, judicial discipline, appealability of impugned order.

Analysis:
1. The petitioner contested an Order in Original confirming central excise duty demand, interest, and penalty. The issue revolved around including pre-delivery inspection charges in the assessable value of goods supplied to Government agencies. Despite a favorable Tribunal decision in the petitioner's case, the Assistant Commissioner upheld the duty demand. The Tribunal's ruling distinguished the Maruti Suzuki case, emphasizing charges at the buyer's instance are not included in assessable value.

2. The Assistant Commissioner issued a show cause notice against the petitioner, citing the need to include pre-delivery inspection charges in the assessable value. The impugned order relied on the Supreme Court's decision in Southern Structures Ltd. and the Maruti Suzuki case. The Assistant Commissioner argued that charges part of the transaction value should be included, contrary to the Tribunal's decision in the petitioner's case.

3. The petitioner's counsel argued that the Assistant Commissioner erred by disregarding the Tribunal's binding judgment in the petitioner's case. Judicial discipline mandates adherence to superior forum decisions. The Department's failure to appeal the Tribunal's judgment due to low tax effect does not negate its binding nature. The reliance on Southern Structures Ltd. and the overruled Maruti Suzuki case was deemed improper.

4. The High Court held that the Assistant Commissioner's dismissal of the Tribunal's binding judgment was a serious error. The principle of judicial comity dictates adherence to superior court decisions. The Department's right to appeal against an order, even in favor of the assessee, is preserved under the Central Excise Act. The reliance on Southern Structures Ltd. and the Maruti Suzuki case was deemed erroneous, as they did not address the specific issue decided by the Tribunal.

5. The Court set aside the impugned order, emphasizing the Department's obligation to follow Tribunal judgments until appealed. The Court refrained from expressing an opinion on the legal issue of including pre-delivery inspection charges in the assessable value. The decision aimed to uphold judicial discipline and ensure proper application of legal precedents.

6. The judgment highlighted the importance of respecting Tribunal decisions and maintaining judicial discipline. The Court's decision aimed to uphold legal principles, emphasizing the binding nature of superior court rulings and the need for consistency in applying legal precedents.