2018 (8) TMI 1276 - HC - Central Excise

Allowing credit of duty paid on Capital Goods to be adjusted against duty liability - Rule 57A to Rule 57J. - as per the notification, unutilized credit as on 1.8.1197 shall lapse - by applying the Directions of the Apex Court in the case of Eicher Motors Ltd., original authority extended the benefit. - SC has extended the benefit on the ground that once benefit accrues to the assessee, the same cannot be dined by issuing a notification. By applying the principle of resjudicata, wrongly, authorities and tribunal denied the benefit to the appellant. Validity of observations made by Commissioner Appeal in Appeal Memo - effectiveness of law declared by Supreme Court - lapse of credit lying unutilized. Held that - It is well settled principle of law that the law declared by the Supreme Court is binding on all and when the Division Bench of this court has held that the judgment is applicable against which no SLP was preferred, any lower authority in rank observing that the High Court was not sure about the similarity of the issue in both the cases otherwise the Bench could have decided the case, in our considered opinion, these observations by Commissioner Appeal in Appeal Memo is not only objectionable but it is not permissible under law. Even the tribunal while setting aside the order of the First two Authorities has not given any reasons and simply accepted the appeal memo and has allowed the appeal without reversing the finding arrived at by both the authorities and observed that the Supreme Court judgment is not binding. The notification dated 1st August, 1997 will lapse on 1st August, 1997 and could not be applied subsequently. The first two authorities rightly observed and allowed the proceedings in favour of petitioner/assessee and tribunal as well as two Commissioners of Excise department exceeded the jurisdiction and committed an error in making observations against the High Court and the Supreme Court decisions. The order of the tribunal is quashed and set aside and that of the original authorities is restored - Petition allowed.

Summary

Issues Involved:

1. Challenge to the Tribunal's Order
2. Application of Supreme Court's Decision in Eicher Motors Ltd. Case
3. Principle of Res Judicata
4. Validity and Application of Notifications No. 33/1997-CE(NT) & 34/1997-CE(NT)
5. Binding Nature of Supreme Court's Decisions
6. Jurisdiction and Authority of Lower Authorities

Issue-wise Detailed Analysis:

1. Challenge to the Tribunal's Order:
The petitioner challenged the Tribunal's order which reversed the decisions of the Deputy Commissioner and Commissioner (Appeals). The Tribunal had allowed the Department's appeal, which was contrary to the previous favorable rulings for the petitioner.

2. Application of Supreme Court's Decision in Eicher Motors Ltd. Case:
The petitioner's case was initially remanded by the High Court in 2005, directing the Assistant Commissioner to reassess the excise duty liability in light of the Supreme Court's decision in Eicher Motors Ltd. The Supreme Court had held that the provisions in Rule 57-F(4-A) for lapsing of unutilized credit could not be applied to goods manufactured prior to 16.03.1995. The Assistant Commissioner and Commissioner (Appeals) followed this directive, allowing the petitioner's claim.

3. Principle of Res Judicata:
The Commissioner (Appeals) and the Assistant Commissioner applied the principle of res judicata, concluding that the similarity of the issue with the Eicher Motors case had reached finality as it was not disputed by the Department before the High Court. The Tribunal, however, ignored this principle, leading to the current dispute.

4. Validity and Application of Notifications No. 33/1997-CE(NT) & 34/1997-CE(NT):
The Additional Commissioner argued that the notifications issued on 01.08.1997, which mandated the lapsing of unutilized credit, were not challenged by the petitioner in their writ petition. The Assistant Commissioner and Commissioner (Appeals) were criticized for not honoring these notifications, which were still in force and had not been declared ultra-vires.

5. Binding Nature of Supreme Court's Decisions:
The High Court emphasized that the law declared by the Supreme Court is binding on all authorities. The Tribunal's failure to adhere to the Supreme Court's decision in Eicher Motors Ltd. and its subsequent application by the High Court was deemed erroneous and beyond its jurisdiction.

6. Jurisdiction and Authority of Lower Authorities:
The High Court criticized the Tribunal and the two Commissioners for exceeding their jurisdiction and making objectionable observations against the High Court and Supreme Court decisions. The Tribunal's order was quashed for failing to provide reasons and for improperly reversing the findings of the lower authorities.

Conclusion:
The High Court quashed the Tribunal's order and restored the decisions of the original authorities, which had favored the petitioner. The petition was allowed, reaffirming the binding nature of the Supreme Court's decision and the principle of res judicata.