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2018 (11) TMI 1478 - HC - CustomsRefund claim - assessment order not challenged - can the refund application go behind an assessment, which has attained finality? - Whether the revenue could pursue the R.C.P. after participating in the proceedings consequent to the remand order, dated 24/4/2003, passed by the CESTAT? - applicability of Doctrine of merger. Held that - The Hon'ble Supreme Court, in COLLECTOR OF CENTRAL EXCISE, KANPUR Vs. FLOCK (INDIA) PVT. LTD 2000 (8) TMI 88 - SUPREME COURT OF INDIA , has held that when an order which is appealable, under the Central Excise Act, is not challenged, then, the order is not liable to be questioned and the matter is not to be reopened in a proceeding, for refund. Once an assessee choses not to file an appeal, then, he cannot challenge the same, in a collateral proceedings. In this view, order, dated 4/7/2013, dismissing the Referred Case Petition No.2 of 2012, needs to be reviewed. While setting aside the orders of the assessment authority and the appellate authority, the Tribunal has applied the Doctrine of Merger, which is not applicable to the facts of this case. Tribunal has not stated precisely, as to how, the Doctrine of Merger, is applicable in this case. The Tribunal has not stated, as to which order has merged into which order and as to why the appeal before it was allowed by applying the Doctrine of Merger - The Doctrine of Merger would not apply, even if the order dated 31/3/2004, passed by the Commissioner (Appeals), in order in Appeal No.269 of 2004 was not challenged. Reliance of the respondent on the judgment of the Hon'ble Supreme Court in STATE OF PUNJAB OTHERS Vs. KRISHAN NIWAS 1997 (3) TMI 622 - SUPREME COURT is of no assistance and are distinguishable. Appeal allowed.
Issues Involved:
1. Whether the appellant could question the classification of the case in a refund application without challenging the assessment order. 2. Whether the revenue could pursue the Reference Case Petition (R.C.P.) after participating in the proceedings consequent to the remand order. 3. Whether the Tribunal could apply the Doctrine of Merger for dismissing the appeal of the revenue. Issue-wise Detailed Analysis: 1. Questioning Classification in Refund Application: The court examined whether the appellant could challenge the classification in a refund application without appealing the assessment order. The Supreme Court in *Collector of Central Excise, Kanpur vs. Flock India Pvt. Ltd.* [2000 (120) ELT 285 (SC)] and *Priya Blue Industries Ltd. vs. Commissioner of Customs (Preventive)* [2004 (172) ELT 145 (SC)] held that an order which is appealable must be challenged through an appeal, and not through a refund claim. The court emphasized that if the assessment order is not appealed, it attains finality and cannot be questioned in a refund application. The court found that the respondent did not challenge the assessment order but sought a refund, which was impermissible as per the cited judgments. 2. Revenue's Pursuit of R.C.P. Post-Remand: The court considered whether the revenue could pursue the Reference Case Petition after participating in the proceedings following the remand order. The court held that there is no estoppel against law, and the revenue's participation in subsequent proceedings does not preclude it from challenging the matter later. The court noted that the revenue had challenged the Tribunal's order, albeit belatedly, through a reference application. The court emphasized that the question of law regarding classification at the refund stage was not considered earlier, constituting an error apparent on the face of the record. 3. Application of Doctrine of Merger: The Tribunal applied the Doctrine of Merger to dismiss the revenue's appeal, asserting that the appellate order had merged with the Tribunal's order. The court clarified that the Doctrine of Merger is not universally applicable and depends on the nature of the appellate or revisional order. The court found that the Tribunal's order was a remand order and did not result in a merger of the original and appellate orders. The court concluded that the Tribunal's application of the Doctrine of Merger was incorrect and that the authorities were duty-bound to follow the Supreme Court's judgment in *Flock India Pvt. Ltd.* Conclusion: The court set aside the Tribunal's order and upheld the appellate authority's decision rejecting the refund claim. The court emphasized that the authorities must apply the law correctly and cannot allow a refund application to challenge an assessment order that was not appealed. The Civil Miscellaneous Appeal was allowed, and the court reiterated the binding nature of the Supreme Court's judgments in similar cases.
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