2019 (7) TMI 762 - AT - Central Excise

Maintainability of appeal - whether the present appeal should be dismissed for the reason that the two Appellate orders deciding the same issue between the same parties had attained finality? HELD THAT - In this connection it would be pertinent to refer to the decision of the Supreme Court in SHEODAN SINGH VERSUS SMT. DARYAO KUNWAR 1966 (1) TMI 77 - SUPREME COURT - The Supreme Court held where the trial court decides two suits having common issues on merits and two appeals are filed out which one appeal is dismissed on a preliminary ground like limitation or default in printing the result would be that the Trial Court decision stands confirmed and so the decision of the Appellate Court will then operate as res-judicata and the remaining appeal would have to be dismissed. Thus for this reason the remaining two appeals were rightly dismissed by the High Court because the Trial court had decided all the four suits on merits including the decision on the common issues. It would also be useful to refer to the decision of the Supreme Court in NARAYANA PRABHU VENKATESWARA PRABHU VERSUS NARAYAN PRABHU KRISHNA PRABHU ORS. 1977 (1) TMI 163 - SUPREME COURT . Two suits were filed in this case and thereafter two appeals were filed against the decrees of the Trial Court. The High Court heard both the Appeals together and decided the common issue resulting in two decrees but only one appeal was filed in the Supreme Court. It is in this context that the plea of res judicata was raised. The Supreme Court dismissed the appeal that was filed on the ground of res judicata. In the present case the Commissioner (Appeals) decided three appeals by a common order in favour of the assessee. The Revenue initially assailed all the three orders but by filing one appeal before the Tribunal. Subsequently in view of the application filed by the Revenue two appeals were dismissed as withdrawn. The present appeal before the Tribunal is confined to only one order passed by the Commissioner (Appeals) - Though res judicata may not strictly apply to the orders passed by the Commissioner (Appeals) but the aid of such principles can be taken. In the present case if this appeal is allowed two inconsistent orders will come into existence. The present appeal therefore is liable to be dismissed for this reason. The appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
1. Applicability of Rule 9 read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
2. Whether the goods sold to a related person should be valued under Section 4 of the Central Excise Act, 1944 or under Rule 9 of the 2000 Rules.
3. The impact of the monetary limit on filing appeals as per the Department of Revenue's instructions.
4. Application of the doctrine of res judicata.

Issue-wise Detailed Analysis:

1. Applicability of Rule 9 read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000:
The Department issued three show cause notices to the respondent for different periods, alleging that the goods sold to its sister concern, a related person, should be valued as per Rule 9 read with Rule 8 of the 2000 Rules. The Adjudicating Authority confirmed the demand based on this valuation method. However, the Commissioner (Appeals) observed that since not all goods were sold to the related person (only 99.75% were), Rule 9 was not applicable. Therefore, the appeals were allowed, and the demands were set aside.

2. Valuation of Goods Sold to a Related Person:
The core issue was whether the valuation of excisable goods should be computed under Section 4 of the Central Excise Act, 1944, or under Rule 9 of the 2000 Rules. The Adjudicating Authority applied Rule 9, but the Commissioner (Appeals) found that Rule 9 would only apply if 100% of the goods were sold to a related person. Since a small portion of the goods was sold to other buyers, Rule 9 was deemed inapplicable, and the valuation under Section 4 was upheld.

3. Impact of Monetary Limit on Filing Appeals:
The Department initially filed a single appeal against the common order passed by the Commissioner (Appeals). During the pendency of the appeal, they filed a miscellaneous application to confine the appeal to the order involving a demand of ?32,20,922, as the other two orders involved amounts below ?20 lakhs, per the Department of Revenue's instructions. The Tribunal allowed this application, and the appeal was confined to the order involving the higher amount.

4. Application of the Doctrine of Res Judicata:
The respondent raised a preliminary objection that if two appeals are withdrawn, the remaining appeal would be barred by res judicata. The Tribunal agreed, citing Supreme Court precedents, which established that if common issues are decided in multiple suits and some appeals are dismissed on preliminary grounds, the remaining appeals must also be dismissed to avoid inconsistent decrees. The Tribunal noted that the orders in the other two appeals had attained finality, and allowing the present appeal would result in inconsistent orders. Therefore, the principles of res judicata applied, and the appeal was dismissed.

Conclusion:
The Tribunal dismissed the appeal filed by the Revenue, upholding the Commissioner (Appeals)'s order that Rule 9 was inapplicable due to partial sales to unrelated buyers. The appeal was also dismissed based on the doctrine of res judicata, as the orders in the other two appeals had attained finality, preventing inconsistent decrees.