2022 (5) TMI 1361 - HC - Central Excise

Maintainability of appeal - Monetary limit for filing appeal by Revenue - proper jurisdiction - Recovery of refund already granted - Whether the assessee is liable to return the Education Cess and Secondary Higher Education Cess on the changed view of law as subsequently laid down by the Full Bench of the Supreme Court in M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS 2019 (12) TMI 286 - SUPREME COURT , over ruling M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT , on the basis of which the aforesaid Cess was refunded to the assessee? HELD THAT - In an appeal filed by the Commissioner of Central Excise before the High Court of Sikkim u/s 35G of the Act in relation to refund of Education Cess and the Secondary Higher Education Cess the value involved was ₹ 63 lakhs only and an objection was raised that the appeal is not maintainable in view of the National Litigation Policy dated 22.08.2019 which provides for not filing of appeals to High Court where the valuation is below ₹One Crore. The Division Bench observed that the preliminary objection has much substance though the appeal was disposed of otherwise - The department may not file appeal in isolation on the subject with lower valuation and wait for other similar to come and as and when sufficient number of appeals arises having a collective valuation of over ₹ One Crore, may proceed to file all of them in order to defeat the purpose of the circular. The cause of action in each appeal is separate. Therefore the monetary limit below which appeal shall not be filed referred to in the circular, is in context to a single appeal rather than the group of appeals. The amount involved in a group of appeals cannot be taken together for the purposes of the above Circular. The appellants have not brought on record any material to show that any special permission was granted by the Government of India or the Ministry of Finance to file appeal ignoring the above Circular - It is also important to note that these appeals do not involve any substantial question of law. The question of law proposed to be raised stands settled by catena of decisions as would be clear by the subsequent discussion and, as such, cannot be regarded as substantial question of law. Thus, appellants were not justified in filing these appeals contrary to the mandate of the above circular which is binding upon them. Accordingly, these appeals are not maintainable. Whether the appeals are maintainable before the High Court or are required to be filed directly before the Supreme Court u/s 35 L of the Act? - HELD THAT - If the appeal involves any question in relation to rate of excise duty or the value of the goods in context with the assessment, the appeal would not lie before the High Court but would lie to the Supreme Court u/s 35L of the Act which enables filing of the appeal in the Supreme Court if the order passed by the authority below relates to the determination of any question in relation to the rate of duty of excise or to the value of goods for the purposes of the assessment - Since the appeals are directed against the order passed by CESTAT directing refund of cess and does not involve determination of any question in relation to rate of excise duty or value of goods for the assessment purposes, the appeals would lie to the High Court and have rightly been preferred. The appeals as such are maintainable. The preliminary objections to the above extent stand over ruled. Condonation of delay in filing the appeals - HELD THAT - Admittedly, 7 % so charged by the government was illegal and was realised under a mistake and without authority of law. Therefore, a suit was brought for refund of the amount so charged - It was in view of the facts in a suit for refund of the amount excessively charged in a suit based upon Section 72 of the Indian Contract Act, which provides that where money is paid by mistake to a person, he is liable to repay or return it, the court applied Section 17(1)(c) of The Limitation Act, 1963, and held that the limitation would run from the date of the knowledge of such mistake. The appellant is calculating the limitation for filing of the appeals from the date of subsequent decision of the Supreme Court in the case of Unicorn Industries. This is simply misconceived for the reason that the statute does not provide for taking limitation for filing appeal from any other date except from the date of service/receipt of the copy of the impugned order - Sub-Section (2A) of Section 35 G contemplates for recording satisfaction regarding sufficient cause for not filing the appeal within the period of 180 days as prescribed. Therefore, primarily explanation has to be furnished for not filing the appeal within said 180 days from the receipt of the copy of the impugned order. The said period had expired in each case much before the decision was rendered in Unicorn Industries. There is no explanation on record why the appellant could not file the appeal within the said 180 days. Therefore, in view of the language used in Section 35G (2)(a) in the absence of any sufficient cause for not filing the appeal within that period, it would not be prudent and justifiable to condone the delay by this Court. Any explanation for the period subsequent to it is of no consequence. There are no merit in the submission that the appellants are entitled to get the delay in filing the appeals condoned. There is no sufficient ground to condone the delay and, accordingly, delay condonation applications in all the appeals stand rejected. Whether the subsequent change in opinion by the Supreme Court on the interpretation of a particular provision of law, the appellants are entitled to reopen all the past cases which have been decided on the basis of the opinion of the Supreme Court that was prevailing as binding on the date of their decisions? - HELD THAT - It may be profitable to refer to the case of STATE OF GUJARAT OTHERS VERSUS ESSAR OIL LIMITED AND ANOTHER 2012 (1) TMI 47 - SUPREME COURT , which holds that no refund can be ordered against a party, if that party has not been unjustly enriched or when it has acquired the benefit lawfully. Since the assessee have got the benefit of refund lawfully under the prevailing law, they cannot be directed to refund the same merely on the basis of change of opinion. Therefore, the appeals for the sole purpose to seek return of the amounts refunded in view of the decision of SRD Nutrients on the change of opinion subsequently are meaningless. In the cases at hand, since the assessee has been held entitled to the refund of the Educational cess and Secondary Higher Educational cess on the basis of a judgment and order of the Supreme Court in case M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT which was in vogue at the relevant time, the appellants are not entitled to make recovery of the said refunded amount on the basis of the subsequent decision of the Supreme Court rendered in the case of Unicorn Industries - If such an action is permitted, it will open a Pandora box and the lis between the parties which had attained finality will never come to an end. This would be against the public policy which envisages providing quietus to litigation at some stage. There are no merit in these appeals and the same are dismissed, first for the reason, they are barred by limitation, secondly, they are not maintainable and, lastly, the change of opinion of the court in a subsequent matter of another party would not give any leverage to the appellants to reopen the decisions which have attained finality - appeal dismissed.

Summary

Issues Involved:
1. Limitation and delay in filing appeals.
2. Monetary limit for filing appeals.
3. Jurisdiction of the High Court vs. Supreme Court.
4. Substantial question of law.
5. Merits of the case and refund of Education Cess and Secondary & Higher Education Cess.

Detailed Analysis:

1. Limitation and Delay in Filing Appeals:
The judgment notes that nearly all appeals were filed beyond the prescribed 180-day period under Section 35G of the Central Excise Act, 1944. The appellants argued that the delay should be condoned due to the Supreme Court's decision in Unicorn Industries (2020), which overruled the earlier SRD Nutrients (2017) decision. However, the court emphasized that the limitation period starts from the date of service of the order, not from the date of a subsequent judicial decision. The court cited several precedents, including Collector Land Acquisition Anantnag vs. Mst. Katiji and Ajit Singh Thakur Singh vs. State of Gujarat, to stress that the delay must be justified by events occurring within the limitation period. The court found no sufficient cause for the delay and rejected the applications for condonation of delay.

2. Monetary Limit for Filing Appeals:
The court addressed whether the appeals were maintainable given the monetary limit prescribed by the Ministry of Finance's Circular dated 22.08.2019, which restricts filing appeals in the High Court if the tax incidence is below ?1 Crore. The court examined the individual tax incidences in each appeal and found that none met the ?1 Crore threshold. The court rejected the appellant's argument that the collective tax incidence should be considered. The court held that the circulars are binding on the department and cited Collector of Central Excise Vadodra vs. Dhiren Chemical Industries to support this view. Consequently, the appeals were deemed not maintainable based on the monetary limit.

3. Jurisdiction of the High Court vs. Supreme Court:
The court examined whether the appeals should have been filed directly in the Supreme Court under Section 35L of the Act, as they pertain to the rate of excise duty. The court concluded that the issue at hand did not relate to the determination of the rate of duty or the value of goods for assessment purposes but rather to the refund of Education Cess and Secondary & Higher Education Cess. Therefore, the appeals were rightly filed in the High Court and were maintainable in this regard.

4. Substantial Question of Law:
The court found that the proposed question of law—whether the assessee is liable to return the Education Cess and Secondary & Higher Education Cess based on the Supreme Court's decision in Unicorn Industries—was not a substantial question of law. The issue had already been settled by various judicial decisions, and thus, the appeals did not involve any substantial question of law.

5. Merits of the Case and Refund of Education Cess and Secondary & Higher Education Cess:
On the merits, the court held that the subsequent change in judicial opinion (Unicorn Industries overruling SRD Nutrients) does not entitle the appellants to reopen past cases that were decided based on the prevailing law at the time. The court cited Mafatlal Industries Limited vs. Union of India and Tilokchand MotiChand vs. H. B. Munshi to emphasize that final decisions should not be reopened based on subsequent judicial changes. The court also referred to State of Gujarat vs. ESSAR Oil Limited, holding that no refund should be ordered if the benefit was lawfully acquired under the prevailing law.

Conclusion:
The court dismissed the appeals primarily due to the delay in filing, non-maintainability based on the monetary limit, and lack of a substantial question of law. The court also ruled that the change in judicial opinion does not warrant reopening cases that have attained finality. The appeals were dismissed with no order as to costs.