2023 (2) TMI 548 - HC - Central Excise

Refund of Krishi Kalyan Cess (KKC) levied under the Finance Act, 2016 - essential grievance on the part of the petitioner is of the Tribunal not deciding the matter itself and remanding it to the Assessing Officer with the further grievance that the pending matter before the Apex Court being a case of M/S. GAURI PLASTICULTURE P. LTD., BOMBAY DYEING MANUFACTURING CO. LTD., M/S. SIMPLEX MILLS CO. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, INDORE, THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI IV, THE UNION OF INDIA THROUGH THE COMMISSIONER OF CENTRAL EXCISE MUMBAI I 2019 (6) TMI 820 - BOMBAY HIGH COURT has no applicability. HELD THAT - The chief reason for remanding the matter for adjudicating it de novo by the adjudicating authority is the pendency of the matter in case of M/s. M/s.Bombay Dyeing and Manufacturing Company Limited before the Apex Court. It is a Larger Bench s judgment of the Bombay High Court challenged before the Apex Court. It is given to understand that the same is still pending before the Apex Court and has not been finally decided. If the matter is still pending before the Apex Court, nobody can make a guess as to in what way it is going to result. The least the Tribunal could have done was of deciding the matter on merit as per the prevalent law or to keep the matter back. However, it has chosen to remand the matter to the adjudicating authority which is impermissible. This Court in case of COMMISSION OF CENTRAL GST VERSUS JAY CHEMICAL INDUSTRIES LTD. 2018 (8) TMI 1392 - GUJARAT HIGH COURT the question which was pending before the Tribunal was at large before the High Court. The Court held that in such a situation, the appeal ought to have been kept pending till the decision of the High Court with a liberty to both the sides to approach the Tribunal after the decision of the High Court. The approach of the Tribunal is held to have harassed both the Assessee and the Department, the matter was remanded with a direction to keep it pending and decide after the decision of the High Court in Tax Appeal pending before it on the same issue. In the instant case also, it is noticed that the approach of the Tribunal is to abdicate its duty of deciding the matter on the merits or to retain the matter till the outcome of the pending matter before the Apex Court. Since this is not permissible, it is deemed appropriate that the Tribunal, which is otherwise required to decide the matter on merit, shall decide the same keeping all contentions raised by both the sides before this Court and before the Tribunal open for them to agitate, let the same be decided without further loss of time. Petition disposed off.

Summary

Issues Involved:
1. Refund of Krishi Kalyan Cess (KKC)
2. Tribunal's decision to remand the matter to the Assessing Officer
3. Applicability of the Bombay Dyeing and Manufacturing Company Limited vs. Commissioner of Central Excise case
4. Tribunal's failure to decide the matter on merits

Detailed Analysis:

Issue 1: Refund of Krishi Kalyan Cess (KKC)
- The petitioner sought a refund of the unutilized Cenvat credit of KKC amounting to Rs. 43,61,383, which was levied under the Finance Act, 2016. The petitioner argued that with the implementation of GST, the levy of KKC was discontinued, and therefore, the unutilized credit should be refunded.
- The Assistant Commissioner rejected the refund claim, stating that the refund of unutilized Cenvat credit of KKC was not admissible under the Cenvat Credit Rules. This decision was upheld by the Commissioner (Appeals).

Issue 2: Tribunal's Decision to Remand the Matter
- The petitioner was aggrieved by the Tribunal's decision to remand the matter to the adjudicating authority for a de novo order instead of deciding the matter on its merits.
- The Tribunal justified its decision by citing the pendency of a related matter before the Supreme Court in the case of Bombay Dyeing and Manufacturing Company Limited vs. Commissioner of Central Excise.

Issue 3: Applicability of the Bombay Dyeing Case
- The Tribunal noted that the larger bench judgment of the Bombay High Court in the Gauri Plasticulture Pvt. Ltd. case, which was challenged before the Supreme Court, held that accumulated unutilized Cenvat credit cannot be refunded.
- The Tribunal chose to remand the matter, stating that no purpose would be served in passing an order while the Supreme Court was still seized of the matter.

Issue 4: Tribunal's Failure to Decide on Merits
- The High Court found the Tribunal's approach of remanding the matter impermissible. The Tribunal should have either decided the matter on merits as per the prevalent law or kept the matter pending until the Supreme Court's decision.
- The High Court referred to its previous judgments, disapproving the Tribunal's approach of disposing of appeals without deciding them on merits. The Court emphasized that such an approach causes harassment and inconvenience to both the assessee and the department.
- The High Court directed the Tribunal to decide the matter on merits, keeping all contentions raised by both sides open for agitation, and to do so without further delay.

Conclusion:
The High Court quashed the Tribunal's order of remanding the matter and directed it to decide the appeal on merits, emphasizing that the Tribunal's duty is to dispose of appeals on merits and not to abdicate its responsibility by remanding or keeping matters pending indefinitely. The petition was disposed of with these directions.