2023 (7) TMI 542 - SCH - Central Excise

Exemption from payment of education cess and secondary education cess, when exemption from payment of excise duty under a notification was granted - HELD THAT - In SRD Nutrients (P) Limited 2017 (11) TMI 655 - SUPREME COURT it was held that when payment of Excise Duty is exempt under the Central Excise Act, then the 2% Education Cess and Secondary and Higher Education Cess payable on the aggregate duties of excise will also be exempted. However, later in the case of M/s Unicorn Industries Vs. Union of India reported in 2019 (12) TMI 286 - SUPREME COURT , the aforesaid judgment in SRD Nutrients (P) Limited vs. CCE was overruled and it was held that although the exemption from payment of excise duty under a notification is granted, there is no exemption from payment of education cess. Therefore, the assessee who had paid the excise duty and education cess was not entitled to a refund of the education cess which had been paid. Also where refund had been made pursuant to the judgment in M/s SRD Nutrients (P) Limited, was no longer valid. The explanation to Order XLVII Rule 1 which is a wholesome provision has been inserted to the Code of Civil Procedure. It states that once there is a subsequent judgment overruling an earlier judgment on a point of law, the earlier judgment cannot be reopened or reviewed on the basis of a subsequent judgment. In substance, the High Court in SRD Nutrients (P) Limited has stated that the decision in SRD Nutrients (P) Limited had attained finality and was binding on the parties thereto. Therefore, the subsequent decision of this Court overruling SRD Nutrients (P) Limited in the case of M/s Unicorn Industries cannot have a bearing on past decisions which had attained finality although they had followed SRD Nutrients (P) Limited, which was subsequently overruled in M/s Unicorn Industries. Otherwise a pandora s box would be opened and there would be no end to litigation, which is against public policy. The Special Leave Petitions are dismissed.

Summary

Issues involved:
The judgment deals with the issue of conflicting rulings on the exemption from payment of excise duty and education cess, the need for a larger Bench reference, and the finality of judgments in the context of subsequent overruling.

Exemption from payment of excise duty and education cess:
In the case of SRD Nutrients (P) Limited vs. CCE, it was held that exemption from excise duty would also exempt education cess. However, in M/s Unicorn Industries vs. Union of India, it was overruled that excise duty exemption does not extend to education cess. The High Court considered the matter and stated that decisions based on SRD Nutrients (P) Limited, which had attained finality, should not be affected by subsequent overruling judgments.

Need for a larger Bench reference:
A reference order was made on 27.09.2021 to a larger Bench regarding the judgment in SRD Nutrients (P) Limited, which was overruled by M/s Unicorn Industries. The court questioned the necessity of this reference, highlighting that seeking a second review of a judgment after dismissal of a review petition is impermissible. The principle of finality in litigation and the interest of the State in ending disputes were emphasized.

Finality of judgments and subsequent overruling:
The court discussed the importance of finality in litigation to avoid endless confusion and ensure justice. It cited legal maxims such as "Nemo debet bis vexari pro una et eadem causa" (No man should be vexed twice for the same cause) and "Interest reipublicae ut sit finis litium" (It is in the interest of the State that there should be an end to litigation). The court dismissed the Special Leave Petitions, emphasizing the need for closure in legal disputes to uphold public policy and prevent prolonged litigation.