2023 (9) TMI 802 - AT - Central Excise

Refund of unutilised CENVAT credit on closure of factory in the form of cash - applicability of binding judicial precedent that would govern the field than the statutory enactments - Doctrine of merger. - Scope of the Decision of Supreme Court where SLP was dismissed in a short order. Appellant is challenging the legality of such order of the Commissioner of Central Tax (Appeals) who followed the latter Division Bench Order on the Hon'ble Bombay High Court passed in M/S. GAURI PLASTICULTURE P. LTD., AND OTHERS VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND UNION OF INDIA AND ORS. 2018 (4) TMI 1233 - BOMBAY HIGH COURT and not the previous one namely JAIN VANGUARD POLYBUTYLENE LTD. VERSUS COMMISSIONER OF C. EX., NASHIK 2009 (6) TMI 790 - CESTAT, MUMBAI judgement of the same High Court that was passed following the judgment of the Hon'ble Supreme Court passed in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. 2007 (1) TMI 556 - SC ORDER - difference of opinion. Matter was referred to third member bench in 2021 (9) TMI 1478 - CESTAT MUMBAI Opinion given by S.K. MOHANTY - INTERIM ORDER NO. 31/2023 - ORDER ON DIFFERENCE OF OPINION - HELD THAT - The opinions of the learned Members in the Bench are explicitly divergent only on the effect of the dismissal of SLP of Revenue against the decision of the Hon ble Karnataka High Court in the case of Slovak India Trading Co. Pvt. Ltd. The issue of limitation raised by the learned Member (Technical), though has not been discussed separately by the learned Member (Judicial); but vide the Interim Order dated 28.09.2021, since has directed for grant of refund along with interest, a divergent stand has been taken impliedly. The other issues, though stated explicitly as points of reference, are not required to be addressed inasmuch as no discussions have been made by either of the Members on those issues in the body of the Interim Order. On reading of the judgement of Hon ble Supreme Court, it is amply made clear that the issue regarding cash refund of accumulated Modavt/Cenvat credit, in the case of closure of factory was appreciated by the Hon ble Court and upon consideration of various decisions rendered by the Tribunal, in allowing such refunds, the concession made by the learned ASG to such extent was accepted and accordingly, the SLP was dismissed. Further, it is an admitted fact on record that the decisions of the Tribunal referred to by the Hon ble Supreme Court in the judgement dated 25.01.2007 have not been appealed against by the Revenue, meaning thereby that the principles or the issue dealt with and decided by the Tribunal were accepted by the Revenue. In view of the judgment of the Hon ble Apex Court in the case of COMMISSIONER OF C. EX., HYDERABAD VERSUS NOVAPAN INDUSTRIES LTD. 2007 (1) TMI 5 - SUPREME COURT it cannot be said that the Hon ble Supreme Court had dismissed the SLP in case of Slovak India Trading Co. Pvt. Ltd., without assigning any reasons therein. The issue in context with doctrine of merger was discussed by the Hon ble Supreme Court in the case of GANGADHARA PALO VERSUS REVENUE DIVISIONAL OFFICER 2011 (3) TMI 252 - SUPREME COURT , wherein the Hon ble Court have held that even if the SLP is dismissed with reasons, however meagre (one sentence), there is merger of orders. It has further been held that once the SLP is dismissed, giving reasons by the Hon ble Supreme Court, however meagre, it becomes a declaration of law. Thereafter, the decision which is merged with the decision of Hon ble Apex Court, is non-existent, and thus, cannot be reviewed. Since the principle of the doctrine of merger has been adequately dealt with by the Hon ble Supreme Court in Gangadhara Palo, it is not felt proper to discuss the binding precedence of the judgments referred to by the learned Members at the referral paragraphs. It is concluded holding that the ratio of the judgment by the Hon ble Supreme Court in Slovak India Trading Co. Pvt. Ltd., has the binding effect on all Courts, Tribunal etc., in view of the mandates, contained in Article 141 of the Constitution of India - the limitation aspect would not apply to the facts of the present case for denial of the refund benefit to the appellant. The learned Member (Judicial) that the impugned order is required to be set aside agreed upon and the appeal is required to be allowed with consequential benefit to the appellant - appeal allowed (majority order).

Summary

Issues Involved:
1. Refund of unutilised CENVAT credit on closure of factory.
2. Applicability of binding judicial precedent and stare decisis.
3. Limitation for filing refund claims.

Issue 1: Refund of Unutilised CENVAT Credit on Closure of Factory
The appellant sought a refund of accumulated CENVAT credit upon the closure of their factory in 2017. The Assistant Commissioner initially rejected the claim, and the Commissioner (Appeals) upheld this decision, citing the lack of express provisions for such refunds in the CENVAT Credit Rules and divergent judicial decisions. The appellant relied on precedents like Slovak India Trading Co. Pvt. Ltd., arguing that there was no express prohibition against such refunds. The Tribunal, referencing the binding precedent set by the Hon'ble Supreme Court in Slovak India Trading Co. Pvt. Ltd., ruled in favor of the appellant, allowing the refund with interest.

Issue 2: Applicability of Binding Judicial Precedent and Stare Decisis
The Tribunal discussed the principle of binding precedent, emphasizing that decisions of the Hon'ble Supreme Court must be followed by all lower courts and tribunals. The Tribunal highlighted the judgment in Slovak India Trading Co. Pvt. Ltd., where the Supreme Court dismissed the SLP, thereby setting a binding precedent. The Tribunal also referenced the doctrine of merger and Article 141 of the Constitution, which mandates that the law declared by the Supreme Court is binding on all courts within India.

Issue 3: Limitation for Filing Refund Claims
The Tribunal addressed the issue of whether the refund claim was barred by limitation. It was noted that the appellant continued to file statutory returns until the closure of the factory and filed the refund claim immediately after surrendering the registration certificate. The Tribunal concluded that the claim was not barred by limitation, considering the unique circumstances of the factory's closure and the absence of a specific time limit in Rule 5 of the CENVAT Credit Rules for such refunds.

Conclusion:
The Tribunal, by majority opinion, set aside the impugned order and allowed the appeal with consequential relief, directing the respondent department to pay the refund amount with applicable interest within three months.