2023 (12) TMI 2 - AT - Central Excise

Principles of judicial discipline - principle of res-judicata - entitlement to interest for the period starting from the date of deposit till its realization - HELD THAT - Both the parties agreed that in earlier round of litigation, this Tribunal vide order dated 03.01.2019 decided the appellant s entitlement to interest for the period starting from the date of deposit till its realization. Both the parties are also ad-idem to the fact that the said order dated 03.01.2019 was not challenged further. Once this is so, the said order dated 03.01.2019 attained finality between the parties and the Assistant Commissioner was bound by the said order. The impugned order of the Commissioner (Appeals) taking a contra view on the issue of entitlement and period of interest, is therefore contrary to the principle of judicial discipline as enunciated by the Hon'ble Supreme Court in UUNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. 1991 (9) TMI 72 - SUPREME COURT held that It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee-public without any benefit to the Revenue. Further, it is a settled law that once an order has not been challenged before the appropriate authority, it cannot be reopened and challenged in collateral proceedings subsequently by the same authority - The finding recorded in the impugned order that the order dated 03.01.2019 was accepted by the revenue purely on monetary grounds, appears to be incorrect, as the quantum of interest i.e. Rs 69,44,200/- is higher than the prevailing monetary limit i.e. Rs 50,00,000/-. The applicability of sub-section (4) of Section 35R is restricted to the same authority i.e. the Commissioner (Appeals), Appellate Tribunal or the Court, whose order was not challenged by the revenue because of monetary limit and it is the same authority i.e. the Commissioner (Appeals), Appellate Tribunal or the Court, which shall have regard to the circumstances in which such appeal, application, revision or reference was not filed. Any interpretation other than this would result in chaos in administration of justice, as a well-reasoned order of a higher court would not be followed by a lower court, merely because the decision was accepted on monetary grounds. Thus, sub-section (4) of Section 35R can be invoked only by the same authority/court or the superior authority/court and not by the inferior authority/court - when revenue is alleging non-filing of appeal against order dated 03.01.2019 passed by this Tribunal purely on monetary grounds, it is this Tribunal alone, which can consider the circumstances in which the appeal was not filed by the revenue and may take appropriate decision on the issue. However, sub-section (4) of Section 35R cannot be applied by the lower authority i.e. the Commissioner (Appeals) in the present case, to take a view from that taken by this Tribunal. The impugned order violates principle of judicial discipline and is liable to be set-aside on this ground - the Assistant Commissioner rightly sanctioned the interest by following order dated 03.01.2019 of this Tribunal - Appeal allowed.

Summary

Issues Involved:
1. Entitlement to interest on delayed refunds.
2. Principle of judicial discipline and res judicata.
3. Jurisdiction of authorities in reconsidering settled issues.
4. Applicability of monetary limits for filing appeals.

Summary:

1. Entitlement to Interest on Delayed Refunds:
The appellant was required to reverse Cenvat credit under protest in 2004. The Tribunal's order dated 24.02.2009 favored the appellant, leading to a refund without interest. The appellant's entitlement to interest was later affirmed by the Tribunal on 03.01.2019, citing the Madras High Court decision in UCAL Fuel Systems Ltd., which held that interest is payable from the date of deposit until realization.

2. Principle of Judicial Discipline and Res Judicata:
The Tribunal emphasized that the order dated 03.01.2019 had attained finality as it was not challenged further by the revenue. The Commissioner (Appeals) contravened the principle of judicial discipline by taking a contrary view, which is barred by the principle of res judicata. The Tribunal cited Union of India v. Kamlakshi Finance Corporation Ltd., stressing that subordinate authorities must follow the decisions of higher appellate authorities unreservedly.

3. Jurisdiction of Authorities in Reconsidering Settled Issues:
The Tribunal held that the Commissioner (Appeals) had no jurisdiction to reconsider the merits of the settled issue of interest entitlement. The Tribunal referenced several cases, including Krishnadevi Malchand Kamathia v. Bombay Environmental Action Group, affirming that once an order is not challenged, it cannot be reopened in subsequent collateral proceedings.

4. Applicability of Monetary Limits for Filing Appeals:
The Tribunal found the Commissioner (Appeals)'s reliance on monetary limits for not challenging the order dated 03.01.2019 to be incorrect, as the quantum of interest exceeded the prevailing monetary limit. The Tribunal clarified that Section 35R of the Central Excise Act, 1944, which governs monetary limits, does not allow lower authorities to take a view contrary to that of higher appellate authorities based on monetary grounds.

Conclusion:
The Tribunal set aside the impugned order of the Commissioner (Appeals) and restored the Order in Original dated 22.11.2019, which sanctioned the interest to the appellant. The appeal was allowed with consequential relief, emphasizing the importance of judicial discipline and the finality of unchallenged orders.