2024 (3) TMI 1034 - AT - Central Excise

Exemption under N/N. 214/1986-CE dated 25.03.1986 - manufacture of Metallic Canisters falling under Tariff Heading No. 84799090 on job work basis - HELD THAT - The principle of judicial discipline requires a lower judicial/ quasi-judicial authority to follow the ratio of the decision by a higher judicial/quasi-judicial authority. The Commissioner (Appeals) has just done that. This principle was explained at length in Supreme Court decision in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. 1991 (9) TMI 72 - SUPREME COURT where it was held that In the light of these amended provisions there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal as the case may be even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. It is found that this appeal has been filed by the Revenue on the basis of an order passed by the Committee of Commissioners contrary to the principles of judicial discipline as laid down by the Supreme Court in Kamlakshi Finance Corporation Ltd. The appeal is dismissed.

Summary

Issues involved:
The issues involved in the judgment include the interpretation of exemption Notification No. 214/1986-CE, the application of judicial discipline in following tribunal orders, and the authority of lower judicial/quasi-judicial bodies to adhere to decisions of higher authorities.

Interpretation of Exemption Notification:
The respondent manufactured Metallic Canisters under Tariff Heading No. 84799090 on job work basis and cleared them without duty under exemption Notification No. 214/1986-CE. The notification requires the main manufacturer to execute a bond ensuring the use of goods in the manufacture of final products and discharge of excise duty liabilities. A show cause notice demanded duty from the assessee, which was contested. The Tribunal had previously held that the duty liability shifts to the raw material supplier who executed the required undertaking, leading to the demand being set aside. The Commissioner (Appeals) followed this precedent and set aside the demand, which was challenged by the Revenue.

Application of Judicial Discipline:
The Revenue appealed the Commissioner (Appeals) decision, arguing that judicial discipline was misapplied as the department had not accepted the Tribunal's order on merits. The department contended that the Tribunal's orders are binding only if accepted by the department, which was refuted. The Tribunal emphasized that its decisions are binding unless overruled by a higher forum, and lower authorities must adhere to higher authority decisions. The principle of judicial discipline mandates lower authorities to follow higher authority rulings, as explained in the Supreme Court case of Union of India v. Kamlakshi Finance Corporation Ltd. The Tribunal found the Revenue's appeal contrary to the principles of judicial discipline and dismissed it.

Authority of Lower Judicial/Quasi-Judicial Bodies:
The Tribunal highlighted the importance of lower authorities following higher appellate decisions without reservation, even if they disagree, to avoid undue harassment to taxpayers and ensure tax law administration. The Tribunal emphasized that the higher appellate authority's orders should be unreservedly followed by subordinate authorities, as deviation could lead to chaos. The Tribunal dismissed the Revenue's appeal, emphasizing the need for adjudicating and appellate authorities to uphold judicial discipline and adhere to binding higher authority orders.