2024 (5) TMI 271 - AT - Central Excise

Principles of Res-judicata - suo-moto re-credit taken instead of filing refund application - Refund of amount of duty deposited by the Appellant under the unamended Section 35F of CEA - eligibility for exemption under Notification No. 6/2006-CE dated 01.03.2006 - HELD THAT - Both the parties agreed that in earlier round of litigation, this Tribunal in SARASWATI ENGINEERING LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, KANPUR 2021 (8) TMI 1144 - CESTAT ALLAHABAD 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 04.08.2021 was not challenged further. Once this is so, the said order dated 04.08.2021 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 UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. 1991 (9) TMI 72 - SUPREME COURT , wherein the Hon ble Supreme Court was pleased to hold 'the mere fact that the order of the appellate authority is not acceptable to the department in itself an objectionable phrase and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.' It is also found that the direction in the impugned order directing the adjudicating authority to decide the issue of entitlement to interest afresh, is also barred by principle of res judicata, as the said issue was conclusively decided in order dated 04.08.2021 and therefore the parties cannot be allowed to re-agitate the said issue again. 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 impugned order violates principle of judicial discipline and is liable to be set-aside on this ground alone. The impugned order is set aside and the appeal is allowed.

Summary

Issues Involved:
1. Eligibility for Cenvat credit on inputs when final products are exempt from duty.
2. Legality of suo-moto credit taken by the Appellant.
3. Entitlement to interest on refunded amount deposited u/s 35F.

Summary:

1. Eligibility for Cenvat credit on inputs when final products are exempt from duty:
The Department contended that the Appellant was not eligible for Cenvat credit on inputs since the final products were supplied without payment of duty under Notification No. 6/2006-CE. The Appellant reversed the Cenvat credit but later took suo-moto credit of the reversed amount. The Tribunal had previously allowed the Appellant's appeal, confirming the benefit of the exemption notification.

2. Legality of suo-moto credit taken by the Appellant:
A Show Cause Notice (SCN) was issued alleging that the suo-moto credit taken by the Appellant was contrary to law. The adjudication confirmed the demand, which was upheld in appeal. The Tribunal remanded the matter to the Original Adjudicating Authority to examine the issue afresh. The Adjudicating Authority again confirmed the demand, rejecting the refund claim. The Tribunal in its final order directed the refund of the amount deposited by the Appellant along with interest.

3. Entitlement to interest on refunded amount deposited u/s 35F:
The Appellant sought interest on the refunded amount as per the Tribunal's direction. The Adjudicating Authority sanctioned the refund but denied interest, citing that the amount was deposited before the amendment of Section 35F and introduction of Section 35FF. The Commissioner (Appeals) upheld this view. The Tribunal, however, emphasized judicial discipline and the finality of its previous order, directing the refund along with interest u/s 35FF from the date of deposit to the date of refund at 12% per annum.

Conclusion:
The Tribunal set aside the impugned order, emphasizing the principle of judicial discipline and res judicata. The appeal was allowed with consequential relief to the Appellant, including the refund with interest as per the Tribunal's previous directions.