2009 (12) TMI 243 - HC - Central Excise

Precedent- Notification No. 10/97-C.E.- the petitioner Company is engaged in manufacturing sophisticated machineries like Induction Melting/Heating Furnace and Welder and also parts thereof. The Central Government has issued Notification No. 10/97-C.E. granting exemption to goods namely scientific and technical instruments apparatus equipments when supplied to public funded research institutes and such similar customers if a certificate was issued for such requirement to the institution by the Central Government Officer as specified in the said Notification. The Commissioner of Central Excise issued a show cause notice on 18-10-2007 for above types of clearances made from September 2005 to October 2006 demanding duties from the petitioner on the ground that the goods delivered against the certificates were in the nature of industrial machines for production of goods and were not in the nature of scientific and technical instruments etc. The Commissioner of Central Excise issued another show cause notice on 24-10-2007 for the period from November 2006 to July 2007. He passed an Order In Original on 19-3-2008 deciding the above two show causes notices against the petitioner and demanding duties and imposing penalties. Held that- We remand this matter to the Commissioner (Appeals) with a direction to decide the Appeal afresh in conformity with the CESTAT s order or in the alternative by passing a speaking order as to how the CESTAT order in the earlier year in petitioner s own case is not applicable to the facts of the case before him. By the time the fresh order is passed if the order of CESTAT is either reversed or suspended by the Apex Court the Commissioner will take appropriate view in the matter.

Summary

Issues:
Petition to quash Order In Appeal, Jurisdiction of Commissioner (Appeals), Compliance with CESTAT's order, Alternative remedy of filing an Appeal before CESTAT.

Analysis:
1. The petitioner sought to quash Order In Appeal Nos. 169 to 172 of 2009, contending that the Commissioner (Appeals) did not follow the CESTAT's order in the petitioner's own case, which granted exemption from excise duty for scientific instruments. The Commissioner (Appeals) dismissed the petitioner's Appeals citing the Revenue's option to appeal against the CESTAT's decision, leading to the petitioner approaching the High Court under Article-226 of the Constitution of India.

2. The High Court found that the Commissioner (Appeals) erred in not adhering to the CESTAT's order, emphasizing that unless the higher authority's decision is reversed or suspended, the lower authority must follow it. The Court highlighted the importance of judicial propriety and criticized the Commissioner's deviation from the CESTAT's binding decision, especially when no distinguishing features were presented or the higher authority's order was not reversed or suspended.

3. Referring to legal precedents, the High Court emphasized the significance of maintaining judicial discipline and following higher appellate authorities' orders unreservedly. The Court cited the Apex Court's stance on the matter, stressing that failure to adhere to superior forum directives may lead to undue harassment to taxpayers and chaos in tax law administration.

4. Addressing the Revenue's argument on the non-maintainability of the petition due to the alternative remedy of filing an Appeal before the CESTAT, the High Court cited previous judgments to assert that a superior forum's direction must be followed, and an inferior Tribunal cannot disregard it. The Court rejected the notion that the petitioner must exhaust the statutory right of appeal before resorting to a writ petition.

5. Consequently, the High Court quashed the Commissioner (Appeals)'s order and remanded the matter back to him with a directive to decide the Appeal in compliance with the CESTAT's order or provide a reasoned explanation if the CESTAT's decision is deemed inapplicable. The Court underscored that the Commissioner must act in accordance with the CESTAT's order unless it is reversed or suspended by a higher court, ensuring judicial principles are upheld.

6. The High Court allowed the petition, setting aside the Commissioner (Appeals)'s order without imposing any costs, and instructed a fresh decision in alignment with the CESTAT's directive or with a detailed justification if the CESTAT's order is considered irrelevant in the current context.