2012 (10) TMI 868 - AT - Central Excise

Deduction on equalized basis Held That - As the Tribunal following the decision made earlier in respect of some other unit of assessee had allowed the same exclusively for excisable good. The matter was remanded back only for quantification of demand and segregation of expenses but the Com.(A) again going into question of admissibility of deduction was not admissible. The assessing officer cannot ignore and comment upon the correctness of the decision made earlier by the Tribunal and to decide it afresh case remanded back to the original adjucating authority to segregate the expenses exclusively in respect of excisable goods as directed by the Tribunal in the earlier remand matter in favour of assessee by way of remand.

Summary

Issues involved:
Admissibility of deduction from the assessable value on account of Octroi, Additional Sales Tax, Freight, and Additional Trade Discount on an equalized basis for specific financial years. Discrepancies in implementing the directions of the Tribunal's earlier decision in de novo proceedings.

Detailed Analysis:

1. Admissibility of Deductions:
The case revolved around the admissibility of deductions on an equalized basis for various expenses incurred by the appellant at their Sahibabad unit. The appellant sought deductions for Octroi, Additional Sales Tax, Freight, and Additional Trade Discount. The lower authorities initially denied these deductions, contrary to the decision of the Hon'ble CESTAT and the Hon'ble High Court. The Hon'ble CESTAT had allowed deductions on an equalized basis in a previous order, directing the original authority to segregate expenses exclusively related to excisable goods. However, the Assistant Commissioner and the Commissioner (Appeals) disallowed the deductions, citing Board Circulars and ignoring the binding directions of the higher courts.

2. Compliance with Tribunal's Directions:
The Tribunal had remanded the matter to the original authority to allow deductions in line with its earlier order for a different unit of the same appellant. However, the Assistant Commissioner failed to comply with the Tribunal's directions and confirmed the demands, rejecting the appellant's submissions. The adjudicating authority incorrectly relied on Board Circulars, stating that they were binding for finalizing the provisional assessment, disregarding the Tribunal's decision. The adjudicating authority's actions were deemed as sitting in appeal over the Tribunal's judgment, which was not permissible.

3. Precedents and Binding Circulars:
The Assistant Commissioner's reliance on Circulars denying deductions on an averaged basis, despite the Tribunal's decision, was found to be erroneous. The Tribunal's orders are judicial and must be followed by lower authorities unless set aside by a higher appellate forum. The Supreme Court's decisions emphasized the binding nature of Circulars, but in this case, the Tribunal's order should have been followed. The Tribunal's decision for the appellant's unit in Himachal Pradesh had been implemented favorably, without challenge from the Revenue, highlighting the inconsistency in the present adjudication.

4. Remand and Conclusion:
In light of the above analysis, the Tribunal set aside the impugned orders and remanded the matter to the original adjudicating authority to segregate expenses related to excisable goods and decide afresh. The appeal was allowed by way of remand, emphasizing the importance of following Tribunal's orders and not substituting them with departmental Circulars. The observations and actions of the lower authorities were criticized for not adhering to the Tribunal's directions and for showing a preference for Circulars over judicial orders.

This detailed analysis encapsulates the issues of admissibility of deductions, compliance with Tribunal's directions, the significance of precedents and binding Circulars, and the ultimate remand of the matter for a fresh decision in accordance with the Tribunal's orders.