2014 (1) TMI 1467 - HC - Central Excise

Rate of tax - Tax on education cess - whether the appellant is liable to pay education cess again on the amount which has been worked out by calculating the customs duty payable on the goods in respect of clearances made by 100% EOU to domestic tariff area - Held that - adjudicating authority committed serious error in disregarding binding precedent and that there are absolutely no disputed facts. We would, therefore, not insist that the petitioners once again follow the same gamut of taking the appeal route. To revert back to the issue at hand, we may recall that the question of computation of Education Cess and Secondary and Higher Education Cess was decided finally by the Tribunal in favour of the petitioners. As of now, such decision of the Tribunal holds the field. Such decision of the Tribunal would be binding on the adjudicating authority. Even if the Department is of the opinion that the issue is not free from doubt, it is not open for the adjudicating authority to ignore the binding precedent. We may notice that under the Central Excise Act, 1944 and the Customs Act, the Department has the right to appeal even against the order-in-original passed by the adjudicating authority. This is in contrast to the provisions contained in the Income-tax Act, 1961 where against an order passed by the assessing officer, the Department has no right to appeal. Only remedy available to the Revenue is by way of a revision against the order of the assessing officer that too only if it is found that such order is erroneous and prejudicial to the interest of the Revenue. Such rigors however, are not applicable insofar as the Department s right to appeal against the order of the adjudicating authority is concerned under the Central Excise Act, 1944 - Therefore, decided against assessee.

Summary

Issues:
Challenge to order by Deputy Commissioner of Central Excise regarding calculation of excise duty for goods brought to domestic tariff area by 100% Export Oriented Undertaking.

Analysis:
The petitioners, engaged in manufacturing medicines as 100% EOU, challenged an order by the Deputy Commissioner of Central Excise concerning the calculation of excise duty for goods brought to any other place in India. The dispute revolved around the computation of Education Cess and Secondary and Higher Education Cess on clearances made by the petitioners to the domestic tariff area. The Department contended that these cesses should be levied again on the sum total of customs duties and above cesses. Previously, the Tribunal ruled in favor of the petitioners, holding that once the measure of Customs duty equivalent to Central Excise duty was determined, the Education Cess need not be levied separately. The Division Bench of the High Court held that appeals against such decisions lay before the Supreme Court, not the High Court.

The Department, despite the Tribunal's decision in favor of the petitioners, passed another order demanding additional duty and imposing penalties. The High Court found the adjudicating authority's approach impermissible, emphasizing the binding precedent set by the Tribunal. The Court noted that the Department could appeal against the order-in-original but must follow the law of precedent and binding effect of higher authorities' orders. Quoting a Supreme Court decision, the Court stressed the importance of revenue officers following appellate authorities' decisions to avoid undue harassment to taxpayers and chaos in tax administration.

The High Court, therefore, struck down the impugned order dated 13-7-2012, clarifying that it did not indicate support for the Tribunal's view. The Court maintained that the Department could challenge the Tribunal's decision through appropriate proceedings. The petition was disposed of accordingly, emphasizing the need for revenue officers to adhere to binding precedents and higher appellate authorities' decisions to ensure proper tax administration and avoid undue harassment to taxpayers.