2010 (3) TMI 300 - HC - Central Excise

Judicial discipline- Show cause notices came to be issued to the petitioner periodically alleging that the RDC are includible in the assessable value of the vehicles in terms of Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 5 of the Central Excise Valuation Rules, 2000 for the period from July, 2000 to April, 2005. Commissioner (Appeals) uphold the order. Decision on same issued by co-ordinate bench of Tribunal not followed and matter not referred to larger bench. Tribunal in earlier order holding in favour of appellant but present order taking different view through issue involved same. View taken by Tribunal in present case not correct. Held that-Impugned order set aside. Matter remanded for fresh decision. Reference to Larger Bench to be made if contra view taken in de novo order.

Summary

Issues:
Challenge against inclusion of Road Delivery Charges (RDC) in assessable value of vehicles for Central Excise Duty.

Detailed Analysis:
The petitioner, a company engaged in manufacturing motor vehicles, faced show cause notices alleging that RDC should be included in the assessable value of vehicles for Central Excise Duty. The Department argued that the charges fluctuated, sometimes exceeding actual costs. Initially, the Respondent No. 2 held that RDC is not includible in the assessable value based on the place of sale being the factory gate. This decision was upheld by the Tribunal in 2008, following the Apex Court's decision in Escorts JCB Limited case. However, fresh show cause notices were issued for a later period, leading to conflicting decisions by the Tribunal in 2008 and 2009.

The petitioner contended that the Tribunal's 2009 decision was contrary to established judicial principles and ignored its own previous judgment. The petitioner highlighted the necessity of maintaining legal certainty and criticized the Tribunal's failure to refer the matter to a larger bench when differing from a previous decision on the same issue. Citing legal precedents, the Court emphasized the importance of judicial propriety and the traditional approach of referring conflicting decisions to a larger bench for resolution.

The Court held that the Tribunal's decision lacked a correct approach and set aside the 2009 judgment. It directed the Tribunal to rehear the appeal, emphasizing the need for a reasoned order following principles of natural justice. The Court stressed that if the Tribunal intended to deviate from the existing view, it should refer the matter to a larger bench for resolution. The Court refrained from expressing any opinion on the merits of the controversy, leaving all contentions open. The rule was made absolute with no order as to costs, ensuring a fair reconsideration of the appeal by the Tribunal.