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TMI Blog2021 (9) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... t, [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT ] and affirmed by the Hon ble Supreme Court in [ 2007 (1) TMI 556 - SC Order ], is applicable to the facts of the case in hand as held by Member (Judicial); or The decision of the Hon ble Karnataka High Court is clearly distinguishable and not applicable to the facts of the case as held by Member (Technical) ii. Whether the order passed by the Hon ble Supreme Court is to be accepted as binding precedent in view of KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER [ 2000 (7) TMI 67 - SUPREME COURT ] read with GANGADHARA PALO VERSUS REVENUE DIVISIONAL OFFICER [ 2011 (3) TMI 252 - SUPREME COURT ] in view of operation of Article 141 of the Constitution of India irrespective of the merger or no merger of the judgment of Hon ble High Court with the judgment of the Hon ble Supreme Court; or CESTAT is bound to follow the decision of the larger Bench of CESTAT ( in the case of Steel Strips [ 2011 (5) TMI 111 - CESTAT, NEW DELHI ] and larger Bench of the Hon ble Bombay High Court (Jurisdictional High Court) in the case of Gouri Plastic Culture [ 2019 (6) TMI 820 - BOMBAY HIGH COURT ] which has dealt with the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER NO. 10/2021 - Dated:- 28-9-2021 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) For the Appellant : Shri Ganesh Kumar, Chartered Accountant For the Respondent : Shri Sanjay Hasija, Superintendent, Authorised Representative ORDER Issue to be decided by us relates to refund of unutilised CENVAT credit on closer of factory in the form of cash, for which no provision exist in the CENVAT Credit Rules vis a vis Section 11 of the Central Excise Act, but divergent judicial decisions are available in all hierarchy of Courts where tax disputes are decided including that of the Apex Court. The primary consideration before us, therefore, would be the applicability of binding judicial precedent that would govern the field than the statutory enactments. 2. Factual backdrop that has brought the dispute to this Appellate Tribunal stage relates to a refund application filed by the present appellant for refund of accumulated CENVAT credit to the tune of Rs.1,80,26,559/- at the time of closer of their factory in 2017 as utilisation of the same was otherwise impossible consequent upon such closer of its factory. The said appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjudicating authority had rejected the refund claim while placing reliance on Gauri Plasticulture Pvt. Ltd. reported in [2018 (360) ELT 967 (Bom.)] (hereinafter to be referred as Gauri-I). Learned Commissioner (Appeals) had also rejected the refund claim, though going by the rule of precedent they should have allowed the same in obedience to the judgment of the Hon'ble Supreme Court delivered in the case of Commissioner Vs. Slovak India Trading Co. Pvt. Ltd. reported in [2008 (223) ELT A170 (SC)], that all Courts and Tribunals are bound to follow. He also submitted that it was clearly referred by the Hon'ble Karnataka High Court in the appeal on point of law preferred by Slovak India Trading Co. Pvt. Ltd. that there was no express prohibition in terms of Rule 5 of the CENVAT Credit Rules 2004 to refuse refund and even otherwise also, Rule 5 relates to a manufacturer, which tag appellant had lost after closer of the company, for which Rule 5 cannot be invoked for the purpose of rejection of refund as rightly ruled by CESTAT and therefore refund is fully justified in the case of closer of factory in the light of assessee switching over from MODVAT to CENVAT scheme, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT credit refund in cash after closer of factory is held to be admissible. They are Union of India Vs. Slovak India Trading Co. Pvt. Ltd. [2006 (201) ELT 559 (Kar.)], Union of India Vs. Slovak India Trading Co. Pvt. Ltd. [2008 (223) ELT A170 (S.C.)], Slovak India Trading Co. Pvt. Ltd. Vs. CCE, Bangalore [2006 (205) ELT 956 (Tri.-Bang.)], Welcure Drugs Pharmaceuticals Ltd. Vs. CCE, Jaipur [2018 (15) GSTL 257 (Raj.)], Shalu Synthetics Pvt. Ltd. Vs. CCE, Vapi [2017 (346) ELT 413 (Tri.-Ahmd.)], Commissioner Vs. Shree Krishna Paper Mills and Industries Ltd. [MANU/PH/3052/2019], Nichiplast India Limited Vs. Principal Commissioner, CGST [Excise Appeal No. 50790 of 2019 decided on 23.07.2021], Castrol India Limited Vs. The Commissioner of GST and C. Ex. [Appeal No. E/40711/2013] of CESTAT Chennai date of judgment 13.03.2019. 4.1 We are not here to count the number and declare the rule of majority. Rather we consider it as our onerous duty to attempt a ruling on the judicial precedent that would govern the field and hold good for us so as to be guided by the conclusion arrived at, that would atleast remove the myth from the judicial circle that certainty of law is a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions : 1. Eicher Tractors v. CCE, Hyderabad, 2002 (147) E.L.T. 457 (Tri.-Del.); 2. Shree Prakash Textiles (Guj.) Ltd. v. CCE, Ahmedabad, 2004 (169) E.L.T. 162 (Tri.- Mumbai); 3. CCE, Ahmedabad v. Babu Textile Industries, 2003 (158) E.L.T. 215 (Tri.- Mumbai); and 4. CCE, Ahmedabad v. Arcoy Industries, 2004 (170) E.L.T. 507 (Tri.-Mumbai). of the Tribunal in which it has been held that the assessee is entitled to refund of the amount deposited if the assessee has gone out of the Modvat Scheme or their unit is closed. Aggrieved against the order of the Tribunal, revenue filed C.E.A. No. 5/2006 in the High Court of Karnataka at Bangalore. The High Court by its impugned order has affirmed the order of the tribunal and dismissed C.E.A. No. 5/2006 filed by the revenue. Learned ASG appearing for the Union of India fairly concedes that those decisions of the Tribunal, which were relied upon by the Tribunal, have not been appealed against. In view of the concession made by the Learned ASC, this special leave petition is dismissed. 5.3 In the case of Jain Vanguard Polybutylene Ltd. (supra), the same question arose before the Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating portion of the order reads: 24. There is one more important aspect of the matter. We may note here that while dismissing the Special Leave Petition filed against the aforesaid decision of the Division Bench of this Court in the case of Jain Vanguard (supra), the Apex Court passed the following Order: Delay condoned. We find no reason to interfere with the impugned order in exercise of our discretion under Article 226 of the Constitution. The Special Leave Petition is, accordingly, dismissed leaving the question of law open. 7. The above observation coupled with the noting of the Hon'ble Supreme Court made in the SLP filed against the Hon'ble Karnataka High Court judgment in Slovak India Trading Co. Pvt. Ltd. (supra) had apparently led the Division Bench of the Bombay High Court to conclude for setting up of a Larger Bench in the appeal of M/s. Gauri Plasticulture Pvt. Ltd. on 23rd April 2018 primarily for the reason that dismissal of SLP would not help the Doctrine of Merger enforceable as a binding precedent, in view of the categorical pronouncement of the Hon'ble Supreme Court in the case of Kunhayammed and Others Vs. State of Kerala and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Bench and refer the following questions to Larger Bench. They are (a) Whether cash refund is permissible in terms of clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs? (b) Whether by exercising power under Section 11B of the said Act of 1944, a refund of un-utilized amount of Cenvat Credit on account of the closure of manufacturing activities can be granted.? (c) Whether what is observed in the order dated 25th January 2007 passed by the Apex Court in Petition for Special Leave to Appeal (Civil) No. CC 476 of 2007 (Union of India v. Slovak India Trading Company Pvt. Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India? 8.1 The appeal of Gauri Plasticulture Pvt. Ltd. and above referred points were heard and disposed by the Hon'ble High Court of Bombay on 14.06.2019, reported in [2019 (6) TMI 820 (Bombay - H.C.)] (hereinafter to be referred as Gauri-2). All the three questions of law frame as above were answered in the negative. Hon'ble Bombay High Court had dealt with both point of law on the issue of admissibility of credit and on ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt should be certain, clear and consistent. It is commonly known that most decisions of the courts are of significance not merely because they constitute an adjudication on the rights of the parties and resolve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases. In this latter aspect lies their particular value in developing the jurisprudence of the law. (emphasis Supplied) 10. Though Larger Bench of this Tribunal had answered the admissibility of refund claim in the negative in M/s Steel Strips reported in [2011 (269) ELT 257 (Tri.-LB)] by referring to all its previous judgements that was also followed in Purvi Fabrics and Texturise (supra), in Mira Silk Mills Vs. Commissioner of Central Excise Mumbai, the Larger Bench of this Tribunal way back in [2003 (153) ELT 686 (Tri.-LB)] had laid down the norm to the effect that if there is conflict between law laid down by the Hon'ble High Court and ratio of the decision of the Tribunal, whether it is a Larger Bench or not, Hon'ble High Court decisions will prevail over Tribunals decisions unless the same is inflict with a decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reason would not be treated as a binding precedent under Article 141 of the Constitution of India. In this connection reference was also made to the leading case Kunhayammed and Others (supra) of the Hon'ble Supreme Court on the Doctrine of Merger, more particularly, to sub-para V of para 44 [already reproduced in the preceding para]. However, this para 44 reiterates the sum and substance of Kunhayammed and Others judgement in the form of its conclusion but the real meaning of subpara V can better be inferred from para 40 of the said Kunhayammed and Others judgment which is required to be reproduced here for a better clarity: 40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the Court, (iv) the conduct of the petitioner having no disentitling him to any indulgence by the Court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger. (emphasis Supplied) 12. A conjoint reading of both sub-para V of para 44 vis-a-vis para 40 of Kunhayammed and Others judgment would reveal promptly three things. First, the grounds of rejection of SLP which are not on merit. Second, the fact of rejection of SLP with reason that can be considered as merit of the Special Leave Petition only and not to be equated with Doctrine of Merger but it is still a binding precedent as per Article 141 of the Constitution of India and third, which would govern the rule in the field, is the effect of the order refusing leave to appeal with reason (speaking order), then the implication of that order is that it takes away the jurisdiction any other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the seal of approval of the Apex Court of our country. Since, in Jain Vanguard Polybutylene Ltd. it was discussed in the order of the Hon'ble Bombay High Court that reasoning was available for extending cash refund and it was observed that SLP in Slovak India Trading Co. Pvt. Ltd. was discussed including doctrine of merger and not about the legality of cash refund on closer of factory or transfer from MODVAT to CENVAT scheme, with great respect to the order in Gauri Plasticulture Pvt. Ltd. , we would also like to place it on record that there was a clear finding of the Hon'ble Supreme Court on the issue of doctrine of merger as in Gangadhara Palo Vs. Revenue Divisional Officer [2012 (25) STR 273 (SC)] it has been distinctly mentioned that SLP if dismissed with reasons, however meagre (even one sentence) there is merger or orders. Unfortunately, this judgment of Hon'ble Supreme Court in Gangadhara Palo (Supra), wherein the decision of Kunhayammed and Others Vs. State of Kerla was further referred and clarified, was not brought to the knowledge of the Hon'ble Bombay High Court. Be that as it may, as has been held by Kunhayammed and Others (supra) whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view that there is no provision under Rule 5 of the Cenvat Rules to grant cash refund. The learned Counsel submits that the order is not legal and proper for the reason that the grounds of rejection taken by the Commissioner (Appeals) were not communicated in the show cause notice. He submits that the Tribunal in the cases of Eicher Tractors v. The Commissioner of Central Excise, Hyderabad [2002 (147) E.L.T. 457 (Tri.-Del.)]; Shree Prakash Textiles (Guj.) Ltd. v. Commissioner of C. Excise, Ahmedabad [2004 (169) E.L.T. 162 (Tri.-Mumbai); The Commissioner of C. Ex., Ahmedabad v. Babu Textile Industries [2003 (158) E.L.T. 215 (Tri.-Mumbai) and Commissioner of Central Excise, Ahmedabad-I v. Arcoy Industries [2004 (170) E.L.T. 507 (Tri.- Mumbai) have held that the refund claim is eligible to the assessee and refund has to be made in cash, when the assessee goes out of the Modvat scheme or their unit is closed. 2. The learned DR opposes the prayer and submits that there has to be provision of law for grant of refund in such cases. Therefore the order is correct in law. 3. On a careful consideration the submissions made by both the sides, I find that the Tribunal has consist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants also seems to be apposite to the issue on hand. In that case the assessee, by virtue of the provisions of a notification, was entitled to set-off of duty paid on certain inputs. The relevant notification happened to be rescinded and consequently it was not possible for the assessee to avail the set-off. The Tribunal held that, in such a factual situation, the assessee was entitled to claim cash refund of the duty paid on the inputs. I think it is this principle which has been embodied in the proviso to Section 11B(2) of the Act. The ground raised in the appeal is forceful. Both the authorities have apparently overlooked the relevant provision of law. In the circumstances, the matter will be sent back to the original authority to enable that authority to examine the case afresh in the light of the applicable provision of law. It is up to that authority to verify the duty-paid nature of the inputs and to ascertain whether the inputs had actually been utilised in or in relation to the manufacture of final products prior to 16-12-1998. 18.4 In case of Eicher Tractors, Babu Textile Industries and Arcoy Industries referred in the decision, the issue was in respect of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the appeal. iii. Arcoy Industries [2004 (170) ELT 507 (T)] 2 . The said amount was originally paid by the respondents by debiting RG 23 Pt. II. However, when the dispute was finally settled, they claimed the refund in PLA inasmuch as by that time they had moved out of the Modvat credit scheme and were availing the benefit of small scale exemption notification. Commissioner (Appeals) observed that if it is so the refund should be given to the respondents in cash. 3 . I find no infirmity in the above view of the Commissioner (Appeals). If the respondents is not able to utilise the credit, the very basis of the refund is defeated, in which case the amount is to be given to him in cash. 18.5 Thus the issue under consideration before the tribunal in these cases was refund of the duty paid by making the debit form the MOVAT Credit account. It was not the case for the refund of the amount available as balance in the MODVAT Credit Account. Undoubtedly the refund of the excess duty paid, is governed by the Section 11B of the Central excise Act, 1944. Once the person making such a claim is eligible for refund of such excess payment of duty, the same needs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the Internal Audit, it was noticed that the assessee has availed Cenvat Credit of the materials received by them during the past on the strength of the photocopies of the duplicate copy of invoices and the original copies of the invoices were never produced. The assessee had availed the credit to the tune of Rs. 3,09,390/-. On scrutiny, it was noticed that there was neither production nor clearance of finished goods. Cenvat Credit availed by the respondent is irregular. A show cause notice was issued in the matter with regard to irregular availment and also with regard to rejection of refund claim. Reply was submitted. Thereafter, an order was passed ordering allowance of Cenvat Credit of Rs. 3,72,405/- availed on the invoices mentioned in the show cause notice except invoice No. 62 dated 19.2.2002. Refund claim was also rejected in terms of Section 11B of the Act. It was stated that there is no provision in Rule 5 of Cenvat Credit Rules 2002 with regard to refund. An unsuccessful appeal was filed by the assessee. Thereafter, he moved the Tribunal and the Tribunal has chosen to allow the appeal in terms of the impugned order. It is in these circumstances, the Revenue is befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident that they were concerned with a case where the issue of admissibility of MODVAT Credit was determined in the favour of Slovak, after they had closed down the production. Since the credit was determined in their favour after closure of production, they were not in position to utilize the same towards the payment of the Central Excise duty at the time of clearance of the finished goods. The ratio of the decision Hon ble Karnataka High Court, needs to be read in light of the facts recorded by the Hon ble High Court while deciding the issue. Explaining this Salmond on Jurisprudence, 11th Edition., by Glanville Williams, LL.D. (Sweet Maxwell Ltd., London, 1957 at page 221, states as follows: Although it is the duty of courts of justice to decide questions of fact on principle if they can, they must take care in this formulation of principles to limit themselves to the requirements of the case in hand. That is to say, they must not lay down principles which are not required for the due decision of the particular case, or which are wider than is necessary for this purpose. The only judicial principles which are authoritative are those which are thus relevant in their subject- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law? Here again the English Courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. A decision passed sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular' point of law involved in the decision is not perceived by the Court or present to its mind' (Salmond 12th Edition). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd., [1941] IKB 675 the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi v. Gumam Kaur, [1989] 1 SCC 101. The Bench held that, 'precedents subsilentio and without argument are of no moment'. The Courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory authority running counter to the reasoning and result reached, the principle of per incuriam may apply. The said principle was also noticed in the case of Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356. 18.9 Thus in my view the decision of the Hon ble Karnataka High Court which is the sole basis for the finding recorded by learned brother is clearly distinguishable and is not applicable to the facts of the case in hand. Appellant has in the written submissions relied upon various decisions of the tribunal in their support wherein following the decision of the Hon ble Karnataka High Court, refund has been allowed by the tribunal in case of the closure of the unit. In my view the said decisions are per incuriam as none of the decisions correlates the facts with the decision rendered in that case. The issue as I have observed earlier, in the case of the Slovak, was a refund arising on account of the disputed credit which could not have been utilized at the time when the unit was in operation. 19.1 The issue of refund of accumulated credit at the time of closure of the unit was considered by the larger bench of the tribunal in the case of Steel Strips [201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 11, p.68. : AIR 1986 SC 757). It has also been said that if taxing provision is so wanting in clarity that no meaning is reasonably clear, the court will be unable to regard it as of any effect. [Ref : IRC v. Ross and Coulter, (1948) 1 All ER616, p.625 (HL); referred to in Gursahai v. CIT, AIR 1963 SC 1062, p. 1064 : (1963) 3 SCR 893.]. It has also been held that in interpreting taxing statute, equitable considerations are entirely out of place nor can taxing statutes be interpreted on any presumptions or assumptions. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. [Ref : Sales Tax Commissioner v. Modi Sugar Mills, AIR 1961 SC 1047, p. 105, CIT v. M. G. Mills - AIR 1971 SC 2434, p. 2435]. Construction Preserving Workability and Efficacy should be preferred 5.4 In construing provisions designed to prevent tax evasion, if the Legislature uses words of comprehensive import, the courts cannot proceed on an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor Article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review Jurisdiction conferred by Order 47 Rule 1 of the C.P.C. or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory Jurisdiction of the High Court (where also the principles underlying or emerging from Order 47 Rule 1 of the C.P.C. act as guidelines) are not necessarily the same on which this court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of special leave petition does not take away the Jurisdiction of the court, tribunal or forum whose order forms the subject matter of petition for special leave to review its won order if grounds for exercise of review J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r be swallowed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. (See Corpus Juris Secundum, Vol. LVII, pp. 1067-1068). 43. We may look at the issue from another angle. The Supreme Court cannot and does not reverse or modify the decree or order appealed against while deciding a petition for special leave to appeal. What is impugned before the Supreme Court can be reversed or modified only after granting leave to appeal and then assuming appellate Jurisdiction over it. If the order impugned before the Supreme Court be reversed or modified at the SLP stage obviously that order cannot also be affirmed at the SLP stage. 44. To sum up our conclusion are : (i) Where an appeal or revision is provided against an order passed by a court. Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order of the Supreme Court is the only order binding as res Judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate Jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. (vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C. P. C. [Emphasis supplied]. 5.6 No doubt there are cases where Hon ble Supreme Court while dismissing Revenue s Civil Appeal did not go into merits of the issues but had dismissed the appeal only on the ground that there was no appeal by Revenue previously on similar cases. But it has been held by Apex Court in the case of CCE, Raipur v. Hira Cement, reported in 2006 (194) E.L.T. 257 (S.C.) = 2007 (8) S.T.R. 96 (S.C.) that nonfiling of an appeal against an order in any event would not be a ground for refusing to consider the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Substantial compliance means actual compliance in respect to the substance essential to every reasonable objective of the statute and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Refunds and Exemption are Governed by Rule of Strict Compliance 5.8 Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of procedure. He has only the right of prosecution or defence in the manner laid down by law. He has no right than to proceed according to the mandate of the statute governing the subject. Claim of refund is not a matter of right unless vested by law. That would depend upon the object of the statute and eligibility. The purpose for which law has been made and its nature, the intention of the legislature in making the provision, the relation of the particular provision to other provisions dealing with the subject including the language of the provision are considerable factors in arriving at the conclusion whether a particular claim is in accordance with law. No injustice or hardship can be raised as plea to claim refund in absence of statutory mandate in that behalf and no equity or good conscience influence fiscal courts without the same being embedded to the statutory provisions. 5.12 The question before the Larger Bench in Gauri Plasticulture (P) Ltd. - 2006 (202) E.L.T. 199 (Tri.-LB.) was whether duty debited in RG23A part II can be refunded in cash when the refund becomes otherwise due. The Larger Bench without recording the submissions of either side merely discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s insistence, and for that reason, he had to pay duty in cash or out of the PLA, they would be entitled to refund of that credit in cash, on the dispute being ultimately settled in their favour. In the decisions holding that such refund in cash is not possible, it has been observed that there is no provision allowing refund of such credit in cash. However, we are not in agreement with the above proposition for the simple reason that there is also express no bar in the Modvat Rules to that extent We have to keep in mind that it is not the refund of unutilized credit, but the credit which has been used for payment of duty at the insistence of the revenue or has been reversed because the Department was of the view that the same is not available for utilization. This is a simple and basic principle of equity, justice and good conscience. Had the Department not prevented the assessee from utilizing the credit otherwise available to him, they would have been in a position to use the same towards payment of duty on their final product, which obligation they had to discharge from their PLA account. As such, on the success of their claim subsequently, if the assessee is maintaining Modvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from treasury, which needs sanction of law and an order of refund for such purpose is sine qua non. Law has only recognized the event of export of goods for refund of Modvat credit as has been rightly pleaded by Revenue and present reference is neither the case of otherwise due of the refund nor the case of exported goods. Similarly absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable. Therefore, present reference is to be answered negatively and in favour of Revenue since refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever that may be. As has been stated earlier that equity, justice and good conscience are the guiding factors for Civil Courts, no fiscal Courts are governed by these concepts, the present reference is bound to be answered in favour of Revenue and it is answered accordingly. 20. The decision of larger bench of tribunal in case of Gauri Plasticulture [2006 (202) E.L.T. 199 (Tri.-LB.)] referred in the para 5.12 of the decision in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other appeal was preferred by the Revenue and the backdrop in which that has been preferred is set out in paras 7 and 8 of the referring order. Central Excise Appeal Nos.257 of 2008 and 28 of 2008 were admitted on grounds which have been noted in para 10 of the order under reference. 6. Thereafter, the arguments are noted and the Division Bench was of the view that un-utilised amount of Cenvat Credit availed by the assessee, in the circumstances set out, can be allowed or not is the moot question. That question will have to be answered and that the view taken by the earlier Division Bench does not appear to be correct. That is how this reference has been made. 7. Before we proceed, we must note certain provisions of the Central Excise Act, 1944, which is an Act to consolidate and amend the law relating to Central duties of excise. The levy and collection of duty is dealt with by Chapter II. By section 2A, which appears in Chapter I, it is stated that in this Act, save as other wise expressly provided and unless the context otherwise requires, references to the expressions duty , duties , duty of excise and duties of excise shall be construed to include a refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006 (205) ELT 956 = 2005-TIOL-1698-CESTAT-BANG to urge that the appellant in that case claimed refund on un-utilised Cenvat Credit in their account as on the date of the closure of their factory. The Commissioner (Appeals) took a view that there is no provision under Rule 5 of the Cenvat Credit Rules to grant cash refund. The argument was that this order was not legal and proper for the reasons set out by the tribunal. The South Zonal Bench of the CESTAT referred to the view taken by the CESTAT, Delhi and Mumbai to hold that refund claimed is eligible to the assessee and refund has to be made in cash when the assessee goes out of the erstwhile Modvat Scheme or their unit is closed. The view is taken because of the consistent approach of the tribunal. The consistent approach was that such refund claims are logical and a refund has to be made in cash when the assessee goes out of the Modvat Scheme or the company is closed. Thus, appeal of Slovak was allowed. 11. The Union of India, aggrieved and dissatisfied with this view of the tribunal, preferred an appeal, namely, Central Excise Appeal No.5 of 2006 before the High Court of Karnataka at Bengaluru. In the judgment reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the various Benches of the tribunal, then, the Revenue cannot be allowed to take a different view. Following this principle, the Division Bench dismissed the Revenue s appeal. Mr.Patil would submit that the view taken in the case of Jain Vanguard (supra) was confirmed by the Hon ble Supreme Court because the Hon ble Supreme Court dismissed the appeal of the Union of India by observing that it finds no reason to interfere with the order of the Division Bench in exercise of the discretion under Article 136 of the Constitution of India. Mr.Patil submits that merely because in the next line the Hon ble Supreme Court says that the Special Leave Petition is dismissed leaving the question of law open would not mean that the later Division Bench in this case was free to differ from the view taken by the earlier Division Bench in Jain Vanguard (supra). Mr.Patil, therefore, would submit that the referring order, with great respect, is uncalled for, as even thereafter, several orders have been passed by tribunals all over India taking the same view. Once such view is accepted by the Revenue, then, it cannot be selective in its approach. The Revenue does not appeal or rather accepts the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finally attempted to urge that a long standing decision adopting a particular view should be followed. In that regard, our attention has been invited to the judgment in the case of Shanker Raju vs. Union of India 2011 (271) ELT 492 = 2011-TIOL- 56-SC-MISC. Mr.Patil emphasises that the doctrine of binding precedent has a element of certainty and consistency. The pronouncement of law by the Larger Bench of the tribunal was binding on a Bench of two members and when an appeal against the judgment of both has been dismissed by the higher court, then, discipline requires that this consistent view must be followed. Mr.Patil also tried to emphasise before us that the doctrine of merger could not have been deviated from. Today, the judgment in the case of Slovak India (supra) has merged with the view taken by the Hon ble Supreme Court. Hence, we should not reopen the controversy. 18. On the other hand, Mr.Jetly appearing for the Revenue would submit that the referring order has rightly noted the controversy. In the referring order, this court has found that the attempt is to claim something which the law does not permit to be claimed at all. If the law does not permit something, no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash refund is permissible when Cenvat Credit is un-utilised. 21. In this regard, a reference can usefully be made to the judgment of the Hon ble Supreme Court setting out the fundamental legal principles. These are that in a fiscal statute, nothing can be read, into its provisions and rather should not be read, which is expressly not there. In other words, an implied meaning cannot be given. The Hon ble Supreme Court in one of the decisions, in the case of Union of India and Ors. vs. Ind-Swift Laboratories Limited (2011) 4 SCC 635 summarised the legal position thus:- 20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows: 11. ..In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intermediate products cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final products cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty. Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on the inputs purchased and was utilising the same for payment of additional duties of excise on final products at the time of clearance of the same. According to the case of the assessee, by a notification dated 9th July, 2004, the Government of India had exempted all goods appearing within the Schedule of the said Act of 1978. The assessee utilised credit balance of additional duty of excise in their RG-23A Part II Register as on 6th September, 2004, which could not be utilised in future and had remained unutilised. The condition was that since none of the products are charged to additional duties of excise, it would not be possible to utilise the said un-utilised credit and the assessee was liable for cash refund. This plea was not accepted in the order-in-original, but came to be accepted by the appellate authority. The Revenue approached the CESTAT against the appellate authority s view, but the CESTAT dismissed the Revenue s appeal. Now, if the cash refund was not permissible, then, it is evident that by reading into the provision something which is expressly not there, such a refund was sought. 25. In the case of Commissioner of Central Excise vs. Gujarat Narmada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods used in or in relation to the manufacture of final products qualify as input . This presupposes that the element of manufacture must be present. 29. In J.K.Cotton Spg. Wvg. Mills Co. Ltd. v. STO [AIR 1965 SC 1310:(1965) 16 STC 563] this Court held that the expression in the manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw material into finished goods. It was further held that where any particular process (generation of electricity) is so integrally connected with the ultimate production of goods, that, but for such process, manufacture of goods would be inexpedient, then goods required in such process would fall within the expression in the manufacture of goods . 30. In Union Carbide India Ltd. v. CCE [(1996) 86 ELT 613 (Tri)] = 2002-TIOL-439-CESTAT-KOL-LB a larger Bench of CEGAT observed that a wide impact of the expression used in relation to manufacture must be allowed its natural play. Inputs (raw materials) used in the entire process of conversio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The attempt made to rely upon the transitional provision, particularly Rule 11 carries the case no further. Rule 11 of the Cenvat Credit Rules, 2004 reads as under:- Rule 11. Transitional provision.- (1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value of quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2002 as they existed prior to 10th September, 2004 and remaining unutilised on that day shall be allowed as Cenvat Credit to such manufacturer or provider of output service under these rules, and be allowed to be utilised in accordance with these rules. This is how the transitional provision enables carrying forward of the un-utilised Cenvat Credit. That is a distinct contingency altogether. That transitional provision does not enable us to hold that the amount of un-utilised Cenvat Credit can be refunded in cash. 29. We do not think that by taking assistance of this provision, we will be able to hold as contended by Mr.Patil that the Cenvat Credit can be refunded even in relation to those inputs which have not been used in the manufacture of the final product or the exported goods. We are called upon to read something in the substantive rule and which is totally absent therein. When Rule 5 follows Rule 4, which is titled as Conditions for Allowing Cenvat Credit , then, we must understand the scheme in such manner as would make the law workable and consistent. Refund of Cenvat Credit in terms of Rule 5 is permissible only when there is a clearance of a final product of a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cenvat) or the unit is closed. This is the reasoning in the tribunal s order and though the appeal of the Revenue before the High Court of Karnataka at Bengaluru raised several grounds and pleas, the High Court referred to the arguments and in para 4 of its order, reproduced Rule 5 of the Cenvat Credit Rules, 2002. In para 5, the reasoning of the High Court of Karnataka reads thus:- 5. There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly rules by the Tribunal. The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. In these circumstances, we answer all the three questions as framed in para 17 against the Revenue and in favour of the assessee. 32. Thus, the High Court of Karnataka took the view that there is no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Welcure Drugs and Pharmaceuticals Ltd. vs. Commissioner of Central Excise, Jaipur reported in 2018 (15) GST Law Times Page 257 = 2018-TIOL-380-HC-RAJ-CX. There, the Hon ble Rajasthan High Court concluded that the Revenue cannot seek to urge before that High Court that the view taken by four different High Courts approving the order of CESTAT has lost its persuasive value, particularly when the Special Leave Petitions against the view taken by four different High Courts were either not filed or filed but not entertained. Thus, the tribunals have taken a consistent view and the Revenue could not succeed in having that set aside. It is in these circumstances, the Rajasthan High Court negatived the contention of the Revenue that the tribunal under the jurisdiction of that High Court could have distinguished the orders and judgments of its Benches. That was found to be contrary to the judicial discipline. It is in these circumstances so also when there was a larger Bench view of the tribunal having a binding effect, that the principle of judicial discipline was pressed into service. 36. After the view taken in Steel Strips Ltd. (supra) and which was also fairly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to how the principle of merger cannot be invoked in this case. In the order passed in the case of Jain Venguard (supra), the question of law was expressly kept open. Hence, the earlier view of the tribunal does not merge with dismissal of the Special Leave Petition in the case of Slovak India (supra). Hence, this principle has also no application. 40. As a result of the above discussion, we answer the questions of law framed above as (a) and (b) in the negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India. 21. Tribunal has in case of Saera Electric Auto Pvt Ltd [2020 (372) ELT 452 (T-Chand) has in similar circumstances taking into account the changes made in the rule 5 of CENVAT Credit Rules, 2004 with effect from held as follows: 9. A plain reading of Section 11B shows that it provides for refund of excise duty paid. It does not provide for the refund of unutilized Cenvat Credit. The entire Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the same provision there is an expression used i.e. liability to pay duty . It can by no stretch of imagination be said that the adjudicating authority has even a discretion to levy duty less than what is legally and statutorily leviable. Most of cases relied upon by learned counsel for the assessee had their foundation on Bharat Heavy Electrical s case (supra). As noted above, the same is based on concession and in any event did not indicate the correct position in law. 13. It is a well-settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. 14. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See Institute of Chartered Accountants of India v. Price Waterhouse - 1977 6 SCC 312). The intention of the legislature is primarily to be gathered from the langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issus and the other in regard to reading the statute as a whole, appear to be well settled. Under the first principle a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. An intention to produce an unreasonable result , said Danckwerts, L.J. in Artemiou v. Procopiou - (1965) 3 ALL ER 539 (All ER p. 544 I) is not to be imputed to a statute if there is some other construction available . Where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result , we must do some violence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or manifest injustice. Words may be modified or varied, where their import is doubtful or obscure. But we assume the functions of legislators when we depart from the ordinary meaning of the precise words used, merely, because we see, or fancy we see, an absurdity or manifest injustice from an adherence to their literal meaning . (See Abley v. Dale, ER p. 525) 23. The above position was highlighted in Sangeeta Singh v. Union of India and Ors. [2005 (7) SCC 484]. 23. A five Judges bench of Hon ble Supreme Court has in case of Dilip Kumar Company [2018 (366) ELT (SC)] laid down the law in respect of interpretation of taxing statutes as follows: 18. It is well accepted that a statute must be construed according to the intention of the Legislature and the Courts should act upon the true intention of the legislation while applying law and while interpreting law. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the Legislature. In this connection, the following observations made by this Court in District Mining Officer v. Tata Iron and Steel Co., (2001) 7 SCC 358, may be noticed : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct interpretation. (16c) 1. An interpretation according to the narrowest, most literal meaning of the words without regard for context and other permissible meanings. 2. An interpretation according to what the interpreter narrowly believes to have been the specific intentions or understandings of the text s authors or ratifiers, and no more. - Also termed (in senses 1 2) strict construction, literal interpretation; literal construction; restricted interpretation; interpretatio stricta; interpretatio restricta; interpretatio verbalis. 3. The philosophy underlying strict interpretation of statutes. - Also termed as close interpretation; interpretatio restrictive. See strict constructionism under constructionism. Cf. large interpretation; liberal interpretation (2). Strict construction of a statute is that which refuses to expand the law by implications or equitable considerations, but confines its operation to cases which are clearly within the letter of the statute, as well as within its spirit or reason, not so as to defeat the manifest purpose of the legislature, but so as to resolve all reasonable doubts against the applicability of the statute to the particular ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between strict interpretation and literal interpretation . We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute. 24. In view of the discussions as above I do not find any merits in the appeal and the same needs to be dismissed following the decision of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004 in the year 2012, Member (Judicial) has held in favour of the Appellant while Member (Technical) disagrees and holds that the refund claim needs to be filed and adjudged as per the provisions of Rule 5 as they existed when the refund claim was filed. v. Whether the refund claim is barred by limitation, Member (Judicial) has not dealt with the issue as not in adjudication order whereas Member (Technical) has held the refund claim to be hit by limitation. vi. Whether the larger Bench orders of the Tribunal passed in the case of Mira Silk Mills Vs. Commissioner of Central Excise, Mumbai [2003 (153) ELT 686 (Tri. LB)] and Atma Steel Private Limited and others Vs. Collector Central Excise, Chandigarh and others [RLT (LB) CEGAT-87] on the application of binding precedent is to be followed by the Tribunal to arrive at a conclusion as held by the Member (Judicial); or Observation of the larger Bench of the Hon ble Bombay High Court upon non-application of Article 141 in the context of the findings of the Hon ble Supreme Court is to be followed by this Tribunal, as held by the learned Member (Technical) though ratio of the judgment in Gangadhar Pal had not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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