Custom, Excise & Service Tax Tribunal
) M/S. Chemplast Sanmar Ltd vs ) Commissioner Of Customs, Chennai on 2 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/40793/2013 & C/40811/2013
[Arising out of Order-in-Appeal C.Cus.No.05/2013, dated 08.01.2013 passed by the Commissioner of Customs (Appeals), Chennai]
1) M/s. CHEMPLAST SANMAR LTD.
2) COMMISSIONER OF CUSTOMS, CHENNAI
APPELLANT
Versus
1) COMMISSIONER OF CUSTOMS, CHENNAI
2) M/s.CHEMPLAST SANMAR LTD.
RESPONDENT
Appearance:
For the Appellant Shri Vijay Narayanan Adv.
For the Respondent Shri M. Rammohan Rao, DC (AR) CORAM:
Honble Shri R. Periasami, Technical Member Honble Shri Pradeep Kumar Choudhary, Judicial Member Date of hearing/decision:
02-06-2015 FINAL ORDER No.41589-41590/2015 Per R. Periasami:
Both appeals are arising out of a common order passed by Commissioner (Appeals), therefore both the appeals are taken up together for disposal.
2. The brief facts of the case is that the appellant preferred a refund claim on 12.01.1987 for refund of customs duty of Rs.1,50,99,362.95. The appellants had imported plant and machinery for the combined cycle power project in terms of project import regulations and the same was registered with the Customs department on 07.10.1985. The appellants claimed the exemption under Notification No.133/85 where the Basic Customs Duty is nil and the Auxiliary Customs Duty at 25%. Department disputed the appellants claim on the ground as per the amended Notification vide Notfn No.306/86, the power project shall mean such project whose output or end product is power but shall not include captive power plant set up by the units engaged in activities other than power generation. Since the appellant proposed to set up a captive power plant, the notification benefit was denied. Pending the dispute, appellant paid the Basic Customs Duty for the period 29.05.1996 to 22.09.1996 at tariff rate under protest and filed a refund claim on 12.01.1987. Since Department did not sanction their refund claim, they filed writ petition before Honble High Court of Madras praying to declare the Explanation under Notification No.306/86 to Notification No.133/85, dated 19.04.1985 is unconstitutional, void and ultra vires and also through writ of mandamus, directed the department to refund the duty collected in excess of 25%. Honble High Court in their order dated 02.03.1995 in Writ Petition No.4566 & 4567/1987, allowed both the writ petitions of the appellant and quashed part of the Notification No.306/86 to captive power plant. The appellant approached Customs by letter dated 14.09.1995 seeking refund of the amount. The Revenue preferred writ appeal nos.358 & 359/97 against the Honble High Courts order.
3. Subsequently, the appellant also filed another Writ petition No.5299 of 1998 [S.No.11] praying for a Writ of Mandamus, directing the Customs to implement the orders of the Honble High Court, to grant the refund of the amount along with interest at 16%.
4. The Honble High Court disposed the writ petition and held that since there is no stay granted by Honble High Court [DB] and directed the department to carry out the directions of the single member judge and directed to dispose the application of the petitioner of refund within the period of four weeks. Revenue preferred the Writ Appeal No.1686 of 1998 against the High Courts order 11.11.1998 and Writ Petition No.5299 of 1998. The Revenues appeal nos.358 & 359/1997 and the present Writ Appeal No.1686 of 1998 both were pending before High Court. The Honble High Court [DB] in their Order dated 17.07.2000 dismissed the Writ Appeal No.358,359/1997 dismissed both the writ appeals and no SLP filed by the Revenue against the High Courts order.
5. The Honble High Court in their Order dated 13.10.2008 dismissed the second set of Revenue Appeal i.e., 1686 of 1998 and held that the order passed by the High Court in Writ Petition No.4566 & 4567 of 1987 has become final and directed the department to consider and dispose the refund application within a period of two weeks. The Honble [DB] also held that there is no reason to interfere with the order of the learned Single Member judge.
6. Revenue filed Review Application No.128 of 2009 against the High Courts order dated 13.10.2008 on the ground that appellant was not entitled to the benefit of exemption in view of the Honble Supreme Court order in the case of Union of India Vs Indian Charge Chrome reported in 1999 (112) E.L.T.753 (S.C.) which was in favour of the department. The Honble High Court in Order dated 08.10.2009 dismissed the review petition.
7. Consequent to the above High Courts direction, the Adjudicating authority in his Order-in-Original dated 08.04.2011 sanctioned the refund claim of Rs.1,50,99,363/- along with interest of Rs.2,32,84,458/- under Section 27 of the Customs Act.
8. The Adjudicating authority issued a show-cause notice dated 04.08.2011 demanding recovery of the erroneous sanction of refund. The appellant filed a writ petition against the show-cause notice and the Honble High Court order dated 12.10.2011 in the Writ Petition No.23149 -23150 of 2011 granted the interim stay on the show-cause notice. In order to avoid any dispute immediately after issue of show-cause notice, the appellant paid back the entire amount of Rs.4,10,90,669/- vide TR-6 challan, dated 02.09.2011.
9. The department reviewed the Adjudication order dated 04.08.2011 and preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) in the impugned order dated 08.01.2013 allowed the Revenue appeal.
10. The appellant filed the present appeal against the impugned order and the Revenue also filed the appeal against the bar of unjust enrichment.
11. The learned Senior Counsel appearing for the appellant was heard in detail and also submitted a written synopsis of the entire case and reiterated the same. He submits that the appellant imported plant and machinery for the captive power plant under project imports, which was duly registered with the Customs. The Customs denied the exemption benefit of Notification No.133/85 which allows Basic Customs Duty at nil rate of duty. Since they were in need of plant and machinery, they cleared the same through Customs paying duty under protest. They preferred the refund claim only on the basic Customs duty. He submits that they are eligible for concessional rate of duty under Notification No.133/85. Since the department granted refund, they preferred Writ Petition 219/87 and the Honble High Court in the Order dated 02.03.1985 allowed both the writ petitions and struck down part of the Notification No.306/86 denying the benefits to captive power plant. The department did not implement the High Courts order and preferred the writ appeal. The appellant had no other way but to approach the Honble High Court with Writ Petition No.5299 of 1998 with a prayer to direct the department to implement the Honble High Courts order. The Honble High Court allowed their writ petition and directed the department to implement its order. Since both the departments Writ Appeal Nos.358 & 359 of 1997 and another Writ Appeal No.1686 of 1998 were dismissed and the review petitions were also dismissed by the Honble High Court. He submits that the Adjudicating authority immediately after sanctioning of the refund claim, issued a show-cause notice demanding recovery of refund. The Honble High Court finally dismissed the departments writ appeals against the High Court Single Bench order and no SLP has been filed. He submits that the Honble High Court Single Bench order attained finality.
12. In the impugned order, the Commissioner (Appeals) denied the exemption benefit of Notification No.133/85 and held that amended Notification No.306/86 is applicable and appellant is not eligible for the exemption benefit. He further submits that the Honble High Courts order dated 02.03.1995 quashed the later part of the Notification No.306/86. In this regard, he relied on the Honble High Courts order at P.Nos.30,34,53 and 54 and submits that Honble High Court independently examined the issue without referring to the Orissa High Court judgment in the case of Indian Charge Chrome Vs Union of India reported in 1994 (72) E.L.T.538 (Ori.). Therefore, he submits that the Honble High Courts order merely relied on the Honble Orissa High Courts order. Though, the Honble Supreme Court has allowed the Revenues appeal in the case of Indian Charge Chrome, the same is not applicable to the facts of the present case as there is no stay against the Honble High Courts order. Therefore, it is binding on the Revenue as far as the appellant is concerned. He relied on the Honble High Courts [DB] Order dated 17.07.2000. He further submits that the Honble High Court in their Order dated 13.10.2008 and again on 08.10.2009 while dismissing the writ appeal and the review applications categorically directed the department to implement the order of the Honble Single judge. He submits that the issue has attained finality whereas the Commissioner (Appeals) again reopened the issue in the impugned order by relying on the Supreme Court decision in the case of Indian Charge Chrome.
13. He relied on the Honble decision of the Honble Supreme Court in the case of RBF Big Corporation Vs Commissioner of Customs (Imports), Mumbai reported in 2011 (264) E.L.T.486 (S.C.) and submits that the Honble Supreme Court has held that once the High Court order is binding upon the lower authorities then it is not open to subordinate authorities to examine the correctness of the High Courts order. On the other hand, the lower appellate authority has blatantly passed order in this regard against the Honble High Courts order
14. On the other hand, learned Authorised Representative submits that as regards the Revenue appeal preferred against the impugned order, he reiterated the grounds of appeal and submits that the Commissioner (Appeals) wrongly held that bar of unjust enrichment is not applicable to the facts of the present case by holding that the unjust enrichment clause was extended to Customs Act on 20.09.1991. He further submits that though it was incorporated with effect tfrom 20.09.1991, doctrine of unjust enrichment clause will apply retrospectively. In this regard, he relied on the following judgments of the Honble Supreme Court:
(i) Union of India Vs Jain Spinners Ltd. reported in 1992 (61) E.L.T.321 (S.C.).
(ii) Union of India Vs Raj Industries reported in 2000 (120) E.L.T.50 (S.C.)
(iii) Union of India Vs Ingersoll Rand (India) Ltd. reported in 2000 (120) E.L.T.291 (S.C.).
He further submits that the Honble Supreme Court dismissed the review petition filed by Jain Spinners Ltd. Vs Union of India reported in 1993 (64) E.L.T.A.195 (S.C.). He submits that Honble Supreme Court clearly held that a Central Excise and Customs law amendment came into operation from 20.09.1991 had retrospective effect and, therefore, is applicable to the refund order passed before the date of amendment. He further submits that in the present case, the appellants refund application was pending from the date of finalization, therefore by virtue of Honbe Supreme Courts above decision the unjust enrichment clause is applicable in the present case.
15. On the appellants appeal, the learned Authorized Representative submits that it is not the case of the department that they have not implemented the Honbe High Courts order. The Adjudicating authority in Order-in-Original duly complied with the Honbe High Courts direction, completed the reassessment and sanctioned the refund claim. Therefore, in totality they have complied with the Honble High Courts order. He further submits that the department is bound to enforce the law declared by the Honble Supreme Court in the case of Union of India Vs Indian Charge Chrome reported in 1999 (112) E.L.T.753 (S.C.). The Honble Supreme Court set aside the Honble High Court order of Orissa and held that the amendment issued in the Notification No.306/86 held as valid. He relied on para 14 of the Supreme Court order. He further submits that having complied the High Courts order, the department is also duty bound to comply with the Apex Courts law. Therefore, the department reviewed the order under Section 129B , which is an independent power vested with the government to seek relief against any order passed by the Adjudicating authority. He further submits that the appellate authority has rightly allowed their appeal. He further submits that when the Adjudicating authority sanctioned the refund claim, the Honble Supreme Court judgment is already in operation and it is binding. In this regard, he relied on the following decisions:-
(i) Union of India Vs R.C. Fabrics (P) Ltd. reported in 2002 (139) E.L.T.12 (S.C.).
(ii) M.M. Murthy Vs State of Karnataka and Others reported in (2003) 7 SCC 517 [Para 8].
He submits that direction of the High Court is to be correctly appreciated and department had complied the same by assessing the goods as per direction.
16. He further submits that case law relied by appellant in the case of RBF Big Corporation is totally different to the facts of the present case, wherein it is the non-compliance of the Honble High Courts direction. Whereas in the present case, it was duly complied and there was no disobedience. Revenue is correct in taking recourse to the review mechanism under the Act and utilizing the right to appeal before the Commissioner (Appeals).
17. The learned Senior Advocate countered the arguments of the learned Authorised Representative and submits that the Authorised Representatives statement showing that the Honble High Court directed to re-assess the assessment, is not correct. Learned Authorised Representatives arguments to the assessees claim is not right as the Honble High Court has clearly quashed Notification No.306/86. Whereas in the impugned order, the Commissioner (Appeals) relied on Notification No.306/86 and allowed the Revenues appeal, which is in clear violation of the High Courts order. Since Notification No.306/86 was struck down, the Commissioner (Appeals) has no power to reopen and again deny the benefit. In this regard, he relied on the following judgments, in the case of
(i) Easwar Dutta Vs Land Acquisition collector & Another reported in (2005) 7 CCC 190 [Paras 14,18,29 & 30] He also further submits that Honble Supreme Court in the case of Indian Charge Chrome [Para no.18], clearly held that they have not expressed any opinion as to whether contract is already registered in pursuance to the contract as this was not the issue before the Honble Supreme Court. Therefore, they have not expressed any opinion and left it to be agitated upon as and when the occasion arise for the purpose. He submits that profit in the present case, the contract was already registered on 07.10.1985 and the goods were imported pursuant to the above registration. Therefore, to that extent Honble Supreme Court order is not applicable as the Adjudicating authority has clearly brought out in para 4 of the Order-in-Original.
18. We have carefully considered the submissions of both sides. the short issue in this case relates to demand of recovery of consequential refund sanctioned consequent to the Hon'ble High Court of Madras orders which attained finality. The adjudicating authority viz. Deputy Commissioner of Customs (Refunds) in compliance of the Hon'ble High Court's order sanctioned the refund claim of Rs. 1,50,99,363/-along with interest of Rs.2,32,84,458/-. Revenue reviewed the said refund sanction order and preferred appeal before Commissioner (Appeals) on the grounds that the refund sanctioned is erroneous on account of Honble Supreme Court Order in the case of UOI Vs. Indian Change Chrome and the Commissioner (Appeals) set aside the consequential refund and allowed the Revenue's appeal.
19. It is pertinent to state that in the present case, the claim of refund relates to duty paid on import of capital goods and claimed under the project import and claimed the benefit of Notification No. 133/85. We find that the original refund claim was filed on 12.1.1987. It is seen that from January, 1985 to October, 2009 for almost 24 years the claim was put through series of writ petitions and writ appeals filed either by the appellant or by the Revenue resulting in series of orders passed by the Hon'ble Single Judge or the Division Bench of the High Court, Madras.
20. The Hon'ble High Court in their order dt. 2.3.1995 in writ petition No.4566 & 4567/87 allowed both the writ petitions of the appellants and struck down that part of the Notification No. 306/96 which denied the benefits to captive power plant. Against the above Hon'ble High Court order, Revenue filed W.A.Nos.358 & 359/97 against the above Honble High Court order and the Honble High Court in their order dt. 17.7.2000 dismissed both the writ appeals. It is evident that Revenue choose not to file any S.L.P. or appeal against the above Hon'ble High Court's order dt. 17.7.2000. Therefore, the High Court's order dt. 17.7.2000, become final and the issue had attained finality.
21. We also find that after the Hon'ble Single Judge order dt. 2.3.1995 and before the dismissal of Revenue's writ appeals on 17.7.2000, the appellant-assessee approached the department for consequential refund in terms of Hon'ble High Court's order dt. 2.3.95, and when the refund was not granted, the appellants again approached the Hon'ble High Court by way of another writ petition No.5299/98 seeking writ of mandamus for implementing the High Court's order dated 2.3.95and the Hon'ble High Court, Madras in their order dt. 11.11.1998 disposed the said writ petition with a direction to the Revenue to implement the directions of the learned Single Judge order dt. 2.3.1995.
22. Instead of implementing the Honble High Court directions, the Revenue preferred another W.A. No.1696/98 against the High Court order dt. 11.11.1998. The Hon'ble High Court dismissed the said Revenue W.A.No.1686/98 by their order dt. 13.10.2008 with a direction to dispose of the appellant's refund application within a period of two weeks from the date of receipt of copy of the order. The relevant paragraph of the Honble High Court Division Bench order dt. 13.10.2008 is reproduced as under :-
"6. As the order passed in W.P.Nos.4566 and 4567 of 1987 has become final, we direct the appellants/respondents to consider and dispose of the application of the respondent/petitioner for the refund of the said amount within a period of two weeks from the date of receipt of a copy of this order or from the date of production of this order and we see no reason to interfere with the order of the learned single Judge. The writ appeal fails and the same is dismissed. However, here will be no order as to costs. "
It is abundantly clear from the above order that Hon'ble High Court clearly spelt out that the Honble High Court learned Single Judge order dt. 9.3.1995 in W.P. Nos.4566 and 4567/1987 has become final. Accordingly, the Hon'ble High Court directed the department to dispose of the refund application and also categorically held that there is no reason to interfere with the order of the learned single Judge.
23. It is pertinent to see that Revenue once again approached the Honble High Court by filing Review Application No.128/2009 seeking to review the Honble High Court's order dt. 13.10.2008. The Division Bench of the Hon'ble High Court in their order dt. 8.10.2009 dismissed the said review application filed by Revenue. The relevant paragraph of the said High Court's order is as under :-
"3. Now, by virtue of this review application, the Administration is requiring us to pass orders on the representation submitted by the writ petitioner and to reject the same. It is an unfortunate situation, wherein the Administration by virtue of this review application is seeking orders of rejection of the representation submitted by the writ petitioner. When the Administration is required to dispose of the representation of the petitioner, they could very well consider all the facts and circumstances of the case and dispose of the representation on merits and in accordance with law. Instead of complying with the direction concurrently issued by the learned single Judge and also by the Division Bench in the writ appeal, the Administration is gaining time by filing this type of frivolous and vexatious litigations, besides seeks us to exercise their duties. Hence, we see no reason to entertain the review application and accordingly, the same is dismissed. However, there will be no order as to costs."
We find that Revenue accepted the High Court's order in the review application as no S.L.P. has been filed against the dismissal order dt. 8.10.2009 of review application.
24. From the above sequence of events and series of 7 Honble High Court's orders discussed above, we find that Hon'ble Single Judge order dt. 2.3.1995 has attained finality. It is also relevant to state that once again the department choose not to file any appeal before the Apex Court against the Honble High Courts Order dated 13.10.2008.
25. Thus, Revenue having failed in both writ appeal as well as in review application vide the High Court's orders dt. 17.7.2000 and 8.10.2009 respectively, the Hon'ble High Court's order dt. 2.3.1995 has attained finality and binding on the department as far as this appellant is concerned. Therefore, we do not see any error in the adjudicating authoritys order who diligently complied the Honble High Courts Order. The adjudicating authority while sanctioning the refund had clearly brought out in his order dt. 8.4.2011, all aspects including the Hon'ble Supreme Court judgment by relied by Revenue in the case of Union of India Vs Indian Charge Chrome (supra).
26. Having failed to seek any appeal remedy against both the Hon'ble High Court Single Judge order dated 2.3.95 and High Court's Division Bench order dated 17.7.2000 or its review order dated 8.10.2009, Revenue has chosen to reopen the case for denying the refund under review mechanism provided under Section 129B. There is no dispute on the fact that Revenue has power to review any order of the lower authority under Section 129B of Customs Act whereas in the present case the adjudicating authority had sanctioned the consequential refund as per the Hon'ble High Court order which attained finality. In this scenario, the Revenue has no valid grounds to say that the adjudicating authority has erred in sanctioning the refund both on merits as well as on unjust enrichment. Further, the LAA has no power to go beyond the High Court's order to set aside the refund sanctioned by L.A. The jurisdictional High Court Order is binding on the Revenue and the LAA and the appellant. In this regard, we rely Hon'ble Supreme Court decision in the case of Ishwar Dutt Vs Land Acquisition Collector and Another (2005) 7 SCC 190. The relevant part of the order of the Hon'ble Supreme Court in the above case is reproduced as under :-
"29. Furthermore, a writ of mandamus is required to be obeyed unless a judgment is overruled or a legislation by way of a validating statute is brought into force.
30. In Madan Mohan Pathak V Union of India the Constitution Bench observed : (SCC p.67, para 9) "Here, the judgment given by the Calcutta High Court, which is relied upon by the petitioners, is not a mere declaratory judgment holding an impost or tax to be invalid, so that a validation statute can remove the defect pointed out by the judgment amending the law with retrospective effect and validate such impost or tax. But it is a judgment giving effect to the right of the petitioners to annual cash bonus under the Settlement by issuing a writ of mandamus directing the Life Insurance Corporation to pay the amount of such bonus. If by reason of retrospective alteration of the factual or legal situation, the judgment is rendered erroneous the remedy may be by way of appeal or review, but so long as the judgment stands, it cannot be disregarded or ignored and it must be obeyed by the Life Insurance Corporation. We are, therefore, of the view that, in any event, irrespective of whether the impugned Act is constitutionally valid or not, the Life Insurance Corporation is bound to obey the writ of mandamus issued by the Calcutta High Court and to pay annual cash bonus for the year 1-4-1975 to 31-3-1976 to Class III and Class IV employees".
27. Further, the Hon'ble Supreme Court in the case of RBF RIG Corporation Vs CC (Imports), Mumbai 2011 (264) ELT 486 (SC) which was relied by the adjudicating authority in the adjudication order has held as under :-
"19.?We hasten to add, if for any reason, the subordinate authority is of the view that the directions issued by the Court is contrary to statutory provision or well established principles of law, it can approach the same Court with necessary application/petition for clarification or modification or approach the superior forum for appropriate reliefs. In the present case, as we have already noticed, the respondents have not questioned the order passed by the High Court, which order has reached finality. In such circumstances, we cannot permit the adjudicating authority to circumvent the order passed by the High Court.
20.?Therefore, in our view, the refund claim of appellant has been erroneously rejected by the Deputy Commissioner of Customs vide its order dated 23-12-2004 ignoring the specific directions issued by the Delhi High Court vide its order dated 11-3-2003, to the customs authorities to dispose of the appellants claim of refund by taking into consideration the Essentiality Certificates issued by the DGH. The Deputy Commissioner of Customs has rejected the refund claim of appellant on the ground of unjust enrichment and failure to challenge the assessment of the Bills of Entry at the appellate stage, without even considering the Essentiality Certificates in the light of specific and binding directions of the High Court.
21.?In view of the above, we allow this appeal and direct the Customs authorities to consider the appellants claim of refund of customs duty paid under protest in accordance with the directions issued by Delhi High Court vide its order dated 11-3-2003 as expeditiously as possible. In the facts and circumstances of the case, we direct the parties to bear their own costs."
The ratio of the above Supreme Court decisions are squarely applicable to the present case. Revenue having lost their appeal remedy against the Hon'ble High Courts orders dt. 17.7.2000 and 8.10.2009 cannot take shelter by reviewing the order of the adjudicating authority by citing the case law of UOI Vs Indian Charge Chrome (supra). It is settled law by the Apex court that the department cannot reopen the case which is settled by the jurisdictional High Courts without setting aside the Honble High Court Order by the Apex Court in so far as the particular appellant who succeeded their writ petition. The order of LAA setting aside the DCs order sanctioning the refund and interest, in compliance of High Court's order, is not justified and not in conformity with the law. Further, the LAA knowing fully well that the said refund was sanctioned as per the Honble High Courts order and holding it as erroneous refund is not warranted and it amounts to judicial impropriety as the Honble High Court order is binding on all subordinate authorities including LAA and the Tribunal. Revenue filing appeal against the impugned order on the unjust enrichment also is not justified.
28. Before parting the case, we would like to state that it was brought to our notice that appellant had returned the amount sanctioned as refund suo motu 'under protest' along with interest to the tune of Rs.4,10,90,669/- under TR challan dt. 2.9.2011 which stands deposited in the government exchequer. We are of the view that when there is no stay granted by any higher court on the refund order of adjudicating authority, depositing the refund already sanctioned in compliance of High Court's order is unwarranted. Keeping judicial discipline in view and this case having gone through a record of 7 Honble High Court Orders, we direct the revenue to return the amount due to the assessee without any further delay. Accordingly, we reject the Revenue appeal and allow the assessees appeal with consequential benefit.
(Operative part of the order pronounced
in the open court on 02-06-2015)
(PRADEEP KUMAR CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
Ksr/gs
03-06-2015/05-11-2015
DRAFT
Remarks
I
II
III
Date of dictation
02.06.2015
Draft Order - Date of typing
03.06.2015
Fair Order Typing
.06.2015
Date of number and date of dispatch
18
C/40793/2013 & C/40811/2013