2015 (7) TMI 1112 - HC - Central Excise

Challenge to the show cause notice - demand of education cess and secondary and higher education cess on duty payable in respect of DTA clearance of goods - binding precedence of earlier decisions of the tribunal on the lower authorities in the subsequent proceedings - Held that - the view of the higher authority or the Tribunal can be further carried to the High Court or Supreme Court and for that adjudicating authority is required to issue show cause notice so that ultimately matter can be carried to the Higher Court/ Forum. However so far as adjudicating authority is concerned being subordinate to the Tribunal it is bound to follow the decision of the learned Tribunal. However it will always been open for the department to call in question such a view in appropriate proceedings as in the manner permissible to the Department. The appropriate proceedings as in the manner permissible to the Department would be that after adjudicating authority passes an order as per the decision of the learned Tribunal the matter can be further carried to the Tribunal and the learned Member of the Tribunal either may take the same view and / or may refer to the Larger Bench. If the learned Tribunal takes the same view in that case it will always be open for the Department to carry the matter further to the Higher Court and in such proceedings the view of the Tribunal can be tested and / or considered. The aforesaid can be said to be permitting the department to call in question the view of the Tribunal in appropriate proceedings as in the manner permissible to the department. However for the aforesaid purpose the department / adjudicating authority is required to issue show cause notice may be for the aforesaid limited purpose and to keep the issue alive. No relief to the petitioner - Decided against the petitioner.

Summary

Issues:
Challenge to show cause notices for recovery of Education Cess and Secondary and Higher Education Cess on excise duty; Binding nature of Tribunal's decision on adjudicating authority; Department's right to challenge Tribunal's decision; Validity of issuing show cause notices to keep the issue alive for appeal to Higher Court.

Analysis:
The petitions involved a challenge to show cause notices seeking recovery of Education Cess and Secondary and Higher Education Cess on excise duty, with petitioners requesting a writ of prohibition against the respondents. The petitioners argued that the issue had been settled in their favor by the Tribunal's previous decision, which the department sought to challenge in the Supreme Court. The department, represented by an advocate, contended that it did not accept the Tribunal's decision and issued show cause notices to keep the issue alive for further appeal. The advocates for both parties heavily relied on previous judgments to support their arguments.

The High Court considered the binding nature of the Tribunal's decision on the adjudicating authority, emphasizing that subordinate authorities must follow the Tribunal's rulings. However, it acknowledged the department's right to challenge the Tribunal's decision in higher courts. The Court cited a Supreme Court judgment highlighting the importance of following appellate authorities' orders and the department's power to rectify decisions adverse to revenue. It clarified that the department could challenge the Tribunal's view through appropriate proceedings, necessitating the issuance of show cause notices to keep the issue alive for appeal.

Ultimately, the Court disposed of the petitions by directing the adjudicating authority to adjudicate the show cause notices within three months. The authority was instructed to consider the observations made in the judgment so that the department could challenge the Tribunal's decision in further proceedings. The Court upheld the department's right to question the Tribunal's view through permissible channels, indicating that the issuance of show cause notices served the purpose of maintaining the issue for potential appeal to higher courts.