2023 (9) TMI 802 - AT - Central Excise

Refund of unutilised CENVAT credit on closure of factory in the form of cash - applicability of binding judicial precedent that would govern the field than the statutory enactments - Doctrine of merger. - Scope of the Decision of Supreme Court where SLP was dismissed in a short order.

Appellant is challenging the legality of such order of the Commissioner of Central Tax (Appeals) who followed the latter Division Bench Order on the Hon'ble Bombay High Court passed in M/S. GAURI PLASTICULTURE P. LTD., AND OTHERS VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND UNION OF INDIA AND ORS. [2018 (4) TMI 1233 - BOMBAY HIGH COURT] and not the previous one namely JAIN VANGUARD POLYBUTYLENE LTD. VERSUS COMMISSIONER OF C. EX., NASHIK [2009 (6) TMI 790 - CESTAT, MUMBAI] judgement of the same High Court that was passed following the judgment of the Hon'ble Supreme Court passed in UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [2007 (1) TMI 556 - SC ORDER] - difference of opinion.

Matter was referred to third member bench in [2021 (9) TMI 1478 - CESTAT MUMBAI]

Opinion given by S.K. MOHANTY - INTERIM ORDER NO. 31/2023 - ORDER ON DIFFERENCE OF OPINION -

HELD THAT:- The opinions of the learned Members in the Bench are explicitly divergent only on the effect of the dismissal of SLP of Revenue against the decision of the Hon’ble Karnataka High Court in the case of Slovak India Trading Co. Pvt. Ltd. The issue of limitation raised by the learned Member (Technical), though has not been discussed separately by the learned Member (Judicial); but vide the Interim Order dated 28.09.2021, since has directed for grant of refund along with interest, a divergent stand has been taken impliedly. The other issues, though stated explicitly as points of reference, are not required to be addressed inasmuch as no discussions have been made by either of the Members on those issues in the body of the Interim Order.

On reading of the judgement of Hon’ble Supreme Court, it is amply made clear that the issue regarding cash refund of accumulated Modavt/Cenvat credit, in the case of closure of factory was appreciated by the Hon’ble Court and upon consideration of various decisions rendered by the Tribunal, in allowing such refunds, the concession made by the learned ASG to such extent was accepted and accordingly, the SLP was dismissed. Further, it is an admitted fact on record that the decisions of the Tribunal referred to by the Hon’ble Supreme Court in the judgement dated 25.01.2007 have not been appealed against by the Revenue, meaning thereby that the principles or the issue dealt with and decided by the Tribunal were accepted by the Revenue.

In view of the judgment of the Hon’ble Apex Court in the case of COMMISSIONER OF C. EX., HYDERABAD VERSUS NOVAPAN INDUSTRIES LTD. [2007 (1) TMI 5 - SUPREME COURT] it cannot be said that the Hon’ble Supreme Court had dismissed the SLP in case of Slovak India Trading Co. Pvt. Ltd., without assigning any reasons therein.

The issue in context with doctrine of merger was discussed by the Hon’ble Supreme Court in the case of GANGADHARA PALO VERSUS REVENUE DIVISIONAL OFFICER [2011 (3) TMI 252 - SUPREME COURT], wherein the Hon’ble Court have held that even if the SLP is dismissed with reasons, however meagre (one sentence), there is merger of orders. It has further been held that once the SLP is dismissed, giving reasons by the Hon’ble Supreme Court, however meagre, it becomes a declaration of law. Thereafter, the decision which is merged with the decision of Hon’ble Apex Court, is non-existent, and thus, cannot be reviewed.

Since the principle of the doctrine of merger has been adequately dealt with by the Hon’ble Supreme Court in Gangadhara Palo, it is not felt proper to discuss the binding precedence of the judgments referred to by the learned Members at the referral paragraphs.

It is concluded holding that the ratio of the judgment by the Hon’ble Supreme Court in Slovak India Trading Co. Pvt. Ltd., has the binding effect on all Courts, Tribunal etc., in view of the mandates, contained in Article 141 of the Constitution of India - the limitation aspect would not apply to the facts of the present case for denial of the refund benefit to the appellant.

The learned Member (Judicial) that the impugned order is required to be set aside agreed upon and the appeal is required to be allowed with consequential benefit to the appellant - appeal allowed (majority order).