IF THE TRIBUNAL WANTS TO DIFFER TO THE EARLIER VIEW TAKEN BY THE TRIBUNAL IN THE IDENTICAL SET OF FACTS THE JUDICIAL DISCIPLINE REQUIRES REFERENCE TO THE LARGER BENCH

[Mr. M. GOVINDARAJAN]

In 'Mercedes Benz Indian Pvt. Ltd., V. Union of India' - 2010 -TMI - 76790 - (BOMBAY HIGH COURT)  the petitioner is a company engaging in manufacture of motor vehicles and part thereof at factory located at Chakan, Pune. The petitioner is selling the said vehicles to its dealers at the factory gate. The said vehicles are cleared on payment of central excise duty on transaction value at the factory gate. The dealer is free to engage his own transporter and carry the goods from the factory gate of the petitioner to his premises. However in terms of dealer agreement, the petitioner arranges for transportation and transit insurance on behalf of the dealers and thereby undertakes to deliver the goods at the doorstep of the dealer. The charges for the said service are recovered from the dealers as Road Delivery Charges by showing the same in the sales invoice separately. The petitioner is paying value added tax on the said charge in the invoice for sales within the State.

The Department is of the opinion that the RDC are includible in the assessable value of vehicles in terms of Sec. 4(1)(b) of the Central Excise Act, 1944 read with Rule 5 of the Central Excise Valuation Rules, 2000.. The case of the Department was that charges collected on RDC from the dealers keep on fluctuating; sometimes more than that actually incurred and sometimes less than actually incurred. Excess recovery of RDC is not includible in the assessable value of the vehicles. Accordingly the Department issued show cause notices periodically.

For the show cause notice for the period from July 2000 to April 2005 it was held that RDC is not includible in the assessable value of final product in as much as the sale takes place at the factory gate, since the place of removal is the factory gate and not the premises of the buyer, as such relying upon the decision of the Supreme Court in 'Escorts JCB Ltd., V. Commissioner of Central Excise' - 2002 -TMI - 46355 - (SUPREME COURT OF INDIA). The proceedings initiated against the petitioner were dropped and the same was not challenged by the Revenue as such attained finality.

Again show cause notice is issued afresh on the same set of facts but for further period. On contest they culminated in the order in original. The said orders were challenged by the petitioners and got failed in appeal also. The petitioner filed appeal before the Tribunal and the tribunal allowed the appeal of the petitioner. The Tribunal held that the issue in dispute stands settled in favor of the appellants by the Apex Court's decision in 'Escorts JCB Ltd.,' (supra) holding that the element of freight and transit insurance is not includible in the assessable value. The Supreme Court in that case held that the ownership of goods have no relevance insofar as transit insurance of goods is concerned. In view of the above the Department's reliance upon clause VII of the conditions of sale to the effect that ownership of the goods is retained by the assessee does not come to the rescue of the Revenue as this has also been considered and held against the Revenue by the Apex Court. The Commissioner of Central Excise (Appeals), the Tribunal held, has accepted the contention of the assessee that their factory gate has to be treated as the place of removal. The Revenue filed appeal against the order of the Tribunal before Supreme Court which was dismissed on the ground of delay.

The Revenue again issued show cause notice for the period from May, 2005 to March 2007 to the petitioner, which again culminated in the order-n-original where under the demand of differential central duty were confirmed without imposing penalty. The Commissioner (Appeals) upheld the order of the lower authority and went on to hold that the excess RDC would be includible in the assessable value of the vehicles. The petitioner filed appeal before the Tribunal. The Tribunal rejected the appeal filed on merits. But it has not chosen to follow the earlier order passed in the case of the petitioner itself dealing with the very same issue for earlier period. The Tribunal held that the Tribunal need not follow the decision of the Tribunal in order dated 26.5.08 in view of the fact that while the controversy was noted, the decision was that the elements of freight and transit insurance are not includible in the assessable value since the place of removal was factory gate. This decision does not address the grievance of the Revenue and did not consider all the facts and did not lay down a clear ratio. Therefore the Tribunal is to consider the issue afresh.

The petitioner filed the present writ petition against the order of the Tribunal. The petitioner contended the following before the Court:

* The order passed by the Tribunal is ex facie perverse and contrary to the judicial discipline laid down by the Apex Court as well by the High Court of Bombay from time to time;

* In appeal the order dated 26.5.08 of the Tribunal is pressed into service to contend that the issue is squarely covered by the judgment of the Tribunal in the case of the petitioner itself ;

Based on the above two judgments of the Tribunal running counter to each other, the petitioner pressed into service the serious consequences of unsettling law resulting from the approach by the Tribunal.

The tribunal held as follows:

* It is urged that the decision of the co-ordinate bench has been disregarded and the same has been ignored. The grievance of the petitioner is not wholly unjustified;

* It is not happy to observe but constrained to say that one must remember that pursuit of the law, however glamorous it is, has its own limitation on the Bench. In a multi-judge court, the judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction the matter should be referred to a larger Bench. It is a subversion of judicial process not to follow this procedure;

* It is the duty of the Judges and Courts and members of the Tribunals to make the law more predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behavior. It must be determined with reasons which carry convictions within the Courts, profession and public. Otherwise the lawyers would be a predicament and would not know how to advise their clients. Subordinate courts would find themselves in an embarrassing position to choose between the conflicting opinions. The general public would in a dilemma to obey or not to obey such law and it, ultimately, falls into disrepute.

* The Apex Court held in 'Lala Shri BhagwanV. Ram Chand' AIR 1965 SC 1767 that it is hardly necessary to emphasize that considerations of judicial propriety and decorum require that if a learned single Judge hearing a matter is inclined to take the view that the earlier decisions of the High Court whether of a Division Bench or of a single Judge, need to be reconsidered he should not embark upon that enquiry sitting as a single Judge, he should refer the matter to a Division Bench or , in a proper case, place the relevant papers before the Chief Justice to enable him to constitute a larger Bench to examine the question. That is the proper and traditional way to deal with such matters and it is founded on the healthy principles of judicial decorum and propriety;

* The Apex Court in 'Mahadeolal Kanodia V. The Administrator General of West Bengal' - AIR 1960 SC 936 held that the Court noticed with some regret that when the earlier decision of two Judges of the same High Court was cited before the learned Judges who heard the present appeal they took on themselves to say that the previous decision was wrong, instead of following the usual procedure in case of difference of opinion with an earlier decision, of referring no less than legal propriety form the basis of judicial procedure. If one thing is more necessary in law that any other thing, it is the quality of certainty. The quality would totally disappear if Judges of co-ordinate jurisdiction in a High Court start overruling one another's decision.

* The impugned view taken by the Tribunal by no means can be said to be correct approach. Needless to mention that if the Tribunal wanted to differ to the earlier view taken by the Tribunal in the identical set of facts, the judicial discipline required reference to the larger bench;

* The court has no option but to set aside the impugned judgment passed by the Tribunal;

* Appeal is restored to the file of the Tribunal with direction to hear and decide the same afresh by a reasoned order following the principles of natural justice. If the Tribunal decides to take view contrary to the view holding the field, then in the event it is expected of the Tribunal to pass appropriate order leading a reference to a larger bench to resolve the differences, if any.