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M/s. Chemplast Sanmar Ltd. Versus Commissioner of Customs, Chennai And Vice-Versa

Demand of recovery of consequential refund sanctioned consequent to the Hon'ble High Court of Madras orders which attained finality - Denial of exemption under Notification No.133/85 - Department disputed the appellant’s 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’ - High Court .....

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e do not see any error in the adjudicating authority’s order who diligently complied the Hon ble High Court’s 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 (1999 (8) TMI 69 - SUPREME COURT OF INDIA). - Revenue has power to review any order of the lower authority under Section 129B of Customs Act whe .....

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d the LAA and the appellant. - Decided in favour of assessee. - C/40793/2013 & C/40811/2013 - FINAL ORDER No.41589-41590/2015 - Dated:- 2-6-2015 - Shri R. Periasami, Technical Member And Shri Pradeep Kumar Choudhary, Judicial Member For the Petitioner : Shri Vijay Narayanan, Adv. For the Respondent : Shri M. Rammohan Rao, DC (AR) ORDER 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. .....

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ed the appellant s 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 u .....

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& 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 Hon ble High Court s 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 Hon .....

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.5299 of 1998. The Revenue s appeal nos.358 & 359/1997 and the present Writ Appeal No.1686 of 1998 both were pending before High Court. The Hon ble 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 Court s order. 5. The Hon ble 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 .....

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der 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 Hon ble High Court in Order dated 08.10.2009 dismissed the review petition. 7. Consequent to the above High Court s direction, the Adjudicating authority in his Order-in-Original dated 08.04.2011 sanctioned the refund claim of ₹ 1,50,99,363/- along with interest of ₹ 2,32,84,458/- under Section 27 of the Customs Act. 8. The Adjudicating authorit .....

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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 .....

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gible for concessional rate of duty under Notification No.133/85. Since the department granted refund, they preferred Writ Petition 219/87 and the Hon ble 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 Court s order and preferred the writ appeal. The appellant had no other way but to approach the Hon ble High Court with Writ Petition .....

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how-cause notice demanding recovery of refund. The Hon ble High Court finally dismissed the department s writ appeals against the High Court Single Bench order and no SLP has been filed. He submits that the Hon ble 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 .....

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e Orissa High Court s order. Though, the Hon ble Supreme Court has allowed the Revenue s 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 Hon ble High Court s order. Therefore, it is binding on the Revenue as far as the appellant is concerned. He relied on the Hon ble High Court s [DB] Order dated 17.07.2000. He further submits that the Hon ble High Court in their Order dated 13.10.2008 and again on 08.10.2009 .....

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Mumbai reported in 2011 (264) E.L.T.486 (S.C.) and submits that the Hon ble 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 Court s order. On the other hand, the lower appellate authority has blatantly passed order in this regard against the Hon ble High Court s order 14. On the other hand, learned Authorised Representative submits that as regards the Revenue appeal p .....

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the Hon ble 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 th .....

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resentative submits that it is not the case of the department that they have not implemented the Hon ble High Court s order. The Adjudicating authority in Order-in-Original duly complied with the Hon ble High Court s direction, completed the reassessment and sanctioned the refund claim. Therefore, in totality they have complied with the Hon ble High Court s order. He further submits that the department is bound to enforce the law declared by the Hon ble Supreme Court in the case of Union of Indi .....

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r 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 Hon ble 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 .....

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here 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 Representative s statement showing that the Hon ble High Court directed to re-assess the assessment, is not correct. Learned Authorised Representative s arguments to the assessees claim is not right a .....

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ther reported in (2005) 7 CCC 190 [Paras 14,18,29 & 30] He also further submits that Hon ble 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 i .....

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dras 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 ₹ 1,50,99,363/-along with interest of ₹ 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 Hon ble Supreme Court Order in the case of UOI Vs. Indian Change Chr .....

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tions 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 .....

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l 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 .....

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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 wi .....

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n to interfere with the order of the learned single Judge. 23. It is pertinent to see that Revenue once again approached the Hon ble High Court by filing Review Application No.128/2009 seeking to review the Hon ble 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 .....

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f 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 .....

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ed 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 authority s order who diligently complied the Honble High Court s Order. The adjudicating authority while sanctioning the refu .....

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ed 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, th .....

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ired 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 retrospe .....

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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 .....

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y 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 custo .....

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appeal and direct the Customs authorities to consider the appellant s 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 .....

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