TMI Blog2008 (1) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount erroneously refunded could not be recovered by filing an appeal under section 129D of the Customs Act, 1962 unless a demand notice was issued under section 28(1) be correct in law, when the Supreme Court in the case of Asian Paints (India) Ltd. v. CCE, Mumbai, 2002 (142) E.L.T. 522 had held to the effect that an order issued under section 35E of the Act would be equally sustainable in law for recovering dues of excise duty? 2. Whether unjust enrichment by an individual company is permissible in law only for the reason that a demand notice under section 28(1) of the Customs Act was not issued for recovery of erroneous refund when the Department followed the appellate remedy available under section 129D of the Customs Act, 1962 for recovery of erroneous refund, without considering the settled law emerging from the apex Court's decision in the case of Mafatlal Industries Ltd. v. UOI, 1997 (89) E.L.T. 247 (S.C.) = 1997 (5) SCC 536 and Sahakari khand Udyog Mandal Ltd., v. CCE, 2005 (181) E.L.T. 328 (S.C.) = 2005 (3) SCC 738? 2. Mr. Udayakumar, learned Standing Counsel for the appellant contended that the order of the appellate Tribunal is erroneous in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 220/2005-06, who by his order dated 08.07.2005 sanctioned the said amount and the same was paid back to the respondent. 5. Thereupon, the Assistant Collector of Customs (Refund) filed an appeal against the order dated 08.07.2005 made in Order in Original No. 220/2005-06 on the ground that it was not established by the importer that the duty has not been passed on to the buyers, with corroborative evidence. The Commissioner (Appeals) by his order dated 28.07.2006 allowed the appeal on the premise that the doctrine of unjust enrichment would apply to the case of the respondent that mere submission of the Chartered Accountant's certificate was not sufficient. The respondent carried that order to the CESTAT. 6. The Tribunal, after consideration of the legal issue, accepted the submission made by the respondent and set aside the order of the Commissioner dated 28.07.2006 and remanded the case to the Commissioner (Appeals) with the direction to him to examine the legal issue raised by the respondent and thereafter proceed to dispose of the appeal taking into account the observations made by the Tribunal. 7. The Commissioner (Appeals) once again, on the ground that the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand. 9. The Tribunal, in the impugned order, has expressed its anguish in the following manner : "Our directions to the lower appellate authority were quite categorical. In our remand order, we had taken a view on section 28 v. section 129D. After distinguishing Asian Paints (supra), we held that, where any amount of duty had already been refunded to an assessee under section 27 of the Customs Act, it was not open to the revenue on the ground of erroneous refund to proceed for recovery of the amount from them under section 129D of the Act after expiry of the period of limitation prescribed for demand notice under section 28(1) of the Act. We held that the right recourse for the revenue was to issue a show cause notice within the prescribed period. Had we found that, in the earlier round, learned Commissioner (Appeals) had at least attempted examination of the issue, we would not have remanded the matter. The remand was occasioned by our finding that the appellate authority had sidestepped the above issue. It would have been graceful on its part, if the appellate authority had abided by the definite view expressed by the Tribunal in the remand order. In this context, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement to be amended, case before High Court to be heard by not less than two Judges, appeal to the Supreme Court, etc. 11. Under section 129A of the Act, any person aggrieved by a decision or order passed by the Commissioner of Customs as an adjudicating authority or aggrieved by an order passed by the Commissioner (Appeals) under section 128A may appeal to the appellate Tribunal. Section 129-B invests power on the appellate Tribunal to pass orders as it thinks fit confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be. Thus, the appellate Tribunal is placed vertically over the Commissioner (Appeals) and conferred an appellate power. The failure on the part of the latter to carry out such direction or show disrespect to or to question the propriety of such direction would, it is obvious, be destructive of hierarchial system in the administration of justice. The seekers of remedy would lose faith in both. 12. The binding nature of the orders passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly critisized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department, in itself an objectionable phrase-and is subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. In the case of Tirupati Balaji Developers (P) Ltd. v. State of Bihar reported in 2004 AIR SCW 2522 = (2004) 5 SCC 1, the Supreme Court held thus : "... 11. The very conferral of appellate jurisdiction carries with it certain consequences. Conferral of a principal substantive jurisdiction carries with it, as a necessary concomitant of that power, the power to exercise such other incidental and ancillary powers without which the conferral of the principal power shall be rendered redundant. As held by Their Lordships of the Privy Council in Nagendra Nath Dey v. Suresh Chandra Dey and others, AIR 1932 Privy Concil 165 (Sir Dinshah Mulla speaking for the Bench of five), an appeal is an application by a party to an appellate court asking it to set aside or revise a decision of a subordinate court. The appeal does not cease to be an appeal though irregular or incompetent. Placing on record his opinion, Subramania Ayyar, J. as a member of the Full Bench (of five Judges) in Chappan v. Moidin Kutti, (1899) 22 ILR Mad 68 (at p.80) stated inter alia that appeal is "the removal of a cause or a suit from an inferior to a superior judge or court for re-examination or review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it on the ground that the department has filed an appeal, it will be really a contempt of the Tribunal's order...." 15. In this case also, as we have already stated, directions given by the CESTAT has been floated just like that in spite of the fact that that has been urged for consideration by the respondent. Even on merits, we are not able to accept the reason of the Commissioner that the respondent has not discharged the onus of proving that the refund is not hit by the doctrine of unjust enrichment. In the refund order, the Assistant Commissioner (Refund) stated as follows : "Under Section 27(2) of the Customs Act, the amount as determined by the Assistant Commissioner under provisions of section 27(2) of Customs Act, 1962 shall be credited to fund. Under first proviso to Section 27(2) of Customs Act, 1962 instead of being credited to the fund, be paid to the applicant, if such amount is relatable to the duty and interest, if any paid on such duty paid by the importer, if he had not passed on to any other person. The importers have produced a certificate dated 20.05.2005 obtained from S.S. Subramanian, Chartered Accountants, Madurai stating that the importers have sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained an order in its favour from the Tribunal. The appellant filed a refund claim under section 11B of the Central Excise Act. In this factual circumstances of the case, i.e., inspite of the fact that the solution were not goods and payment of excise duty was not attracted, in view of the fact that the fabric so manufactured had been sold to third parties and the solution was captively consumed, and there was every possibility of cascading the duty element on the goods sold by the appellant, the Court held that the appellant was obliged to prove that there was no unjust enrichment. But in the case on hand, the goods imported is a capital good, a machinery. After importation, the machinery was installed in the respondent textile mills and was very much available and being used for manufacture of goods. Hence, the SRF Ltd's case is not applicable to the present case. 19. Reliance was placed by the counsel for the revenue on the decision of the Supreme Court in the case of Asian Paints v. Collector of Central Excise, (2002) 142 E.L.T. 522. We are of the view that decision cannot in any way advance the case of the appellant in the facts of the present case. In that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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