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TMI Blog2024 (5) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in manufacture of diesel locomotive, entered into a Sales Representation Agreement with the appellant, for appointment as sales representative of EMD in India. The Indian Railways procured various components of locomotive from EMD, through appellant, however, the purchase orders were placed by the Indian Railways directly on EMD. As per the terms and conditions mentioned in the purchase order, Indian Railways undertook to pay commission to the appellant out of the total consideration payable by Indian Railways to EMD, i.e. instead of paying the entire consideration to EMD and thereafter the appellant receives back the commission from EMD. The commission payable is deducted by converting into equivalent Indian Rupees, and balance is remitted to EMD. 4. Treating such services rendered to EMD as export of services, the appellant filed refund claim of service tax paid thereon relying on several decisions of the Tribunal including those passed in their own case for the period from 2005 onwards. 5. Heard Ms. Sukriti Das and Ms. Aarushi Prabhakar, Advocates for the appellant and Shri Rohit Issar, Authorised Representative for the respondent. 6. The present case has a chequered histo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 11,11,899 refunded to the Appellant, as erroneous inasmuch as commission received by Appellant was in convertible Indian rupees, therefore the condition of export of service contemplated under Rule 3(2) of Export of Service Rules, 2005 was not complied. Hence, the Hon'ble CESTAT had erred in allowing the appeal. Further, the decisions of Hon'ble CESTAT pertaining to earlier periods and affirmed by Hon'ble Rajasthan High Court, is pending in SLP No. 14081- 14084/2018 filed by department before Hon'ble Supreme Court. 30.7.2021 Vide Order-in-Original no. 04/CE/Dem/2021-22/CGSTDiv-G, Jaipur, the Ld. Deputy Commissioner confirmed recovery of Rs. 11,11,899 from Appellant alleging erroneous sanction of refund pertaining to April 2008, under Section 11A of the Excise Act read with Section 73 of the Finance Act, 1994 ('Finance Act') along with interest under Section 11AA of the Excise Act read with Section 75 of the Act, on the ground that the said transaction do not qualify as export of services. It was further held in Para 13, pg. 56 of appeal memo that the "Hon'ble CESTAT has erred in allowing the appeal of the assessee". Further, non-filing of appeal by department against refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise, Jaipur 2008 (11) STR 156 (Tri.-Delh.) dealt with the similar issue while allowing the appeal observed as under:- "6. It appears from the Annexure to Purchase Order that necessary foreign exchange would be released to the Indian Railways for payment to GMC. It further appears that the appellant shall raise the bill to the consignee (Indian Railways) at 5% agency commission at USD which shall be paid in equivalent to non-convertible Indian rupees. Ld. Advocate submits that Indian Railways deducted the commission of the appellant in their bill raised to M/s. GMC, USA and the less amount of foreign-exchange was released. Thus, if GMC would pay the appellant agency commission in foreign-exchange, then the same amount of foreignexchange shall be released to Indian Railways to pay GMC, USA. In effect, the amount of foreign-exchange was not released to the Indian Railways, which may be treated as the appellant received payment in convertible foreign-exchange. Rule 4 of Export of Services Rules, 2005 provides any service, which is taxable under Clause (105) of Section 65 of the Act, may be exported without payment of Service tax. Sub-rule (2) of Rule 3 of the Rules, is as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the arrangement made by the service recipient abroad in that behalf through Indian Railways. Instead of appellant earning foreign exchange, the foreign exchange which otherwise would have flown out of India, due to import by Indian Railways, has been conserved. This appears to have fulfilled the object of export of service." 11. The matter was taken up to the Rajasthan High Court by the Revenue and the decision was rendered as reported in Commissioner of Central Excise, Jaipur-I Vs. National Engineering Industries Ltd. 2019 (30) GSTL 211 (Rajasthan) deciding the issue in favour of the appellant and against the Department. The case of the Revenue is that the decision of the Rajasthan High Court has not been accepted by the Department and a Special Leave Petition has been preferred before the Supreme Court, which is pending consideration and hence, the amount refunded to the appellant needs to be recovered. I do not agree with the submissions of the Revenue in view of the judicial pronouncement on the binding nature of the decision rendered by the higher forum on the principle of judicial discipline. The final order dated 22.05.2017 passed by the Tribunal had allowed the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section 35E(1) or (2) to keep the interests of the department alive. If the officer's view is the correct once it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail." The Supreme Court further emphasised that :- "8.............We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the Adjudicating Authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them. " 14. The Tribunal, accordingly concluded that the Commissioner (Appeals) was bound to have followed the order of this Tribunal since it was not stayed, suspended or set aside by the higher courts. It was further observed that the judgement of the Supreme Court on judicial discipline is over three decades old and is well known, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whereas some 10 to 12 orders were passed on the issue against the very same appellant covering the periods before and after the period covered in the impugned order. The Revenue contends that there is no "estoppel" in Revenue's matter. May be it so, it is not open to the Department to open up a case which attained finality. In passing an order contrary to the order of the CESTAT and holding that the CESTAT order was "per incuriam", learned Commissioner (Appeals) has exceeded his brief. " 17. In view of the judicial pronouncements on the issue of judicial discipline, it is necessary to take note of the contents of the show cause notice and the order-in-original in the present case. The show cause notice dated 12.11.2019 was issued by the Asstt. Commissioner, Jaipur. After referring to the past history of the case, it was noted that the decision of the Tribunal dated 22.05.2017 was found to be not correct and proper and the Tribunal had erred in allowing the appeal of the assessee. The relevant paras of the show cause notice are quoted below:- " 3. On examination of Hon'ble Tribunal's Final Order No. A/53395/2017-SM (BR) dated 22.05.2017 regarding its correctness, proper an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for refund against such payments of tax under the provisions of Export of Services Rules, 2005 as the Hon'ble CESTAT has erred in allowing the appeal of the assessee." 19. The paragraphs noted above clearly show that the authorities below have absolutely no regard for the orders passed by the Tribunal, though, as per the judicial discipline, they are binding on them and they are required to follow the same. There have been decisions after decisions by the Tribunal and also by the Apex Court, specifically conveying the that the orders by the Tribunal are binding on the lower authorities and there is no reason to differ from the same. Mere filing of an appeal to challenge the order of the Tribunal or the High Court before the Apex Court is not really a valid ground to ignore or to disregard the orders of the Tribunal, unless and until the same are stayed or suspended or finally set aside, which is not the case here and, therefore, I am of the firm opinion that the authorities below have seriously erred in passing such an order, which is beyond their jurisdiction and is a matter of concern, to be taken note of by the Department. 20. The principle has been concurrently reiterated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und and observed as under:- "15. That apart, we are also in agreement with CESTAT that, once the excise duty in favour of assessee is sanctioned by the competent authority after passing a speaking order and which order is appealable under Section 35 of the Act, parallel proceedings seeking recovery of the sanctioned refund cannot be launched by the Adjudicating Authority. Unless the orders of sanctioning refund passed by the Adjudicating Authority are reversed in appeal or revision under the Act, Section 11 cannot be invoked by terming such sanctioned refund of excise duty as 'erroneous refund' by holding collateral proceedings under section 11A of the Act. Any duty, which is paid /refunded to the assessee after holding formal proceedings and passing speaking orders in favour of the assessee, cannot be termed as 'erroneous refund'. The revenue, if it is of the opinion that the Adjudicating Authority has made an erroneous refund in favour of assessee to which it was not otherwise eligible, can avail the remedy of filing appeal or revision under the Act. So long as the orders stand as having attained finality, the same cannot be tampered with by the Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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