October 2016
Precedent – Judicial Discipline – Departmental authorities bound by the judicial pronouncements of the Statutory Tribunals even if the decision of the Tribunal was not carried further in appeal on account of low tax effect [Central Excise Act, 1944 S. 35 and 35E].
By Dr. K. Shivaram
Senior Advocate
Rahul K. Hakani
Advocate
Sashank Dundu
Advocate
fiogf49gjkf0d
Lubi Industries LLP vs. Union of India (2016) 337 E.L.T. 179 (Guj.)(HC)
The petitioner manufactures and supplies submersible pumps to Government agencies. The contracts envisage pre-delivery inspection charges by third party agency at the cost of the buyer . However, initially the payment would be made by the petitioner and would be claimed from the Government. The contest between the petitioner and the Department is with respect to the inclusion of these charges towards the assessable value of the goods. This precise question in identical circumstances in case of this very petitioner came to be decided by CESTAT by judgement dated 16/06/2014, ruled in favour of the assessee.
When such a question arose again, the AO issued a show cause notice as to why the pre-delivery inspection charges should not be included in the assessable value and resultantly unpaid dues of Rs.1.37 lacs not be recovered. The petitioner heavily relied on its case decided in the Tribunal. The AO however confirmed the additions and relied on the judgement of the Supreme Court in the case of Commissioner of Central Excise, Tamil Nadu vs. Southern Structures Ltd. 2008 (229) E.L.T. 487.
The High Court held that, the Assistant Commissioner committed a serious error in ignoring the binding judgement of the superior Court that too in case of the same assessee. Even if the decision of the Tribunal in the present case was not carried further in appeal on account of low tax effect, it was not open for the adjudicating authority to ignore the ratio of such decision. An order that the adjucating authority may pass is appealable, even at the hands of the department. This is clearly provided in Section 35 read with section 35E of the Central Excise Act. Therefore, even if the adjucating authority passes an order in favour of the assessee on the basis of the decision of the Tribunal, it is always open to the Department to file appeal against such judgement of the adjucating authority.
