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1990 Supreme(All) 52
IN THE HIGH COURT OF ALLAHABAD
A. N. Varma and Om Prakash, JJ.
GEEP INDUSTRIAL SYNDICATE LTD. - Appellant
Versus
ASSISTANT COLLECTOR OF C.EX. - Respondents
Civil Misc. Writ 960 Of 1986
Decided On : 01/19/1990
N.B.Singh, Sunil Gupta
A subordinate authority is bound by the decisions and directions of a higher authority, and cannot disregard them even if they are contrary to a Supreme Court decision.
Headnote:
CENTRAL EXCISE - REFUND CLAIM - POST-MANUFACTURING EXPENSES - IDENTIFICATION AND ACTUAL INCURRENCE - JURISDICTION OF ASSISTANT COLLECTOR - BOUND BY DIRECTIONS OF APPELLATE COLLECTOR - SUPREME COURT DECISION - RELEVANCE FOR IDENTIFICATION OF POST-MANUFACTURING ELEMENTS - SHOW CAUSE NOTICE - MAINTAINABILITY.
Fact of the Case:
The petitioner, a public limited company, claimed a refund of excise duty paid on electric batteries, alleging that post-manufacturing costs were erroneously included in the assessable value. The Appellate Collector allowed the appeal and directed the Assistant Collector to grant the refund if the post-manufacturing elements were distinctly identifiable and actually incurred. The Assistant Collector issued a show cause notice to the petitioner, stating that the refund claim was inadmissible in view of a Supreme Court decision.
Finding of the Court:
The Court held that the Assistant Collector was bound by the directions of the Appellate Collector and could not disregard them even if the Supreme Court decision cited in the show cause notice took a contrary view. The Court clarified that the Assistant Collector's jurisdiction was limited to identifying the post-manufacturing expenses and determining whether they were actually incurred, in accordance with the Appellate Collector's directions.
Issues: 1. Whether the Assistant Collector was bound by the directions of the Appellate Collector, even if they were contrary to a Supreme Court decision. 2. Whether the Assistant Collector had the jurisdiction to reopen the issue of the admissibility of the refund claim, which had been foreclosed by the Appellate Collector's decision.
Ratio Decidendi: 1. The Court relied on the principle of hierarchy in the judicial system, stating that subordinate authorities are bound by the decisions and directions of higher authorities. 2. The Court emphasized that the Assistant Collector's role was to comply with the Appellate Collector's directions, and that reopening the issue of admissibility would lead to indiscipline and disrupt the functioning of the hierarchical system.
Final Decision: The Court allowed the petition in part, directing the Assistant Collector to comply with the Appellate Collector's directions within four months. The Court also clarified that the Assistant Collector could not reopen the issue of admissibility and that the petitioner was entitled to a refund if the post-manufacturing expenses were distinctly identifiable and actually incurred.
( 1 ) THIS petition is primarily directed against a show cause notice dated 6-10-1986 issued by the assistant Collector, Central Excise, Allahabad, calling upon the petitioner to show cause why the refund claim submitted by them for the refund of Rs. 28,31,472. 73 may not be rejected. As the parties have exchanged affidavits the petition is being disposed of finally at the stage of admission with the consent of counsel for the parties.
( 2 ) THE facts relevant for the disposal of the petition lie within a narrow compass and there is not much dispute between the parties on those facts. They may be briefly summarised thus.
( 3 ) THE petitioner, a public limited company, carries on the business of manufacturing and selling torches, dry cell batteries and miniature bulbs, etc. On the goods manufactured by it, it pays excise duty under the Central Excises and Salt Act, 1944. On March 28, 1977 it submitted a refund claim in respect of the duty stated to have been paid in excess on electric batteries during the period 12-7-1968 to 30-9-1975. The basis of the claim alleged was that under a mistake of law the petitioners had included post manufacturing costs in the assessable value calculated under Section 4 (old) of the aforesaid Act. Legally post manufacturing costs, it was contended, were liable to be excluded in determining the assessable value of the concerned item. The assistant Collec- appeal on 30-3-1979 before the Appellate Collector, Central Excise, New delhi who by his order dated 3-4-1982 allowed the appeal and modified the order passed by the assistant Collector with certain directions which, as we will presently demonstrate, have a vital bearing on the controversy raised before use are, therefore, being extracted here :
"in the circumstances, I consider that the proper course would be to allow the benefit in respect of the period of three years from the date of finalization of respective assessments. This benefit would, however, accrue only if the applicants were able to show to the satisfaction of the collector that the post-manufacturing elements indicated by them were distinctly identifiable and could be shown to have been actually incurred. Assistant Collectors order is modified accordingly. Messrs. Geep Flashlight Industries Ltd. , Sd/- S K Bhatnagar28 South Rd Allahabad Appellate Collector"
( 4 ) THE order passed by the Appellate Collector was not challenged by the Central Excise department by way of appeal or revision or otherwise. The petitioner alleges that as a consequence of the order passed by the Appellate Collector it had become entitled to a refund of the sum of Rs. 28,31,472. 73. Meanwhile, in late 1982 or early 1983 the Central Excise department raised a demand of Rs. 37,02,058. 25 as excise duty in respect of zinc calots cleared by it during the period 3-10-1981 to 30-9-1982. On 11-3-1983 the petitioner sent a letter to the assistant Collector, Central Excise requesting him to adjust the sum of Rs. 28,31,472. 73, the amount alleged to be refundable to the petitioner, against the aforesaid demand of the Central excise Department and by the same letter the petitioner undertook to pay the balance immediately on receiving the intimation from the Asstt. Collector. The Asstt. Collector wrote back to the petitioner stating "deposit the balance of the amount forthwith pending examination, scrutiny, grant and sanction of your refund claim". The petitioner asserts that in pursuance of its undertaking it paid a sum of Rs. 8,70,585. 52 on 21-3-1983 towards excise duty payable on zinc calots. Thereafter on 18-7-1984 the Asstt. Collector sent a letter to the petitioner asking it to deposit the aforesaid amount of Rs. 28,31,472. 73 as excise duty within two days failing which the petitioner was threatened with an action under Rule 230 of the Central Excise Rules. In response to this letter the petitioner asked the Collector Central Excise to intervene in the matter and also requested that the aforesaid d
