The Gujarat High Court has imposed the token cost of Rs. 1000 on CGST and Central Excise (CE) Commissioner for not following the directions of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that CGST And CE Commissioner was only required to verify that whether the principal manufacturer has paid the duty on the total value of the final product including the value of material supplied by the principal manufacturer to the petitioners for job work in the facts of the case. However, the CGST And CE Commissioner for reasons best known to him has tried to overreach the directions issued by the CESTAT.
The petitioners/assessee are engaged in the work of joining various material M.S, S.S. or alloy pipes together or welding together through machines which is also called finning/studding by use of intermediate goods to manufacture final products to manufacture the Heat Exchangers that are sold on their own account.
The petitioners submitted that apart from manufacturing the Head Exchangers, the petitioners also undertake job work for various principal manufactures who were duly registered under the Central Excise Act, 1944.
A show cause notice was issued after investigation made by the respondents invoking an extended period of limitation proposing to demand central excise duty under section 11A(4) on the value of free issue material supplied by the principal manufacturers for the manufacture of the intermediate goods on job work basis along with interest and penalty for the clearance made by the petitioners.
The adjudicating authority considering the reply of the petitioners passed an order dropping the demands proposed in the show cause notice on the ground that duty liability on the free issue material is on the principal manufacturers.
The department preferred an appeal before CESTAT. The CESTAT allowed the appeal of the department by setting aside the order of dropping the proceedings and remanded the matter to the adjudicating authority with a direction to the said authority to verify whether principal manufacturer has paid duty on the total value of the final products including the value of the free material supplied by the principal manufacturer to the petitioners for job work for applying the ratio of decision of Apex Court in case of M/s. International Auto Ltd.
It is shocking and surprising that inspite of the directions issued by CESTAT, respondent Commissioner of CGST & CE, Vadodara-II keeping aside all the norms of judicial propriety and judicial hierarchy has fortitude to observe, “I am not required to acquiesce to the reasoning by the previous authority contrary to the question of law unless it is ratio decidendi. That said, I find that the question of verification at this juncture will not serve any purpose if the judicial discipline is followed and judgment of the Apex Court is followed.”
The court while imposing the cost remanded the matter for allocating the same to another officer to pass a fresh de novo order within a period of 12 weeks from the date of receipt the order so as to comply with the directions issued by CESTAT in letter and spirit.
Case Details
Case Title: M/S Akshar Precision Tubes Pvt. Ltd. & Anr. Versus Commissioner Of Cgst And Ce Vadodara II
Case No.: R/Special Civil Application No. 15869 Of 2024
Date: 12/02/2025
Counsel For Appellant: Krutarth K Desai
Counsel For Respondent: CB Gupta
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