Facts of the Case

The Commissioner of Central GST and Central Excise, Jammu and Kashmir, Jammu filed the present appeal before the High Court of Jammu & Kashmir and Ladakh under Section 35G of the Central Excise Act, 1944. The appeal challenged an order of the Customs, Excise and Service Tax Appellate Tribunal, Chandigarh (CESTAT).

The underlying dispute concerned the entitlement of the assessee to a refund of Education Cess and Secondary & Higher Education Cess. The CESTAT had set aside the orders passed by the Commissioner (Appeals) and the Adjudicating Authority and had directed refund of the aforesaid cesses to the assessee.

The Tribunal’s approach was based on the decision of the Supreme Court in:

M/s SRD Nutrients Pvt. Ltd. vs Commissioner of Central Excise, Guwahati, 2017 (335) ELT 481 (SC).

The High Court noted that a batch of similar appeals had earlier been filed by the Commissioner of Central GST and Central Excise, Jammu and Kashmir, under Section 35G of the Central Excise Act, 1944. Those appeals also challenged CESTAT orders granting refund of Education Cess and Secondary & Higher Education Cess on the basis of the Supreme Court’s ruling in SRD Nutrients.

The earlier batch, together with applications seeking condonation of delay, had CEA No. 10/2022 as the lead case and had already been dismissed by a Coordinate Bench of the High Court by judgment dated 23 May 2022.

Upon examining the present appeal, the High Court found that the order under challenge was similar to the orders involved in the earlier batch and that the grounds raised were almost identical to those already considered and dealt with by the Coordinate Bench.

Issues Involved

The principal issues arising in the matter were:

  1. Whether the Revenue’s appeal under Section 35G of the Central Excise Act, 1944 against the CESTAT order directing refund of Education Cess and Secondary & Higher Education Cess was liable to be entertained when substantially identical appeals had already been dismissed by a Coordinate Bench.
  2. Whether the present appeal raised grounds materially distinguishable from those considered in the earlier batch of appeals decided on 23 May 2022.
  3. Whether the principle of parity required the present appeal to be dismissed on the same terms and conditions as the earlier batch of similar appeals.
  4. Whether the CESTAT’s direction granting refund, made in view of the Supreme Court decision in M/s SRD Nutrients Pvt. Ltd. vs Commissioner of Central Excise, Guwahati, could be successfully challenged on grounds already dealt with in the earlier batch proceedings.

Petitioner/Appellant’s Arguments

The appellant, namely the Commissioner of Central GST and Central Excise J&K, Jammu, challenged the CESTAT order under Section 35G of the Central Excise Act, 1944.

From the judgment, the appellant’s case can be accurately stated as follows:

  • The Revenue challenged the CESTAT order by which the orders of the Commissioner (Appeals) and the Adjudicating Authority had been set aside.
  • The Revenue’s appeal was directed against the Tribunal’s decision granting refund of Education Cess and Secondary & Higher Education Cess to the assessee.
  • The challenge was raised on grounds that the High Court found to be almost identical to the grounds already considered in the earlier batch of appeals.
  • The appellant was represented by Mr Jagpaul Singh, Advocate.

The short judgment does not separately reproduce or elaborate every individual legal submission advanced on behalf of the Revenue. Therefore, no additional arguments beyond those reflected in the judicial record should be attributed to the appellant.

Respondent’s Arguments

The judgment specifically records that none appeared for the respondent.

Accordingly:

  • No separate oral arguments on behalf of OM Metal Sharper Industries are recorded in the judgment.
  • The respondent’s position, as emerging from the subject matter of the appeal, was connected with the benefit of the CESTAT order directing refund of Education Cess and Secondary & Higher Education Cess.
  • The Tribunal’s refund direction had been made in view of the Supreme Court decision in M/s SRD Nutrients Pvt. Ltd. vs Commissioner of Central Excise, Guwahati.

It is important not to attribute any further specific submissions to the respondent because the order itself records “None” under the appearance for the respondent.

Court Order / Findings

The High Court dismissed the Revenue’s appeal.

The Court recorded the following material findings:

  • A batch of similar appeals had already been filed by the Commissioner of Central GST and Central Excise, Jammu and Kashmir, under Section 35G of the Central Excise Act, 1944.
  • Those earlier appeals concerned CESTAT orders directing refund of Education Cess and Secondary & Higher Education Cess in view of the Supreme Court’s decision in SRD Nutrients.
  • The earlier batch of appeals, with CEA No. 10/2022 as the lead case, had already been dismissed by a Coordinate Bench through judgment dated 23 May 2022.
  • The challenge in the present appeal was against a similar order.
  • The grounds raised in the present appeal were almost identical to those already dealt with by the Coordinate Bench.
  • In order to maintain parity, the High Court dismissed the present appeal on the same terms and conditions as laid down in the Coordinate Bench judgment dated 23 May 2022.
  • Any interim directions subsisting as on the date of the judgment were ordered to stand vacated.

Important Clarification

This judgment is significant for the manner in which the High Court applied parity and consistency with an earlier Coordinate Bench decision. The Court did not undertake a fresh, extensive determination of the entire Education Cess refund controversy in this short order. Instead, it expressly found that:

  • the order challenged in the present appeal was similar to those involved in the earlier batch;
  • the grounds of challenge were almost identical;
  • those grounds had already been dealt with by the Coordinate Bench; and
  • the present appeal should therefore be dismissed on the same terms and conditions to maintain parity.

Accordingly, the judgment should be understood as a parity-based disposal following the earlier judgment dated 23 May 2022, rather than as a standalone detailed reconsideration of every substantive legal issue relating to refund of Education Cess and Secondary & Higher Education Cess.

A further important clarification is that the present judgment refers to the Supreme Court decision in M/s SRD Nutrients Pvt. Ltd. vs Commissioner of Central Excise, Guwahati, 2017 (335) ELT 481 (SC) because the CESTAT refund orders in the concerned group of matters had been passed in view of that ruling. The precise operative basis of the High Court’s dismissal in the present case, however, was the similarity of the matter with the earlier batch and the need to maintain parity with the Coordinate Bench judgment dated 23 May 2022.

Sections Involved

Section 35G of the Central Excise Act, 1944 — The statutory provision under which the appeal was filed before the High Court against the order passed by the CESTAT.

Education Cess and Secondary & Higher Education Cess Refund Issue — The substantive dispute concerned refund of these cesses to the assessee pursuant to the CESTAT order.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783403458_1345compressed.pdf

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