Adjudicating Authority Cannot Override CESTAT Remand Directions: Gujarat HC Imposes ₹1,000 Token Cost [Read Order]

In a recent ruling, the Gujarat High Court quashed an order passed by the Commissioner of CGST for disregarding specific remand directions issued by the Central Excise and Service Tax Appellate Tribunal (CESTAT). The Court imposed a token cost of Rs. 1,000 on the respondent authority for violating judicial propriety.

The case involved Akshar Precision Tubes Pvt. Ltd., which carried out job work processes such as finning and studding on pipes supplied by principal manufacturers under Rule 4(5)(a) of the Cenvat Credit Rules, 2004.

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The company returned the processed goods without including the value of the free-supplied pipes in their excise duty calculations, claiming that the duty liability on such inputs lay with the principal manufacturers, not the job worker.

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A show cause notice was issued in 2016 demanding central excise duty on the free material used during job work for the period from 2011 to 2016. The adjudicating authority dropped the demand, citing the Supreme Court’s ruling in International Auto Ltd., which held that the duty of liability lies with the manufacturer of the final product.

The Revenue challenged this decision before CESTAT, which remanded the matter to verify whether the principal manufacturers had paid duty on the total value of the final goods, including the value of the free-supplied pipes.

Instead of following this limited direction, the adjudicating authority re-evaluated the case entirely and upheld the duty demand. In doing so, he not only ignored CESTAT’s direction but also questioned its interpretation of applicable Supreme Court judgments, asserting his own independent view.

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The petitioners approached the High Court, arguing that the Commissioner had no authority to disregard the binding remand directions and that the only issue left was factual verification, not fresh legal interpretation.

The bench comprising Justice Bhargav D. Karia and Justice D.N. Ray observed that the adjudicating authority’s failure to adhere to CESTAT’s instructions amounted to a breach of judicial discipline.

The court held that the Commissioner’s actions were without jurisdiction and contrary to the judicial hierarchy. The Court set aside the impugned order and directed the matter to be reassigned to another officer for fresh adjudication strictly in line with CESTAT’s remand within 12 weeks. The writ petition was allowed.

To Read the full text of the Order CLICK HERE

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