Madras High Court quashes the demand/recovery notice passed in violation of the judgment delivered by the Apex Court [Read Judgment]

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The Madras High Court quashed the demand/recovery notice passed in violation of the judgment delivered by the Apex Court.

The petitioner, M/s.Jumbo Bags Ltd. claimed exemption from payment of duty against the sales effected by them against the Domestic Tariff Area (DTA) against foreign exchange, by placing reliance on Customs Notification No.125/84-C.E.

The Revenue rejected the claim, holding that the petitioner is liable to pay the duty demanded. The challenge made to the rejection before the adjudicating authority and the Commissioner of Appeals were unsuccessful.

Consequently, in the appeal before the CESTAT in the case of Jumbo Bag Ltd. v. Commissioner of Central Excise, Chennai, it was held that the duty demand was not sustainable and the Commissioner was in error in invoking Notification No.2/95 for demanding excise duty.

The Revenue had challenged the order of CESTAT before the Supreme Court and by an order dated August 05, 2015, wherein the matter was covered against the Revenue.

The petitioner submitted that when the CESTAT had passed final orders, holding that the Judgment of the Supreme Court is against the Revenue, the earlier decision of the Tribunal merges with that of the Judgment of the Supreme Court and therefore, the Revenue is not justifiable in interpreting the Supreme Court’s order.

The Madras High Court observed that when the Supreme Court had rejected the appeal of the Revenue, the order of the Tribunal, which was in favor of the importer, merged with the order of the Supreme Court, under the principle of ‘Doctrine of Merger’. The attempt on the part of the Revenue to interpret the order of the Supreme Court and attempting to give life to the claim, which they had lost before the Supreme Court, is nothing, but an act, which could be termed as an act of contempt of the Supreme Court’s order.

The single-judge bench of Justice M.S. Ramesh while quashing the order of the tribunal held that judicial discipline mandates Quasi-Judicial Authorities to extend sanctity to the binding precedents, more so, when such orders are from the highest Court of the Country.

The Court expressed its disappointment on the conduct of the concerned authorities in having scant respect towards the orders of the Supreme Court.

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