Customs Appellate Authority Cannot Revisit Final Order on Drawback Entitlement: Orissa HC in Vedanta Case [Read Order]

In a recent ruling, the Orissa High Court held that an appellate authority cannot reopen or change a final order on duty drawback and set aside the order of the Commissioner (Appeals) which had denied drawback to Vedanta Limited even though an earlier appellate order had become final.

VedantaLimited had claimed duty drawback for exports made between April 2017 and March 2018. Its claim was partly allowed by the Principal Commissioner (Appeals) on 30.09.2023, who held that the company was eligible for drawback of Rs. 162 crore for four Bills of Export, subject to reversal of Input Tax Credit (ITC). The Department did not challenge this order and accepted it.

The petitioner reversed ITC as directed and sought payment. The Assistant Commissioner passed an Order-in-Original granting drawback after adjusting ITC and interest. Both sides filed appeals against this order.

Later, the Commissioner (Appeals) passed another order holding that since ITC was availed, the petitioner was not eligible for drawback and set aside the earlier Order-in-Original.

Before the High Court, the petitioner’s counsel argued that the earlier Order-in-Appeal dated 30.09.2023 had already become final and could not be reopened. The Department admitted that it had not challenged that earlier order.

The Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman observed that no provision of the Customs Act was shown which permitted the Commissioner (Appeals) to revisit an earlier Order-in-Appeal that had attained finality. The court observed that once an appellate order is not challenged and is accepted by the Department, its findings become binding between the parties.

The court explained the doctrine of functus officio and pointed out that once an appellate authority has rendered a decision and it has attained finality, it cannot review or modify that decision unless such power is expressly provided by statute. The court further observed that principles of judicial discipline and finality require subordinate authorities to give effect to binding appellate orders.

The court held that the Commissioner (Appeals) while deciding the subsequent appeals effectively sat in review over the earlier Order-in-Appeal dated 30.09.2023 and took a contrary view on entitlement to drawback. This was held to be impermissible in law.

In view of these findings, the High Court set aside the impugned Order-in-Appeal. The matter was remitted to the Commissioner (Appeals), Bhubaneswar to decide the appeals afresh on merits after giving opportunity of hearing, keeping in view the observations made by the Court. The writ petition was allowed to that extent.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates