The Tribunal, first and foremost, is duty bound by Article 141 of the Constitution of India to ensure that it follows binding precedent of the Supreme Court. The Tribunal as a judicial body must follow principles of consistency when it decides cases. The lack of consistency is clear on the face of record. Judicial orders must be passed by the Tribunal with a greater degree of circumspection and application of mind. Whim and caprice are alien to the judicial process. Consistency, based on judicial precedents should be the norm.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2308 of 2009
M/s. Hindustan Petroleum Corporation Limited
(A Government of India Enterprise] a company incorporated under the Companies Act, 1956 & having its Registered Office at 17, Jamshedji Tata Road, Mumbai – 400 020 and its Refinery at P.O. Box No.18820, B.D. Patil Marg, Mahul, Chembur, Mumbai – 400 074 ..Petitioner.
1. The Union of India,
Ministry of Law & Justice, Aayakar Bhavan, New Marine Lines, Mumbai – 400 020.
2. The Commissioner of Central Excise,
Mumbai – II Commissionerate, having Office at Piramal Chambers, Jijibhoi Lane, Parel, Mumbai – 400 012 ..Respondents.
Mr. M.H. Patil for the petitioner.
Mr. Jitendra Mishra for the respondent.
CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ.
Date of Judgement: 13th January, 2010.
J U D G M E N T
(Per Dr.D.Y. Chandrachud, J.) :
1. Rule. With the consent of the learned counsel appearing on behalf of the respondents, rule is made returnable. The learned counsel appearing on behalf of the respondents waives service. With the consent of the learned counsel, taken up for hearing and final disposal.
2. The petitioner is in appeal before the Customs, Excise and Service Tax Appellate Tribunal, aggrieved by an order of adjudication passed by the Commissioner on 6th February 2008 confirming a demand of duty of Rs.3.85 crores. An application for waiver of pre deposit was filed before the Tribunal. By its order dated 11th September 2009, the Tribunal directed the petitioner to deposit an amount of Rs.1 crore within a period of four weeks and to report compliance.
3. The issue which arises before the Tribunal in the appeal pertains to an Exemption Notification (No.64/95CE) dated 16th March 1995. Under Serial No.3 of the Notification, an exemption is provided in respect of all goods other than cigarettes `if supplied as stores for consumption on board a vessel of the Indian Navy or Coast Guard’. The petitioner claims to have supplied High Speed Diesel Oil as stores for consumption on board naval vessels. According to the petitioner, the product has been supplied through the installations of Indian Oil Corporation Limited, which are directly connected to the naval docks through dedicated pipe lines. The case of the petitioner is that prior to 6th September 2004 a facility of removing petroleum products without payment of duty from the refinery to the warehouse was available. The prevailing practice of Indian Oil Corporation Limited was to place orders upon the petitioner, confirming the quantities intended for supplies to Naval Vessels. The petitioner made supplies against specific indents placed by Indian Oil Corporation Limited and claimed the benefit of Exemption Notification No.64/95CE. With effect from 6th September 2004, the warehousing facility was withdrawn. The petitioner continued the same practice, as before, of supplying or clearing specified quantities of HSD oil through pipe lines to IOCL’s warehouse at Wadala, which in turn was cleared by IOCL to Naval Vessels.
4. A show cause notice was issued to the petitioner on 25th September 2007 by the Commissioner of Central Excise seeking to deny the benefit of Exemption Notification No. 64/95 on the ground that the supply of HSD was not effected directly to the Indian Navy. The demand, as noted earlier, was confirmed on 6th February 2008. The petitioner has filed an appeal before the Tribunal, in which an application for stay was moved. Stay has been granted subject to a deposit of an amount of Rs.1 crore, by the impugned order.
5. The grievance of the petitioner before the Court is that the same member of the Tribunal, who passed the impugned order dated 11th September 2009 subsequently passed an order on 20th November 2009 in a batch of cases involving the same question, by which a complete waiver of pre deposit was granted, subject to the filing of a bond. As a matter of fact, it may also be noted that among the stay applications, which were disposed of by the Tribunal on 20th November 2009 were those arising from appeals filed by Bharat Petroleum Corporation Limited as well as the petitioner, Hindustan Petroleum Corporation Limited. The grievance, therefore, is that an inconsistent stand has been taken by the Tribunal not merely in respect of different oil companies but in the case of the petitioner itself.
6. During the course of hearing, learned counsel appearing on behalf of the respondent has placed on the record a subsequent order passed by the same member of the Tribunal on 14th December 2009 in a stay application arising out of an appeal filed by the petitioner, by which the petitioner has been directed to deposit an amount of Rs.1 crore towards a demand of duty of approximately Rs. 4 crores.
7. The position that has been brought to the notice of the Court is far from satisfactory. In the order of the Tribunal dated 11th September 2009 which is impugned in these proceedings, the Tribunal has, on a construction prima facie of Exemption Notification No. 64/95, rejected the case of the petitioner for a complete waiver of pre deposit. The Tribunal observed that prima facie the requirement for the grant of an exemption under Notification No. 64/95 is that the supply of stores should be effected directly to the Indian Navy for consumption on board a Naval vessel. The Tribunal has observed that the Notification cannot apply to `indirect supplies’ like those involved in the present case. The Tribunal also took note of the fact that with effect from 1st November 2007 Notification No.37/2007CE was brought into force, which inserted Entry 3A in the Table annexed to the earlier Notification No.64/95CE. By the new entry, fuels falling under Chapter heading 27.10 of the Tariff Schedule have been exempted from the payment of the duty of excise if procured by IOCL from any other manufacturer and supplied as stores for consumption on board a vessel of the Indian Navy or Coast Guard, subject to the fulfilment of certain conditions. The Tribunal however was of the view that the Notification would apply with effect from 1st November 2007 whereas the dispute in the present case relates to a period prior to 1st November 2007. The Tribunal has also took note of the judgment of the Supreme Court in Leader Engineering Works Vs. CCE 2007 (212) E.L.T. 168 (S.C.). The case before the Supreme Court related to supplies of stores made not directly to the Indian Navy but to Ship Builders. The Supreme Court upheld the view of the Tribunal that the benefit of Notification No. 64/95CE was admissible only if the goods were supplied directly to the Indian Navy as stores for consumption on board a naval vessel and not through a Ship Builder on a certificate issued by the Navy that the goods would be used for the manufacture of ships for the Navy. The Supreme Court observed as follows :“
9. …….. The words of the exemption notification are clear and unambiguous. Goods other than cigarettes are exempted from duty if the same are supplied as stores for consumption on board a vessel of Indian Navy or Coastguard. The purchase order has been issued by ship builders on behalf of the Indian Navy, Government of India under the Ministry of Defence for manufacture or warship in yard. As per notification the goods supplied to the ship builders will not qualify for exemption and only the goods supplied to the Indian Navy directly will qualify for exemption.”
8. The Tribunal disposed of another set of stay applications on 20th November 2009 in which, as noted earlier, Bharat Petroleum Corporation Limited and the petitioner were applicants. The member of the Tribunal, who wrote the impugned order dated 11th September 2009, has also written the subsequent order dated 20th November 2009. However in the subsequent order, same judgement of the Supreme Court in Leader Engineering Works (supra) has been distinguished on the ground that whereas in the case of the petitioner, HSD is being supplied to the Navy through a continuous pipe line, in Leader Engineering Works, the stores were supplied by the assessee to the Indian Navy through Ship Builders. We find that there is a palpable inconsistency on the part of the Tribunal in dealing with stay applications arising out of diverse appeals. The inconsistency is even more pronounced having regard to the fact that the same judgement of the Supreme Court in Leader Engineering Works has been construed differently by the same member of the Tribunal in the orders dated 11th September 2009 and 20th November 2009.
9. The Tribunal, first and foremost, is duty bound by Article 141 of the Constitution of India to ensure that it follows binding precedent of the Supreme Court. The Tribunal as a judicial body must follow principles of consistency when it decides cases. The lack of consistency is clear on the face of record. In fact, as noted earlier the Tribunal has now passed a third order on 14th December 2009 on a stay application arising out of an appeal filed by the petitioner, by which the view taken in the first order dated 11th September 2009 is reiterated and a direction has been issued for the deposit of an amount of Rs.1 crore towards a demand of duty. Faced with this situation, we are of the considered view that it would be appropriate to remit the proceedings back to the Tribunal for reconsideration of the matter having regard to the observations made by this Court earlier. Judicial orders must be passed by the Tribunal with a greater degree of circumspection and application of mind. Whim and caprice are alien to the judicial process. Consistency, based on judicial precedents should be the norm.
10. In order to facilitate a fresh decision on remand, the impugned order of the Tribunal dated 11th September 2009 is set aside and the stay application is restored to the file of the Tribunal for a fresh decision.
11. Rule is accordingly made absolute in the above said terms. There shall be no order as to costs.