Order date – 17 August 2022

Facts – 

• The Petitioner, J.P. Morgan Services India Pvt. Ltd., is engaged in the business of various types of back office services largely outside India along with certain group entities within India. Since petitioner exports majority of its services to overseas entities, petitioner is not in a position to utilise the accumulated CENVAT credit.
• During the usual course of business, petitioner filed applications for refund claiming refund of accumulated unutilised CENVAT credit for various periods under Rule 5 of the CENVAT Credit Rules, 2004. The period to which unutilised accumulated CENVAT credit applied was September 2004 to June 2005 and October 2006 to September 2007 and the total refund claimed was Rs.6,61,46,240/-.
• Petitioner filed two refund claims and applications were filed within limitation provided under Section 11B of the Central Excise Act, 1944, which was allowed by the commissioner (Appeal).
• A show cause notice dated 22nd December 2021 alleging that consequent to CESTAT order petitioner had filed refund claim by a letter dated 7th September 2021 which was received by the department on 14th September 2021 and hence, the refund claim was time barred in view of Explanation B (ec) of Section 11B of the Central Excise Act, 1944.
• By a letter dated 17th February 2022, petitioner explained that the refund claims had been filed years ago and had been adjudicated upon and no appeal had been filed by the department against the order of the Commissioner (Appeals) allowing certain refunds and hence, the show cause notice was not legal.
• Aggrieved the petitioner filed an appeal.

Issue – 

• Whether the Show Cause Notice rejecting the refund claim of petitioner which has been already allowed and reached finality in judicial/quasi judicial proceedings is sustainable?

Order – 

• The Court observed that the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. 
• The mere fact that the order of the appellate authority was not acceptable to the department in itself would be an objectionable phrase and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. 
• The Apex Court in Union of India and Ors. V/s. Kamlakshi Finance Corporation Ltd (1992) has held that if this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.
• Respondents were directed to pay interest to petitioner on refund amount for the applicable period in accordance with law and the refund was directed to be paid within eight weeks from the date of the order. 
• Petition disposed.