Corporation of India Ltd. Vs Union of India & Ors.
O R D E R
S.H. KAPADIA, CJI
Corporation of India Ltd. ("assessee" for short) is a Central Government
Public Sector Undertaking ("PSU"). It is registered as a Government
Company under the Companies Act, 1956. It is under the control of Department of
Atomic Energy, Government of India. A dispute had been raised by the Central Government
(Ministry of Finance) by issuing show cause notices to the assessee alleging that
the Corporation was not entitled to avail/utilize Modvat/Cenvat Credit in respect
of inputs whose values stood written off. credit taken on inputs was liable to be
reversed. Thus, the short point which arose for determination in the present
case was whether the Central Government was right in insisting on reversal of credit
taken by the assessee on inputs whose values stood written off.
adjudicating authority held that there was no substance in the contention of
the assessee that the write off was made in terms of AS-2. The case of the
assessee before the Commissioner of Central Excise (adjudicating authority) was
that it was a financial requirement as prescribed in AS-2; that an inventory more
than three years old had to be written off/derated in value; that such derating
in value did not mean that the inputs were unfunctionable; that the inputs were
still lying in the factory and they were useful for production and therefore
they were entitled to Modvat/Cenvat credit. As stated above, this argument was rejected
by the adjudicating authority and the demand against the assessee stood confirmed.
Against the order of
the adjudicating authority, the assessee decided to challenge the same by filing
an appeal before CESTAT. Accordingly, the assessee applied before the Committee
on Disputes (CoD). However, the CoD vide its decision dated 2.11.2006 refused
to grant clearance though in an identical case the CoD granted clearance to Bharat
Heavy Electricals Ltd. ("BHEL"). Accordingly, the assessee herein
filed Writ Petition No. 26573 of 2008 in the Andhra Pradesh High Court. By the
impugned decision, the writ petition filed by the assessee stood dismissed. Against
the order of the Andhra Pradesh High Court the assessee has moved this Court by
way of a special leave petition.
a conjunct matter, Civil Appeal No. 1903 of 2008, the facts were as follows. Bharat
Petroleum Corporation Ltd. ("assessee" for short) cleared the goods for
sale at the outlets owned and operated by themselves known as Company Owned and
Company Operated Outlets. The assessee cleared the goods for sale at such outlets
by determining the value of the goods cleared during the period February, 2000 to
November, 2001 on the basis of the price at which such goods were sold from their
warehouses to independent dealers, instead of determining it on the basis of the
normal price and normal transaction value as per Section 4(4)(b)(iii) of Central
Excise Act, 1944 ("1944 Act" for short) read with Rule 7 of Central Excise
Valuation (Determination of Price of Excisable Goods) Rules, 2000. In short,
the price adopted by the assessee which is a PSU in terms of Administered
Pricing Mechanism ("APM") formulated by Government of India stood rejected.
The Tribunal came to
the conclusion that the APM adopted by the assessee was in terms of the price fixed
by the Ministry of Petroleum and Natural Gas; that it was not possible for the assessee
to adopt the price in terms of Section 4(1)(a) of the 1944 Act; and that it was
not possible to arrive at the transaction value in terms of the said section.
Accordingly, the Tribunal allowed the appeal of the assessee. Aggrieved by the decision
of the Tribunal, CCE has come to this Court by way of Civil Appeal No. 1903 of 2008
in which the assessee has preferred I.A. No. 4 of 2009 requesting the Court to dismiss
the above Civil Appeal No. 1903 of 2008 filed by the Department on the ground
that CoD has declined permission to the Department to pursue the said appeal.
above two instances are given only to highlight the fact that the mechanism set
up by this Court in its Orders reported in
Suppl.(4) SCC 541 (ONGC v. CCE) dated 11.10.1991;
(6) SCC 437 (ONGC v. CCE) dated 7.1.1994; and
(7) SCC 39 (ONGC v. City & Industrial Development Corpn.) dated 20.7.2007 needs
to be revisited.
Attorney General has submitted that the above Orders have outlived their utility
and in view of the changed scenario, as indicated hereinafter, the aforestated Orders
are required to be recalled. We find merit in the submission made by the
Attorney General of India on behalf of the Union of India for the following reasons.
By Order dated 11.9.1991, reported in 1992 Supp (2) SCC 432 (ONGC and Anr. v. CCE),
this Court noted that "Public Sector Undertakings of Central Government and
the Union of India should not fight their litigations in Court". Consequently,
the Cabinet Secretary, Government of India was "called upon to handle the
was followed by the order dated 11.10.1991 in ONGC-II case (supra) where this Court
directed the Government of India "to set up a Committee consisting of representatives
from the Ministry of Industry, Bureau of Public Enterprises and Ministry of
Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry
and public sector undertakings of the Government of India and public sector
undertakings between themselves, to ensure that no litigation comes to Court or
to a Tribunal without the matter having been first examined by the Committee and
its clearance for litigation".
in ONGC-III case (supra), this Court directed that in the absence of clearance
from the "Committee of Secretaries" (CoS), any legal proceeding will not
be proceeded with. This was subject to the rider that appeals and petitions filed
without such clearance could be filed to save limitation. It was, however, directed
that the needful should be done within one month from such filing, failing which
the matter would not be proceeded with. By another order dated 20.7.2007 (ONGC-IVth
case) this Court extended the concept of Dispute Resolution by High-Powered
Committee to amicably resolve the disputes involving the State Governments and
idea behind setting up of this Committee, initially, called a "High-Powered
Committee" (HPC), later on called as "Committee of Secretaries" (CoS)
and finally termed as "Committee on Disputes" (CoD) was to ensure that
resources of the State are not frittered away in inter se litigations between
entities of the State, which could be best resolved, by an empowered CoD. The
machinery contemplated was only to ensure that no litigation comes to Court without
the parties having had an opportunity of conciliation before an in-house committee.
[see : para 3 of the order dated 7.1.1994 (supra)] Whilst the principle and the
object behind the aforestated Orders is unexceptionable and laudatory, experience
has shown that despite best efforts of the CoD, the mechanism has not achieved
the results for which it was constituted and has in fact led to delays in litigation.
We have already given
two examples hereinabove. They indicate that on same set of facts, clearance is
given in one case and refused in the other. This has led a PSU to institute a SLP
in this Court on the ground of discrimination. We need not multiply such illustrations.
The mechanism was set up with a laudatory object. However, the mechanism has led
to delay in filing of civil appeals causing loss of revenue. For example, in many
cases of exemptions, the Industry Department gives exemption, while the same is
denied by the Revenue Department. Similarly, with the enactment of regulatory
laws in several cases there could be overlapping of jurisdictions between, let us
say, SEBI and insurance regulators. Civil appeals lie to this Court. Stakes in
such cases are huge. One cannot possibly expect timely clearance by Co D.
In such cases, grant of
clearance to one and not to the other may result in generation of more and more
litigation. The mechanism has outlived its utility. In the changed scenario indicated
above, we are of the view that time has come under the above circumstances to
recall the directions of this Court in its various Orders reported as
Supp (4) SCC 541 dated 11.10.1991,
6 SCC 437 dated 7.1.1994 and
7 SCC 39 dated 20.7.2007.
the circumstances, we hereby recall the following Orders reported in :
Supp (4) SCC 541 dated 11.10.1991
6 SCC 437 dated 7.1.1994
7 SCC 39 dated 20.7.2007 11. For the afore stated reasons, I.A. No. 4 filed by
the assessee in Civil Appeal No. 1903/2008 is dismissed.
(S. H. Kapadia)
(K.S. Panicker Radhakrishnan)
(Anil R. Dave)