ELECTRONICS CORPORATION OF INDIA LTD.versusUNION OF INDIA & ORS.

                       [2011] 2 S.C.R. 971


       ELECTRONICS CORPORATION OF INDIA LTD.                         A
                                 v.
                   UNION OF INDIA & ORS.
                (Civil Appeal No. 1883 of 2011}

                      FEBRUARY 17, 2011,
                                                                     9,
  [S.H. KAPADIA, CJI, MUKUNDAKAM SHARMA, K.S.
 RADHAKRISHNAN, SWATANTER KUMAR AND ANIL R.
                      DAVE, JJ.]

         Committees: Inter se litigation between entities of the C
    State - Resolution by Committees - Dispute between Public
    Sector Undertaking of Central Government and Union of India
   - Committees set up by Supreme Court by orders dated
    11.10. 1-S.9._1, 7.1.1994, 20.7.2007 - Prayer for recalling these
   orders on the ground that the mechanism set up by Supreme D
   Court in its orders had outlived their utility and in view of
   changed scenario - Held: The idea behind setting up of the
   Committees, initially called "High Power~d Committee~ then
   "Committee of Secretaries" and finally "Committee on
   Disputes" (CoD) was to ensure that resources of the State are E
   not frittered away in inter se litigations between entities of the
   State, which could be best resolved, by an empowered CoD
   - The mechanism 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 -         F
 ; However, despite best efforts of the CoD, the mechanism
   could not achieve the results, for which it was constituted, and
   had in fact led to delay in litigation causing loss of revenue -
!: Since the mechanism has outlived its utility, the directions
   contained in order dated 11.10.1991, 7.1.1994, 20.7.2007 are
   recalled.                                                          G

     ONGC v. CCE 1995 Suppl.(4)        sec
                                     541; ONGC v. CCE
 2004 (6) SCC 437; ONGC v. City & Industrial Development

                               971
        972     SUPREME COURT REPORTS                 [2011) 2 S.C.R.


A       Corpn. 2007 (7) SCC 39; ONGC and Anr. v. CCE 1992 Supp
        (2) sec 432; 1995 Supp (4) sec 541 dated 11.10.1991;
        (2004) 6 sec 437; (2007) 7 sec 39 - referred to.

                            Case Law Reference:

B             1995 suppl.(4) sec 541 Referred to          Paras 5, 9

              2004 (6) sec 437         Referred to        Paras 5, 9

              2001 (7) sec 39           Referred to       Paras 5, 9

              1992 Supp (2) sec 432 Referred to           Para 6
c
            CIVIL APPELLATE JURISDICTION : Civil Appeal No.
        1883 of 2011.

      From the Judgment & Order dated 13.12.2008 of the High
D Court of Andhra Pradesh at Hyderabad in Writ Petition No.
• 26573 of 2008.

                                    WITH

        C.A. No. 1903 of 2008.
E
       Goolam E. Vahanvati, AG, P.P. Tripathy, ASG, Arijit
  Prasad, Kumal Bahri, D.D. Karnath, Rohit Sharma, Amey
  Nargolkar, B.V. Balaram Das, Anil Katiyar, Rupesh Kumar,
  Parijat Sinha, Reshmi Rea Sinha, Anil Kumar Mishra, Vikram,
F Ganguly, S.C. Ghosh, B. Krishna Prasad, E.C. Agrawala for the
  appearing parties.

              The Order of the Court was delivered by

                                 ORDER
    G
              S.H. KAPADIA, CJI. 1. Leave granted.

             2. Electronics Corporation of India Ltd. ("assessee" for
         short) is a Central Government Public Sector Undertaking
         ("PSU"). It is registered as a Government Company under the
    H
    ELECTRONICS CORPORATION OF INDIA LTD. v.                  973
     l,JNION OF INDIA & ORS. [S.H. KAPADIA, CJI.]

 Companies Act, 1956. It is under the control of Department of       A
 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.         B
 Accordingly it was proposed in the show cause notices that the
 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     c
 stood written off.

        3. The adjudicating authority held that the.re 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) D
  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 stilUying
  in the factory and they were useful for production and therefore E
  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. F
 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 G
  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.                                         H
    974     SUPREME COURT REPORTS                  [2011) 2 S.C.R.


A        4. In 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
8   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
C   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
D   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
E   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
F   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.

G      5. The above two instances are given only to highlight the
  fact that the mechanism set up by this Court in its Orders
  reported in (i) 1995 Suppl.(4) SCC 541 (ONGC v. CCE) dated
  11.10.1991; (ii) 2004 (6)     sec437 (ONGC v. CCE) dated
  7.1.1994; and (iii) 2007 (7) SCC 39 (ONGC v. City & Industrial
H Development Corpn.) dated 20.7.2007 needs to be revisited.
    ELECTRONICS CORPORATION OF INDIA LTD. v.                 975
     UNION OF INDIA & ORS. [S.H. KAPADIA, CJI.]

       6. Learned Attorney General has submitted that the above A
 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 B
 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 matter         c
 personally".

        7. This was followed by the order dated 11.10.1991 in
 ONGC-11 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 D
 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 E
 having been first examined by the Committee and its clearance
 for litigation".

         8. Thereafter, in ONGC-111 case (supra), this Court directed
   that in the· absence of clearance from the "Committee of F
   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 G
   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 their
. 'Instrumentalities.
                                                                   H
    976     SUPREME COURT REPORTS                  [2011] 2 S.C.R.


A       9. The 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
B 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)]
c 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,
0
   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
E 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
F insurance regulators. Civil appeals lie to this Court. Stakes in
   such cases are huge. One cannot possibly expect timely
   clearance by CoD. 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
G 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 (i) 1995 Supp (4) SCC
    541 dated 11.10.1991, (ii) (2004) 6 sec 437 dated 7 .1.1994
    and (iii) (2007) 7 sec 39 dated 20.7.2007.
H
 ELECTRONICS CORPORATION OF INDIA LTD. v.                977
  UNION OF INDIA & ORS. [S.H. KAPADIA, CJI.]

    10. In the circumstances, we hereby recall the following A
Orders reported in:

       · (i)    1995 Supp (4) sec 541 dated 11.10.1991

        (ii)    (2004) 6 sec 437 dated 7.1.1994
                                                               B
        (iii)   (2007) 1 sec 39 d~ted 20.1.2001

    11. For the aforestated reasons, I.A. No. 4 filed by the
assessee in Civil Appeal No. 1903/2008 is dismissed.

D.G.                                         Appeal pending.