2011 (9) TMI 949 - HC - Central Excise

Summary

Issues:
1. Entitlement to avail Modvat Credit on inputs received from 100% EOU supplier.
2. Ignoring restrictions on credit availment under Rule 57 AB (2) (a) of Central Excise Rules.
3. Reliance on a judgment while an appeal is pending before the High Court.
4. Consideration of clearances from 100% EOUs to DTA as "deemed import."
5. Entitlement of assessees to duty paid by suppliers as excise duty equivalent to Additional duty of customs.

Analysis:

1. The first issue revolves around the entitlement of the first respondent to avail Modvat Credit on inputs received from a 100% EOU supplier. The question pertains to whether the credit can be claimed to the extent of 100% of the Additional Duty of Customs leviable when the actual payment was only 50% of such duty. This matter involves interpreting Notification No. 2/95-C.E., dated 4-1-95.

2. The second issue questions the correctness of the Tribunal in disregarding the restrictions on credit availment as per Rule 57 AB (2) (a) of the Central Excise Rules. The focus is on whether the Tribunal erred in allowing credit beyond the duty amount equal to the Additional duty leviable on the goods under the Customs Tariff Act, 1975.

3. The third issue concerns the Tribunal's reliance on a specific judgment while an appeal is pending before the High Court. The question arises as to whether the Tribunal was justified in relying on the judgment in Vikram Ispat v. Commissioner of Central Excise, Mumbai III, despite the matter being subjudice.

4. The fourth issue questions the Tribunal's decision regarding clearances from 100% EOUs to the DTA, arguing that such clearances should be treated as "deemed import." This issue involves determining the classification of clearances from EOUs to the DTA and its implications on the tax treatment.

5. The final issue addresses the entitlement of assessees to the duty paid by suppliers as excise duty equivalent to the Additional duty of customs leviable. The judgment of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) favored the assessees, aligning with the precedent set in the case of Vikram Ispat v. CCE, Mumbai - III. The High Court, after reviewing the CESTAT's order, upheld the decision and dismissed the appeals, allowing the Revenue to approach the Supreme Court.