2010 (12) TMI 443 - HC - Central Excise

Adjustment of duty - Whether the duty chargeable u/s 3 of the Central Excise Act, 1944 can be adjusted against the amount of 8% of the value of exempted goods under erstwhile Rule 57CC of Cenvat Credit Rules, 1944 - The revenue has contended that the adjustment so allowed is not legally correct also not strictly in accordance with the directions contained in the aforesaid CESTAT order in as much as the adjustment had to be allowed of duty already paid, whereas here the adjustment has been allowed not against duty but against the amount paid @ 8% - The revenue has pleaded that there is plethora of legal pronouncements holding that the amount paid under Rule 57CC is not duty - In this connection, it is observed that the Commissioner (Appeals) directed that the duty liability on hot rolled patta patti would be adjusted to the extent of duty already paid by way of adjustment of Modvat/Cenvat Credits - While directing so also keep in mind that revenue has not gone in appeal against the order of adjudication allowed by the Ld. Adjudicating Authority - In absence of appeal by revenue, the relief granted by lower authority cannot be denied - Therefore, the assessee should get relief granted by lower appellate authority - Decided in favour of assessee.

Summary

Issues:
1. Whether duty chargeable under Section 3 of the Central Excise Act, 1944 can be adjusted against exempted goods under Rule 57CC of Cenvat Credit Rules, 1944?
2. Whether Central Excise duty liability on S.S. Patta Patti ordered to be adjusted against payment of 8% of the value of exempted goods is legally correct?

Analysis:
Issue 1: The respondent-assessee, a manufacturer of stainless steel circles, claimed exemption for captive use of raw material under notification No.67/95-CE. Duty demand was raised against the assessee, which was upheld in appeal with the modification that duty liability was to be adjusted against modvat reversal. On further appeal, the duty paid under Rule 57CC of the Central Excise Rules, 1944 was directed to be adjusted. The Commissioner upheld the adjustment, stating that the duty liability on SS Patta Patti would be adjusted to the extent of duty already paid. The Tribunal concurred, emphasizing that the adjustment was allowed in accordance with previous orders and that the revenue had not challenged the earlier adjudication order. The Tribunal highlighted that the duty liability should be examined at different stages of manufacture, and relief granted by the lower authority should not be denied in the absence of an appeal by the revenue.

Issue 2: The Tribunal found no dispute by the revenue that the order of adjudication was incorrect. It emphasized that goods were manufactured at different stages and that duty liability should be examined accordingly. The Tribunal noted that since the revenue did not appeal against the adjudication order, the relief granted by the lower authority should not be denied to the assessee. The High Court dismissed the appeal, stating that since the revenue did not challenge the earlier adjudication order allowing adjustment, the questions raised could not be considered substantial questions of law. The Court upheld the view that the adjustment could not be challenged in the second round of litigation due to the revenue's previous inaction.

In conclusion, the High Court affirmed the decisions of the lower authorities and dismissed the appeal, emphasizing the importance of following judicial discipline and respecting final adjudication orders in subsequent litigation.