2015 (10) TMI 711 - HC - Central Excise

CENVAT Credit - benefit of exemption of the notification dated 16.3.1995 - Captive consumption - Invocation of extended period of limitation - Suppression of facts - Held that - Adjudicating Authority failed to take into account the object of the Central Excise Tariff (Amendment) Bill, 2004 as well as the statement of objects/reasons appended to the Bill. The adjudicating Authority has also over looked the fundamental principle of interpretation, thus, the order, so passed, by the Adjudicating Authority is non-speaking order. It has further been submitted that it is not open for the subordinate authority to refuse to give effect to binding judgments of higher quasi judicial authorities without assigning reasons - Prima face of interim relief is made out. - Stay granted.

Summary

Issues:
1. Exemption notification for goods under Central Excise Act.
2. Classification of products under different headings.
3. Duty rates for different types of spirits.
4. Compliance with CENVAT Credit Rules.
5. Allegations of willful misdeclaration and suppression.
6. Judicial interpretation of statutory provisions.
7. Adjudicating Authority's reasoning in passing the order.

Exemption Notification and Product Classification:
The petitioner, engaged in V.P. Sugar manufacturing, transfers molasses to a distillery for alcohol production. Exemption under a notification dated 16.3.1995 was extended to the petitioner's unit until 28.2.2005. Post this, Ethyl Alcohol remained exempt from duty, while other spirits were excisable. The subsequent notification dated 17.3.2012 maintained this exemption for non-denatured Ethyl Alcohol. The petitioner, producing both denatured Ethyl Alcohol (taxable) and other spirits (NIL duty), complied with Rule 6 of CENVAT Credit Rules.

Compliance with CENVAT Credit Rules and Allegations:
The petitioner declared molasses transfer for captive consumption monthly, meeting Rule 6 obligations. Despite no objections earlier, a notice was issued in 2012, citing a Supreme Court decision on willful misdeclaration. The petitioner filed a writ petition (No.9339/2012) due to the limitation period lapse. The petition was entertained, interim relief granted, and later disposed on 10.7.2014, remanding the matter to the Adjudicating Authority.

Judicial Interpretation and Adjudicating Authority's Order:
The impugned order dated 4.2.2015 by respondent no.2 was challenged on grounds of overlooking the Central Excise Tariff (Amendment) Bill, 2004's object and interpretation principles. The petitioner argued the order was non-speaking and failed to consider binding higher authorities' judgments without reasons. Interim relief was granted considering the case's circumstances.

In conclusion, the judgment addressed issues related to exemption notifications, product classification, compliance with CENVAT Credit Rules, allegations of willful misdeclaration, judicial interpretation, and the Adjudicating Authority's reasoning in passing the order. The petitioner's compliance with rules, exemption status of different spirits, and the authority's adherence to legal principles were central to the court's decision to stay the impugned order.