2017 (10) TMI 1315 - AT - Customs

Reversal of MODVAT credit - Fulfillment of Export Obligation - Whether in facts of the case since there is a reversal of Modvat credit, there is no violation of Condition No. VI of N/N. 204/92? - Whether in the facts of the case that as per the Licensing Authority (DGFT) has fulfilled the Export obligation and therefore, there is no violation of Condition No. VII of N/N. 204/92? Held that - The aforesaid two questions require clear fact finding and draw conclusion on that basis - Therefore learned Commissioner is requested to issue notice to appellant for production of evidence before him on the date he shall fix to examine the above two issues and outcome of examination reported by 18.12.2017 to Tribunal for conclusion of appeals.

Summary

Issues:
1. Interpretation of Conditions VI and VII of Notification No. 204/92 regarding reversal of Modvat credit and export obligation fulfillment.
2. Compliance with legal requirements based on High Court judgment in Afloat Textiles (India) Ltd.
3. Need for clear fact-finding and conclusion on the issues raised.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI involves the interpretation of Conditions VI and VII of Notification No. 204/92, focusing on the reversal of Modvat credit and fulfillment of export obligations. The matter, which has spanned over 21 years across legal forums, was previously before the Hon’ble High Court of Bombay. The High Court framed two crucial questions for consideration. Firstly, whether the reversal of Modvat credit constitutes a violation of Condition VI of the notification. Secondly, whether the fulfillment of export obligations, as certified by the Licensing Authority, absolves the appellant from violating Condition VII of the notification.

In addressing these questions, the Tribunal referred to the judgment in the case of Afloat Textiles (India) Ltd. The High Court emphasized the importance of ascertaining whether the reversal of Modvat credit and the subsequent findings of the Licensing Authority impact the compliance with the notification's conditions. Notably, the Tribunal noted the absence of a clear finding on these crucial issues, leading to concerns raised by the petitioners regarding the delayed judgment and potential miscarriage of justice.

Consequently, the Tribunal directed the learned Commissioner to issue a notice to the appellant for the production of evidence. The purpose is to conduct a thorough examination to determine compliance with the conditions outlined in the notification. The appellant was instructed to cooperate with the adjudicating Commissioner, appearing on the scheduled date without seeking adjournment. This process aims to ensure a comprehensive fact-finding exercise and the subsequent reporting of the examination outcome to the Tribunal for the final resolution of the appeals.

In conclusion, the judgment underscores the necessity for a meticulous examination of facts and evidence to conclusively address the issues raised regarding the compliance with Conditions VI and VII of Notification No. 204/92. The Tribunal's directive seeks to facilitate a fair and thorough evaluation to uphold legal standards and deliver a just resolution to the longstanding legal dispute.