2010 (2) TMI 1271 - HC - Central Excise

Summary

Issues Involved: Determination of substantial questions of law regarding Cenvat/Modvat credit availability and interpretation of Notification No. 30/2004-CE.

Issue 1 - Cenvat/Modvat Credit Availability:
The Commissioner of Central Excise & Customs, Surat-I filed a Tax Appeal u/s 35-G of the Central Excise Act, 1944 questioning the Tribunal's decision on Cenvat/Modvat credit availability. The appeal raised concerns about Rule 6(4) of the Cenvat Credit Rules, 2002/2004, which restricts Cenvat credit on capital goods used exclusively in manufacturing exempted goods. The Tribunal's decision was based on the interpretation of this rule in relation to goods cleared at nil rate of duty under Notification No. 30/2004-CE dated 9.7.2004. The Tribunal concluded that the Modvat credit was not availed for capital goods used in manufacturing exempted products during the relevant period from July 2004 to March 2005.

Issue 2 - Interpretation of Notification No. 30/2004-CE:
The second issue revolved around the Tribunal's understanding of para 3 of Notification No. 30/2004-CE dated 9.7.2004, which contains a proviso stating that the notification does not apply to goods where duty credit on inputs or capital goods has been taken under the Cenvat Credit Rules. The Tribunal's decision was based on this proviso and the specific circumstances of the case where the respondent-assessee had opted for the exemption under the said notification for a certain period, during which no duty was paid on the manufactured goods. However, the capital goods in question were later used for manufacturing goods on which duty was paid.

Judgment Summary:
The High Court, after considering the arguments presented by both parties and reviewing the lower authorities' orders, found that the Tribunal's factual findings were conclusive. The respondent-assessee had utilized capital goods for manufacturing goods on which duty was paid before opting for the exemption under Notification No. 30/2004-CE. As the Tribunal's decision was based on these factual aspects and the specific timeline of events, the High Court concluded that no substantial question of law arose from the Tribunal's order. Therefore, the appeal was dismissed, and the notice was discharged.