2008 (1) TMI 293 - HC - Central Excise

Original authority denied credit on ground that invoice are not bearing proper declaration as required u/notification 58/97 - Commissioner denied credit on the ground different from one mentioned/alleged in SCN Tribunal is correct in holding that Commissioner (Appeals) has traversed beyond the show cause notice there is no substantial question of law as raised by the appellant arises for determination of this Court revenue appeal is dismissed

Summary

Issues:
1. Challenge to order under Section 35G of Central Excise Act, 1944.
2. Entitlement to deemed credit under Notification 58/97-CE when duty not discharged by input manufacturer.

Issue 1:
The appellant, the Department/Revenue, challenged the order passed by the Customs, Excise & Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944. The substantial questions of law raised included whether the Tribunal was correct in holding that the Commissioner (Appeals) exceeded the show cause notice by not ensuring duty payment as required under Notification 58/97-CE. The appeal revolved around the correct interpretation and application of the provisions relating to deemed Modvat credit under the said Notification.

Issue 2:
The case involved the entitlement of the manufacturer of final products to deemed credit under Notification 58/97-CE when the manufacturer-supplier of inputs had not paid Central Excise duty and provided a misleading certificate on the invoices. The respondent, a manufacturer of M.S. Pipes, availed deemed Modvat credit on M.S. Flats/Bars under the Notification. However, discrepancies were found in the invoices regarding the declaration of duty payment under Section 3A of the Act. The dispute centered on whether the respondent fulfilled the conditions for availing deemed credit, leading to a show cause notice for recovery of wrongly availed credit, interest, and imposition of a penalty.

The adjudicating authority confirmed the demand against the respondent, emphasizing the non-payment of appropriate duty by the input manufacturer, thus disallowing the deemed Modvat credit. The Commissioner (Appeals) upheld this decision, highlighting the input manufacturer's failure to discharge full duty liability, rendering the certificates on invoices invalid for claiming deemed credit. However, the Tribunal overturned the Commissioner's decision, noting that the rejection of the appeal was based on different grounds than those alleged in the show cause notice, leading to the appeal by the Revenue.

In the final judgment, the Court dismissed the appeal by the Revenue, citing precedents and Division Bench judgments that favored the respondents. The Court found no substantial question of law for determination, ultimately upholding the Tribunal's decision in favor of the respondent.