2008 (3) TMI 238 - AT - Central Excise

Revenue plea is to keep appeal pending on ground of pendency of referred issue before HC - revenue plea is not acceptable because HC cannot stay operation of tribunal s order out of which the question was referred in respect of final product (fabrics) cleared on payment of duty to 100% EOU for export, utilization of deemed credit on declared inputs (cotton yarn) is allowable in view of notification no. 6/2002 revenue s appeal dismissed

Summary

Issues:
1. Deemed credit for cotton yarn used in manufacturing fabrics for export to 100% EOU.
2. Pending questions of law before High Courts affecting finality of Tribunal's decisions.
3. Stay of Tribunal's order due to pending issues before High Courts.
4. Entitlement of deemed credit under Notification No.6/2002-CE (NT) for cotton yarn used in manufacturing fabrics for export to 100% EOU.

Analysis:

Issue 1: Deemed credit for cotton yarn used in manufacturing fabrics for export to 100% EOU
The appeal concerns the allowance of deemed credit to the respondents for cotton yarn used in manufacturing fabrics called "Denim fabrics" for export to 100% EOU without duty payment. The Commissioner (Appeals) granted this benefit under Notification No.6/2002-CE (NT) by extending the applicability of the first proviso to para-3 of the Notification. The appellate authority relied on a previous case and the Larger Bench decision in Hunsur Plywood Works, holding in favor of the assessee. The Tribunal upheld the appellate Commissioner's decision based on the precedent set by the Larger Bench decision and the Tribunal's previous order in the respondents' case.

Issue 2: Pending questions of law before High Courts affecting finality of Tribunal's decisions
The department argued that the questions of law raised in previous cases were pending before the High Courts, challenging the finality of the Tribunal's decisions. However, the Tribunal noted that the mere pendency of issues before the High Courts does not automatically stay the operation of the Tribunal's final orders. The Tribunal cited precedents to support this stance, emphasizing that the reference applicant must seek a stay if required.

Issue 3: Stay of Tribunal's order due to pending issues before High Courts
The department contended that the decisions in previous cases did not attain finality due to pending questions of law before the High Courts. However, the Tribunal rejected this argument, stating that the Tribunal's orders remain effective unless stayed by a competent court. The Tribunal emphasized that it is the responsibility of the reference applicant to seek a stay if necessary.

Issue 4: Entitlement of deemed credit under Notification No.6/2002-CE (NT) for cotton yarn used in manufacturing fabrics for export to 100% EOU
The main issue revolved around whether the respondents were entitled to deemed credit under Notification No.6/2002-CE (NT) for cotton yarn used in manufacturing fabrics cleared to 100% EOUs for export. The Tribunal affirmed the applicability of the first proviso to para-3 of the Notification, following the precedent set by the Larger Bench decision and the Tribunal's previous order in the respondents' case. Consequently, the Tribunal upheld the appellate Commissioner's decision and dismissed the appeal.

This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed overview of the legal reasoning and decisions made by the Tribunal.