2008 (8) TMI 59 - HC - Central Excise

Entitlement to deemed credit - assessee is manufacturer of knitted garments has given declaration on under Rule 9A - on facts, the appellate authority has accepted the explanation of the assessee that there were no uncounted goods in the factory and that there was no evasion of duty. There is nothing to hold the said finding to be perverse tribunal was justified in upholding the decision of appellate authority no substantial questions of law arise deemed credit entitled

Summary

Issues:
Entitlement to deemed MODVAT credit, Admissibility of additional evidence at the appellate stage, Legality of Tribunal's order, Interpretation of appellate procedure under Section 35A of the Central Excise Act.

Entitlement to deemed MODVAT credit:
The appellant, a manufacturer of knitted garments, declared goods in stock under Rule 9A of the Cenvat Credit Rules, 2002. A show cause notice was issued for recovery of central excise duty on unrecorded garments. The appellate authority accepted the explanation that no uncounted goods were present, leading to the appeal's dismissal.

Admissibility of additional evidence at the appellate stage:
The appellant argued that the Tribunal wrongly allowed additional evidence in the form of bank statements, citing the Supreme Court's judgment in a similar case. However, Section 35A of the Act permits new grounds and further inquiry as necessary, and the appellate authority's acceptance of the explanation was deemed reasonable.

Legality of Tribunal's order:
The Tribunal's decision was based on factual satisfaction regarding the appellant's explanation, leading to the appeal's allowance. The High Court found no grounds to consider the Tribunal's order as illegal or the findings as perverse, as the explanation was accepted and no evasion of duty was found.

Interpretation of appellate procedure under Section 35A of the Central Excise Act:
The High Court clarified that under Section 35A, new grounds can be raised, and further inquiry can be conducted as necessary based on the facts of the case. In this instance, the appellate authority's acceptance of the appellant's explanation regarding uncounted goods and duty evasion was deemed appropriate, leading to the dismissal of the appeal.

In conclusion, the High Court dismissed the appeal as the substantial questions of law proposed did not arise, given the factual acceptance of the appellant's explanation by the appellate authority. The judgment emphasized the application of relevant legal provisions and the importance of factual satisfaction in appellate decisions under the Central Excise Act.