2007 (7) TMI 269 - HC - Central Excise

Whether in the absence of provisional assessment, duty paid in excess can be adjusted against duty short paid, especially when the refund claim of excess duty is otherwise time barred since no such issue was raised before the Tribunal. Therefore, adjustment as ordered by Tribunal would not give rise to any question of law further, since revenue not raised any argument before Tribunal that credit would not be allowed selectively in respect of few consignments only, no question of law arise

Summary

Issues:
1. Adjustment of duty paid in excess against duty short paid.
2. Allowance of Modvat credit selectively in respect of only a few consignments.

Analysis:

Issue 1: Adjustment of duty paid in excess against duty short paid
The case involved an appeal under Section 35-G of the Central Excise Act, 1944 against an order by the Customs, Excise and Service Tax Appellate Tribunal. The respondent was alleged to have mis-declared the assessable value of certain goods, leading to demands for differential central excise duty. The Adjudicating Authority found the respondent liable for short payment of duty and imposed demands along with interest. However, on appeal, the Tribunal accepted the respondent's argument of arithmetical error, leading to excess demand of about Rs. 1.20 lakhs. The Tribunal directed the re-computation of duty, acknowledging the excess payment made by the respondent and the need to reassess all clearances during the relevant period. The Tribunal also allowed the benefit of Modvat credit to the respondent, as there was no dispute regarding the eligibility of inputs and finished products for such credit.

Issue 2: Allowance of Modvat credit selectively
The Tribunal's decision to allow Modvat credit to the respondent was based on the eligibility of inputs and finished products for such credit, without any dispute in this regard. The Tribunal directed the Adjudicating Authority to recompute the duty amount considering the relief granted and giving the respondent an opportunity to present its case. However, the High Court noted that the questions of law claimed by the revenue did not emerge from the Tribunal's order. The High Court found that the appeal lacked merit as the issues raised by the revenue were not addressed before the Tribunal. The High Court concluded that the appeal was devoid of merit and dismissed it accordingly.

In summary, the High Court upheld the Tribunal's decision to allow the adjustment of excess duty paid and the grant of Modvat credit to the respondent. The High Court found no legal infirmity in the Tribunal's order and dismissed the appeal, stating that the claimed substantial questions of law did not arise from the Tribunal's decision.