2016 (5) TMI 742 - HC - Central Excise

Admissibility of Cenvat credit - Two different orders passed by the Tribunal by admitting the Cenvat credit in one and denying in another - Held that - the order passed by the Tribunal initially is set aside where the Member Judicial and Member Technical disagreed with each other. We would highly appreciate that instead of the appeal going to a third Member and for being heard in its entirety, it is now reheard by the Tribunal s West Zonal Bench afresh. They should, uninfluenced by the earlier findings in the matter, pass fresh order on merits and in accordance with law after hearing both sides. It is clarified that we express no opinion on the rival contentions. - Decided in favour of petitioner

Summary

Issues:
1. Dispute over CENVAT credit on inputs for Ferro Aluminium Alloy products.
2. Difference of opinion between Member (Judicial) and Member (Technical) of the Tribunal.
3. Rectification application regarding the disagreement.
4. Need for clarity in referring questions to a third Member for resolution.
5. Ensuring effective and proper adjudication without rehearing the entire appeal.

Analysis:
1. The petition involves a dispute regarding the admissibility of CENVAT credit on inputs for the manufacture of Ferro Aluminium Alloy products, which are subject to excise duty. The Revenue issued a show cause notice challenging the credit claimed by the Petitioner, leading to conflicting orders by the Tribunal's Members (Judicial and Technical).

2. The Tribunal's Members had a difference of opinion on whether the Revenue could establish fraudulent availment of credit by the Petitioner. Despite a rectification application, the disagreement persisted until the Tribunal agreed that there was no mistake. However, the High Court found the recording of the disagreement inadequate for effective resolution.

3. The High Court emphasized the importance of clarity in referring questions to a third Member for resolution. It noted that the entire appeal should not be reheard by the third Member, as it would not be conducive to effective adjudication. The Court highlighted the need for certainty and finality in litigation to prevent multiple hearings of the same matter.

4. Consequently, the High Court set aside the Tribunal's initial order and directed the matter to be reheard by the Tribunal's West Zonal Bench afresh. The Court instructed the Tribunal to pass a fresh order on merits and in accordance with the law after hearing both sides, without being influenced by the earlier findings. The Court clarified that it expressed no opinion on the rival contentions and allowed the writ petition with no order as to costs.