2004 (10) TMI 103 - HC - Central Excise

Issues Involved:
1. Justification of Modvat credit for Refractory bricks and Silicon Carbide Tiles under Rule 57A of the Central Excise Rules, 1944.
2. Consideration of Refractory bricks and Silicon Carbide Tiles as Capital goods under Rule 57Q of Central Excise Rules, 1944.

Issue-wise Detailed Analysis:

1. Justification of Modvat Credit:
The primary issue was whether the Tribunal was justified in allowing Modvat credit for Refractory bricks and Silicon Carbide Tiles under Rule 57A of the Central Excise Rules, 1944. The Tribunal relied on the affidavit provided by the assessee, which described the manufacturing process of electrical insulators and the usage of the impugned items therein. The Tribunal did not consider the fact that, according to the assessee's own account, the impugned items were used to cover the Kiln Trolleys, which are inserted into the Kiln for firing the insulators. Thus, the items were parts of the Trolleys and, by extension, parts of the Kiln itself, rather than inputs as defined under Rule 57A. The court had to determine if these items could be excluded from Modvat credit on the grounds that they were parts of equipment or apparatus, not inputs.

2. Consideration as Capital Goods:
The second issue was whether the Tribunal overlooked the fact that 'Refractory bricks and Silicon Carbide Tiles' were subsequently defined as Capital goods under Rule 57Q of the Central Excise Rules, 1944, effective from 16-3-95. This definition implied that the items were not considered inputs under Rule 57A during the material period, thus making them ineligible for Modvat Credit. The court noted that this point was not raised in the application for reference and was based on a subsequent amendment without retrospective effect. Therefore, this question could not be raised before the Tribunal as it did not apply to the period in question.

Applicant's and Respondent's Contentions:
The applicant argued that these were substantial questions of law that had not been decided by the High Court, despite decisions by the Larger Bench of the Tribunal. The respondent, however, raised a preliminary objection, citing that these points were neither raised before nor dealt with by the Tribunal, and one point was based on a subsequent amendment. The respondent referenced the decision in Commissioner of Income-Tax, Bombay v. Scindia Steam Navigation Co. Ltd., which outlined the conditions under which a question could be referred to the High Court.

Scindia Steam Navigation Principles:
The court discussed the principles laid down in Scindia Steam Navigation, which clarified that only questions raised before or decided by the Tribunal could be referred to the High Court. Since the questions in this case were not raised before the Tribunal, they did not arise out of its order, and thus could not be referred.

Reframing of Questions:
The court examined whether it could reframe the questions under Section 35G(3) of the Central Excises and Salt Act, 1944. It concluded that the High Court's power to reframe questions is limited to removing obscurity without changing the substance of the question. The court cannot frame a question in a form different from what was sought for reference.

Conclusion:
The court sustained the preliminary objection raised by the respondent, recalling the order that proposed to admit the reference, and dismissed the application for reference. The court emphasized that the High Court's jurisdiction under Section 35G is limited and cannot be expanded to frame new questions not raised before the Tribunal.

Order:
The preliminary objection was upheld, the order to admit the reference was recalled, and the application for reference was dismissed. The court appreciated the assistance provided by the applicant's counsel and noted there would be no order as to costs.

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