2006 (11) TMI 210 - HC - Central Excise

Summary

Issues:
Interpretation of Central Excise Act regarding utilization of credit before availing exemption Notification No. 6/2000.

Analysis:
The appeal under Section 35(G) of the Central Excise Act, 1944 was filed by the revenue against an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The main question of law proposed was whether the Tribunal was correct in allowing credit utilized by the parties before availing exemption Notification No. 6/2000 based on the quantity of clearances. The assessee was availing the benefit of the said notification which provided a nil rate of duty for their finished goods. A show-cause notice was issued to the assessee for reversal of credit in respect of inputs lying in stock under process when they started clearing goods without duty payment. The demand for duty, interest, and penalty was confirmed after a hearing. The appellate authority upheld the duty demand but reduced the penalty amount. The assessee then appealed to the Tribunal, which also dismissed the appeal. The Tribunal noted that the appellant did not contest the demand for credit taken on inputs during the period of clearing goods under exemption notification. However, the appellant sought credit for inputs lying in stock, under process, and in finished goods when they started clearing goods again on payment of duty, citing Rule 57AG of the Central Excise Rules. The Tribunal suggested that the appellant could approach appropriate authorities for relief in accordance with the law. The penalty was reduced for the appellant companies, and the appeals were disposed of accordingly.

The counsel for the revenue failed to show how the revenue was aggrieved by the Tribunal's order when the assessee admitted that the demand for the period under exemption notification was not contested. The High Court found no merit in the appeal. The revenue's argument that penalty equal to the duty amount was mandatory was based on a previous judgment, but it was noted that the revenue did not appeal the penalty reduction by the appellate authority. As a result, the Tribunal's decision did not provide any relief to the assessee that could aggrieve the revenue. Consequently, the High Court concluded that no substantial question of law arose for consideration and dismissed the appeal.