2007 (5) TMI 255 - HC - Central Excise

Summary

Issues:
1. Whether the Tribunal can go into the merits of the case in appeal under Section 35B(b) of the Act when the Commissioner (Appeals) has dismissed the case due to default in payment of pre-deposit under Section 35F of the Act and passed no order under Section 35A of the Act?
2. Whether the CESTAT was correct in delving into the case's merits when they have been remanding such cases back to the Commissioner (Appeals)?

Analysis:
1. The appeal was filed by the revenue challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The Tribunal allowed the application for stay without imposing any pre-deposit condition and dismissed the appeal in favor of the assessee. The revenue contended that the Tribunal should have only decided the Stay application and remanded the matter back to the Commissioner (Appeals) without delving into the merits of the case.
2. The assessee had availed Cenvat credit under the Cenvat Credit Rules, 2002. An issue arose regarding the excess Central Excise duty claimed by the supplier, which the assessee had taken credit for in their Cenvat account. The revenue demanded recovery of the excess amount from the assessee, leading to a show cause notice and subsequent orders confirming the demand. The assessee's appeal was dismissed by the Commissioner (Appeals), prompting them to approach the CESTAT.
3. The CESTAT, in its order, allowed the stay application without a pre-deposit condition, citing the duty paid invoices and the Board's Circular as reasons for granting relief to the appellants. The revenue challenged this order, arguing that the Tribunal should have refrained from deciding on the merits and should have remanded the case back to the Commissioner (Appeals) instead.
4. The High Court examined the arguments and found no grounds to interfere with the Tribunal's decision. It was established that the manufacturer had charged duty on the inputs cleared, entitling the assessee to take credit based on the duty paid invoices. The Court upheld the Tribunal's reliance on the Board's Circular and dismissed the revenue's claim that the case should have been remanded. No illegality in the Tribunal's decision on the case's merits was identified, leading to the dismissal of the appeal.
5. Ultimately, the High Court held that no substantial question of law, as claimed by the revenue, arose for determination. Therefore, the appeal was dismissed, affirming the Tribunal's decision in favor of the assessee.