2008 (2) TMI 554 - HC - Central Excise

Interpretation and applicability of exemption Notification No. 64/95-C.E - When the specific allegation on facts is made by Revenue against the assessee in the show cause for denying to assessee the benefit then there has to be a categorical finding recorded by the Tribunal one way or the other on this issue. It is only then one can decide as to whether assessee rightly claimed exemption or not? In other words in order to come to a conclusion as to whether assessee has on facts complied with the requirement of exemption notification or not the Tribunal has to record a categorical finding of fact namely whether goods in question were supplied to Indian Navy by the assessee and secondly whether these goods were supplied as stores for consumption on board a vessel of Indian Navy. - when the Commissioner of Appeals recorded a categorical finding of fact in favour of assessee then the appeal of Revenue could have been allowed only by reversing and recording reverse categorical finding of fact by the Tribunal. there is no finding by tribunal on material issues - we allow the appeal and set aside the impugned order of Tribunal. - the case is remanded to Tribunal for deciding the appeal on merits

Issues Involved:
1. Interpretation and applicability of exemption Notification No. 64/95-C.E, dated 16-3-95.
2. Whether the goods supplied by the assessee were meant for consumption on board a vessel of the Indian Navy.
3. Whether the Tribunal recorded a categorical finding of fact on the allegations made in the show cause notices.
4. Whether the Tribunal reversed the findings of the Commissioner (Appeals) with proper factual basis.

Detailed Analysis:

1. Interpretation and Applicability of Exemption Notification No. 64/95-C.E, dated 16-3-95:
The core issue revolves around whether the assessee was eligible to claim exemption under Notification No. 64/95-C.E. The assessee argued that they supplied goods to the Indian Navy and thus were entitled to the exemption. The Assistant Commissioner issued show cause notices for periods August 2000 to March 2001 and June 2001 to November 2001, alleging that the goods supplied were not meant for consumption on board a vessel of the Indian Navy and thus did not qualify for the exemption. The Commissioner (Appeals) initially ruled in favor of the assessee, stating that the goods were indeed meant for consumption on board a vessel, but the Tribunal later reversed this decision without providing a categorical finding on the factual basis of the show cause notices.

2. Whether the Goods Supplied were Meant for Consumption on Board a Vessel of the Indian Navy:
The Assistant Commissioner contended that the goods supplied by the assessee were construction materials and not meant for consumption on board a vessel. The Commissioner (Appeals) found that the goods supplied did meet the criteria for exemption as they were intended for consumption on board a vessel of the Indian Navy. However, the Tribunal did not explicitly address this finding when it reversed the Commissioner (Appeals)' decision, leading to the current appeal.

3. Whether the Tribunal Recorded a Categorical Finding of Fact on the Allegations Made in the Show Cause Notices:
The High Court noted that the Tribunal failed to record a categorical finding of fact on whether the allegations in the show cause notices were substantiated. The Tribunal should have determined if the goods were supplied to the Indian Navy and if they were meant for consumption on board a vessel. The absence of such findings rendered the Tribunal's decision legally unsustainable.

4. Whether the Tribunal Reversed the Findings of the Commissioner (Appeals) with Proper Factual Basis:
The High Court emphasized that the Tribunal needed to provide a clear factual basis for reversing the Commissioner (Appeals)' decision. The Commissioner (Appeals) had made a categorical finding that the goods supplied were for consumption on board a vessel of the Indian Navy. The Tribunal's failure to address this finding and to provide its own factual conclusions necessitated a remand for a fresh decision.

Conclusion:
The High Court allowed the appeal, set aside the Tribunal's order, and remanded the case to the Tribunal for a fresh decision on merits. The Tribunal was instructed to record categorical findings on whether the goods were supplied to the Indian Navy and if they were meant for consumption on board a vessel. The Tribunal was given four months to decide the appeal, with both parties directed to appear before the Tribunal on a specified date. The High Court refrained from expressing any opinion on the merits to avoid prejudicing the case.

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