2009 (8) TMI 509 - HC - Central Excise

Cenvat credit- Additional Excise Duty- Whether the duty debit made in Duty Entitlement Pass Book in respect of countervailing duty can be allowed as Modvat/CENVAT contrary to the provisions of Exim policy and Notification No. 34/97 Cus. dated 9-4-97 or provision of Rule 3 of CENVAT Credit Rules 2002? In this case Tribunal passed the order without going on the question of law and The Tribunal has dismissed the appeal simply on the ground that the Revenue has not produced any order staying the order of the earlier decision. Held that- Appeal is allowed and order passed by Tribunal is set aside. The case is remitted to the Tribunal with the direction to decide the appeal afresh in accordance with law.

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against the order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding the admissibility of CENVAT credit of additional duty of customs under the Duty Entitlement Pass Book Scheme.

Analysis:
The respondent, engaged in the manufacture of Sewing Thread and Yarn, claimed CENVAT credit of additional duty of customs under the DEPB Scheme. The Adjudicating Authority confirmed the demand of Rs.84,074/-, imposed penalties, and demanded interest. The respondent's appeal before the Commissioner (Appeals) was allowed, but the department's appeal before the Tribunal was dismissed, leading to the current appeal. The substantial question of law was whether the duty debit in the DEPB for countervailing duty could be allowed as Modvat/CENVAT, contrary to the relevant provisions.

The appellant argued that the Tribunal failed to consider the case properly, citing a previous decision that was no longer valid. The Tribunal dismissed the appeal based on procedural grounds, not analyzing the case's specifics. The appellant requested a remittal to the Tribunal for a fresh decision. The respondent contended that the Tribunal's decision was correct, relying on the previous case law.

Upon review, the High Court found that the Tribunal did not determine if the case fell under the cited precedent. The Court agreed with the appellant that the Tribunal should reconsider the matter, leading to the decision not to address the substantial question of law directly. No other points were raised, and the appeal was allowed, setting aside the Tribunal's order and remitting the case for a fresh decision in accordance with the law.

In conclusion, the High Court's judgment focused on the Tribunal's failure to properly analyze the case and determine its alignment with relevant precedents. The Court's decision to remit the case for a fresh decision emphasized the importance of considering the specific facts and circumstances of each case in determining the admissibility of CENVAT credit under the DEPB Scheme.