2012 (7) TMI 511 - HC - Central Excise

Application made u/s 35 -(H)(1)- denial of benefit of MODVAT credit on capital goods without issuing SCN - Held that - Commissioner of Appeals held that since no show cause notice was served on the assessee before denying them the benefit of claiming modavat credit such order of adjudicating authority is bad in law and liable to be set aside and was accordingly set aside - to allow the application u/s 35 -(H)(1) it is necessary for this Court to record a finding that question of law proposed by the applicant is a question of law, secondly it arise out of the case and third it is a referable question by the Tribunal to this Court for its answer on merit - as order of adjudicating authority was rightly set aside by the Commissioner of appeal and Tribunal no substantial question of law arises.

Summary

Issues:
Application under Section 35-H(1) of the Central Excise Act regarding questions of law arising from a Tribunal order.

Analysis:
The case involves an application under Section 35-H(1) of the Central Excise Act by the Commissioner of Central Excise (Revenue) against a Tribunal order dated 23.5.2000. The Tribunal dismissed the revenue's appeal against the order passed by the Commissioner of Appeal dated 6.9.99. The main issue is whether any referable question of law arises from the Tribunal's order. The Tribunal upheld the Commissioner of Appeal's decision, stating that the procedure under Rule 57Q of the Central Excise Tariff was not followed, and no show cause notice was issued to the appellant before denying the credit on capital goods. The Commissioner of Appeal held that the order of the adjudicating authority was bad in law for not following the prescribed procedure. The High Court found that no referable question of law arose from the findings of the lower authorities.

The High Court noted that the adjudicating authority had denied the assessee the benefit of claiming MODVAT credit on capital goods without issuing a show cause notice, which was deemed a violation of natural justice. The Commissioner of Appeal set aside the order, emphasizing the importance of following the prescribed procedure under Rule 57(Q) and providing a show cause notice before denying such benefits. The High Court concurred with the lower authorities' decision, stating that no referable question of law arose from the case. It emphasized the necessity for the Court to determine if the proposed question is indeed a question of law, arises from the case, and is referable to the Court for a merit-based answer. In this case, the Court found that the question proposed was not a question of law and was properly addressed by the Tribunal based on the facts presented. Consequently, the application was deemed devoid of merit and dismissed without costs.