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2013 (3) TMI 524 - HC - Central ExciseMODVAT CREDIT Small Scale Exemption - whether manufacturer is entitled to exemption under the Notification No. 1/1993-C.E., related to Small Scale Exemption and also under the Modvat scheme. - Tribunal before passing the order made reliance on the case Franco Italian Co. Pvt. Ltd. v. CCE, Mumbai-II 2000 (8) TMI 109 - CEGAT, COURT NO. III, NEW DELHI wherein it has been held that subject to the reversal of the MODVAT credit taken with regard to the inputs which were utilised for the manufacture of duty free goods, the manufacturer could avail of the MODVAT credit as well as full duty exemption under the applicable small scale exemption Notification with regard to the same specified goods. And dismiss the appeal. held that - Since the Tribunal did not decide the issue in the light of law laid down in the Kamani Food v. Collector of Central Excise 1994 (1) TMI 109 - CEGAT, NEW DELHI hence, court consider it opposite to remand the case to the Tribunal for deciding the appeal of the appellant afresh on facts and then pass appropriate orders. The appeal thus succeeds and is allowed. The impugned order is set aside.
Issues:
1. Appeal against order dated 9-11-2004 passed by the Customs, Excise & Service Tax Appellate Tribunal. 2. Justification of the Tribunal in dismissing the appeal. 3. Entitlement of a manufacturer to exemption under Notification No. 1/1993-C.E. and the Modvat scheme. 4. Applicability of the decision in Faridabad Tools Pvt. Ltd. v. Commissioner of Central Excise. 5. Conflict between the decisions in Faridabad Tools' case and Kamani Food v. Collector of Central Excise. 6. Remand of the case to the Tribunal for fresh consideration. Detailed Analysis: 1. The appeal was filed by the Commissioner of Central Excise against the order passed by the Tribunal, which dismissed the appeal based on the decision in Franco Italian Company Pvt. Ltd. v. CCE, Mumbai-II. The main issue was whether the Tribunal was justified in dismissing the appeal and what orders were warranted. 2. The Tribunal held that a manufacturer could avail of MODVAT credit and full duty exemption under the small scale exemption Notification for specified goods, based on the decision in Faridabad Tools Pvt. Ltd. v. Commissioner of Central Excise. The Tribunal dismissed the Revenue's appeal following the precedent set in the Franco case. 3. The Supreme Court later overruled the decision in Faridabad Tools' case in Commissioner of Central Excise, Ahmedabad v. Ramesh Food Products and held that the view in Kamani Food v. Collector of Central Excise was correct. Consequently, the law laid down in Ramesh Food Products became the authoritative position on the issue. 4. As the Tribunal had relied on the now-overruled decision in Faridabad Tools' case, the High Court decided to remand the case for fresh consideration in light of the correct legal position established in Ramesh Food Products. The impugned order was set aside, and the Tribunal was directed to decide the appeal afresh within six months. 5. The High Court's decision emphasized the importance of applying the correct legal precedent, as established by the Supreme Court, in resolving the issues related to the entitlement of manufacturers to exemptions under the Central Excise Act and the Modvat scheme.
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