2015 (4) TMI 695 - HC - Central Excise

Deemed credit - textile fabrics - Whether the Tribunal was right in giving benefit of deemed credit of 50% in terms of Notification Nos. 28 of 2000 dated 1st March, 2000, 7 of 2001 dated 1st March, 2001 and 28 of 2001 dated 11th June, 2001 to the Assessee - option to pay duty under Compounded Levy Scheme - Held that - the show cause notice demanded differential duty - In the meanwhile, even the present Respondent continued to pay duty under the Advalorem Scheme. It paid that duty to the extent of 50% and which was accepted. If the stand of the Revenue was that it was not entitled to be considered as a new unit or was disentitled for any benefit and particularly under the Advalorem Duty Scheme, then, it is inexplicable as to why the Commissioner permitted them to pay duty under the said scheme, namely the Advalorem Scheme. It is that fact which has weighed with the Tribunal and that is how it has held the Assessee to be entitled to the benefit. If the application made on 12th September, 2001 for availing the option to pay duty under the Compounded Levy Scheme was rejected and as complained by the Respondent/ Assessee , without any hearing, which fact was complained to the Tribunal, then, all the more we do not find that the Tribunal was prevented while adjudicating and considering the legality and validity of the show cause notice and the order-in-original . The show cause notice was issued, but in the teeth of the fact that the Assessee /Respondent was entitled to avail of the benefit of the Advalorem Scheme. Despite issuance of such show cause cum demand notice, if the Assessee paid duty under the scheme, then, that fact has rightly weighed with the Tribunal. - Decided against Revenue.

Summary

Issues:
1. Challenge to the order passed by the Customs, Excise, and Service Tax Appellate Tribunal.
2. Benefit of deemed credit under specific Notifications.
3. Jurisdiction of the Tribunal to grant benefits denied by competent authority.
4. Disputes regarding duty payment under different schemes.
5. Validity of the Tribunal's decision and the applicability of substantial questions of law.

Analysis:
1. The Revenue challenged the Tribunal's order concerning the grant of deemed credit and the waiver of interest and penalty. The key issue was whether the Tribunal was correct in allowing the Assessee the benefit of deemed credit under specific Notifications. The Revenue contended that the Assessee was not entitled to such benefits as they were not the successor in interest and had not pursued the necessary procedures. The Tribunal's jurisdiction to grant these benefits was questioned by the Revenue, emphasizing that the Assessee should have paid the entire demand, including interest and penalty.

2. On the other hand, the Assessee argued that the Tribunal's decision was not erroneous. They claimed that they had informed the Central Excise Department and followed the required procedures, leading to the payment of duty under the Advalorem basis. The Assessee asserted their entitlement to deemed credit under the law, as they had already paid a significant portion of the duty. They maintained that the Tribunal correctly extended the benefit of deemed credit based on the relevant Notifications.

3. The Court examined the facts and found that the Assessee, a manufacturing unit dealing in textile fabrics, had a complex history regarding duty schemes and ownership changes. The dispute centered around the Assessee's eligibility for benefits under different duty schemes, particularly the Compounded Levy Scheme. The Commissioner had rejected the Assessee's application under this scheme, citing the existence of a previous unit operating under a different scheme at the same premises. However, the Assessee continued to pay duty under the Advalorem Scheme, which was accepted by the authorities.

4. The Court noted that despite the Commissioner's rejection of the Compounded Levy Scheme application, the Assessee was allowed to pay duty under the Advalorem Scheme. This discrepancy raised questions about the Revenue's stance on the Assessee's eligibility for benefits. The Court concluded that the Tribunal's decision to uphold the Assessee's entitlement to deemed credit was reasonable, considering the circumstances and the Assessee's compliance with the Advalorem Scheme.

5. Ultimately, the Court dismissed the Revenue's appeal, affirming the Tribunal's order. The Court emphasized that the decision was specific to the Assessee's case and did not establish a general rule. The Court deemed the issue as academic due to the scheme's cessation and the unit's non-functioning. The Court found no substantial questions of law necessitating further consideration, concluding that the appeal could be disposed of based on the specific circumstances of the case.