2015 (11) TMI 323 - SC - Central Excise

Benefit of exemption Notification No. 5/99-CE dated 28.02.1999 - credit under Rule 57A or Rule 57B or Rule 57Q of the Central Excise Rules, 1944 - Held that - The product of the respondent is covered by the description of goods at Serial No. 133 of the Table annexed with the General Exemption Notification. The assessee, however, had utilized the MODVAT credit in the previous two years prior to 28.02.1999. As per the assessee, after the issuance of this notification, no such MODVAT credit was ever taken or utilized. Even the earlier MODVAT credit which was utilised was returned or paid back on 10.01.2005. In this We note that five-Member Bench of the Tribunal in the case of Franco Italian Co. Pvt. Ltd. v. Commissioner 2000 (8) TMI 109 - CEGAT, COURT NO. III, NEW DELHI had taken the view that even if the MODVAT credit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Same view has been taken by the High Court of Allahabad in Hello Mineral Water (P) Ltd. v. Union of India 2004 (7) TMI 98 - HIGH COURT OF JUDICATURE AT ALLAHABAD . - as far as the aforesaid two judgments are concerned, they were accepted by the Department and no appeal was filed thereagainst - No reason to interfere with this order - Decided against Revenue.

Summary

Issues:
Availability of benefit under Notification No. 5/99-CE dated 28.02.1999 subject to conditions, utilization of MODVAT credit by the assessee prior to the issuance of the notification, interpretation of whether refunding utilized MODVAT credit amounts to non-utilization, reliance on previous judgments by the Tribunal and High Court, acceptance of judgments by the Department without appeal, decision of the Tribunal in favor of the assessee.

Analysis:
The Supreme Court considered the issue of the availability of the benefit under Notification No. 5/99-CE dated 28.02.1999, subject to certain conditions. One such condition was that the assessee should not have taken any credit under specific rules of the Central Excise Rules, 1944, in the manufacturing process. The respondent's product fell under the description of goods covered by the General Exemption Notification. The assessee had utilized MODVAT credit in the two years preceding the issuance of the notification but claimed that no such credit was taken or utilized after the notification, with the earlier credit being returned or paid back. The Tribunal and the High Court had previously held that refunding utilized MODVAT credit would amount to non-utilization, a view accepted by the Department without appeal.

The Court noted the decisions of the Tribunal and the High Court, which were accepted by the Department without filing an appeal. The Tribunal had ruled in favor of the assessee based on the interpretation that refunding utilized MODVAT credit equated to non-utilization. Given the consistent legal position established by the previous judgments and the acceptance by the Department, the Court found no grounds to interfere with the Tribunal's decision and consequently dismissed the appeal.