2016 (7) TMI 1065 - AT - Central Excise

Principle of res-judicata - lapsing of credit lying unutilized on 16/3/1995 with a manufacturer of tractors falling under Heading No. 87.01 or Motor Vehicles falling under Heading 87.02 and 87.04 or chassis of such tractors or such motor vehicles under Heading 87.06 - Held that - Apex court in the Eicher Motors case 1999 (1) TMI 34 - SUPREME COURT OF INDIA had neither dealt with the compound levy scheme formulated under Section 3A nor has it been held that the Rules or Notifications framed under Section 3A were ultravires. The above discussions bring us to the conclusion that the principle of res-judicata cannot be used to apply the Eicher Motors case to the present facts. A straight forward reading of the Notifications 33/1997 and 34/1997-CE (NT) both dated 01/8/1997 and application of the same would result in the Cenvat credit available in the capital goods account of the respondent on 31/7/1997 to lapse. We also note this Tribunal is a creation of the statute and its mandate is to decide disputes arising in the implementation of the statute within its preview. This Tribunal cannot arrogate to itself any of the extra ordinary powers bestowed upon the Hon ble High Courts and the Supreme Court by the constitution. Consequently we cannot apply the findings of the Apex court in the Eicher case to the present case under the principle of res-judicata. - Decided in favor of revenue.

Summary

Issues:
1. Validity of the amendment to Rule 57S regarding lapsing of Modvat credit.
2. Interpretation of directions given by the High Court in a previous case.
3. Application of the Eicher Motors case to the present scenario.
4. Consideration of Notifications 33/1997 and 34/1997-CE (NT).
5. Principle of res-judicata in the context of the Eicher Motors case.

Issue 1: Validity of the amendment to Rule 57S
The appeal concerns the challenge against the order of the Commissioner (Appeals) upholding the allowance of credit in the respondent's capital goods account, which would otherwise lapse as per Notifications 33/1997 and 34/1997-CE (NT) dated 01/8/1997. The Revenue argues that the Commissioner erred in applying the Eicher Motors case incorrectly, as it did not address the validity of the mentioned notifications. The Revenue contends that the duty was to be paid in cash post-amendment, making Modvat inapplicable to the Assessee.

Issue 2: Interpretation of High Court directions
The High Court directed the Assistant Commissioner to reevaluate the excise duty liability in light of the Eicher Motors case. The Assistant Commissioner's subsequent order allowed the credit, a decision upheld by the Commissioner (Appeals). The Revenue challenges this decision, emphasizing that the High Court's directions should be the guiding principle, and any contrary view would go against the court's directives.

Issue 3: Application of Eicher Motors case
The Eicher Motors case dealt with a different scenario where credit on inputs already used in final products before an amendment was allowed. In contrast, the present case involves capital goods available post-amendment for future use, where Cenvat credit was not permissible. The Tribunal noted the distinctions and emphasized that the Eicher Motors case did not address the compound levy scheme under Section 3A or the validity of the rules and notifications under it.

Issue 4: Consideration of Notifications 33/1997 and 34/1997-CE (NT)
The Tribunal analyzed the notifications and concluded that the credit in the respondent's capital goods account would lapse as per the notifications on 01/8/1997. The Tribunal highlighted that the notifications were clear on the lapsing of credit and that the Eicher Motors case did not impact the validity or applicability of these notifications.

Issue 5: Principle of res-judicata
The Tribunal clarified that the principle of res-judicata could not be applied to equate the Eicher Motors case with the present circumstances. It emphasized the Tribunal's role in deciding disputes within statutory parameters and underscored the need to adhere to the notifications' provisions, leading to the lapse of credit in the respondent's account. Consequently, the Tribunal set aside the impugned order and allowed the appeal filed by the Revenue.