2017 (1) TMI 750 - HC - Central Excise

Section 35H (1) of Central Excise Act, 1944 - application moved seeking a direction to determine amount at the rate of 8 per cent, payable or reversible, by Assessee in terms of Rule 57CC and also to decide question of imposition of penalty, if any, imposed on Assessee - Held that - Learned counsel appearing for Revenue, at the outset, could not dispute that pursuant to remand order, entire matter has to be decided by Adjudicating Authority. No question of law, therefore, has arisen in our view so as to be referred to this Court - application dismissed - decided against applicant.

Summary

Issues involved:
1. Interpretation of Central Excise Act, 1944 regarding MODVAT credit on different types of molasses used as inputs in manufacturing final products.
2. Applicability of Rule 57CC of the Central Excise Rules, 1944 on levy molasses exclusively used in manufacturing Country Liquor.
3. Availability of MODVAT credit on inputs exclusively used for manufacturing non-excisable final products.

Analysis:
1. The application under Section 35H (1) of the Central Excise Act, 1944 sought a direction for the Tribunal to refer questions of law to the High Court regarding the MODVAT credit. The questions revolved around the distinction between free sale molasses and levy molasses used in different final products, the admissibility of MODVAT credit on levy molasses used in manufacturing Country Liquor, and the misapplication of previous orders by the Tribunal. The Tribunal was criticized for not considering the specific findings of fact and for setting aside the Order-in-Appeal without proper reasoning.

2. The judgment discussed the application of Rule 57CC of the Central Excise Rules, 1944 on levy molasses used exclusively in manufacturing Country Liquor. The rule requires manufacturers engaged in producing both dutiable and exempt final products to pay a specified amount for the latter. The distinction between levy molasses for Country Liquor and free sale molasses for other final products was highlighted. It was emphasized that MODVAT credit is not admissible for inputs used in manufacturing non-excisable final products like Country Liquor.

3. The Tribunal had remanded the matter to the Adjudicating Authority to determine the amount payable under Rule 57CC and consider penalties imposed on the Assessee. The High Court noted that no new question of law arose for referral, as the matter was to be decided by the Adjudicating Authority based on the Tribunal's judgment. Consequently, the application was dismissed, indicating that the questions raised did not warrant further consideration by the High Court.