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2021 (10) TMI 891 - HC - Central ExciseViolation of principles of natural justice - Scope of SCN - benefit of deemed credit to the rerollers whose value of clearances have crossed ₹ 75 lakhs in a particular financial year - whatever interpretation was put on Notification No. 1/93 would affect the availment of the benefit of the deemed credit order No.TS/36/94TRU dated 1.3.1994 or not - HELD THAT - The questions raised in this appeal are identical to what have been decided in case of VINUBHAI STEEL CO. PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2015 (3) TMI 746 - GUJARAT HIGH COURT where it was held that to the extent M/s Sonthalia Steel Re-Rolling Mills had availed the benefit of the order dated 1st March, 1994 after it came to be rescinded with effect from 1st April, 1995, it was not entitled to such benefit. Questions are answered in favour of the assessee - appeal allowed.
Issues Involved:
1. Whether the CESTAT was right in dismissing the appeal when the orders challenged before it have traveled beyond the show cause notice and were passed in violation of principles of natural justice. 2. Whether the CESTAT was justified in holding that the benefit of deemed credit under order No.TS/36/94TRU dated 1.3.1994 will not be available to the rerollers whose value of clearances have crossed ?75 lakhs in a particular financial year. 3. Whether the CESTAT was right in holding that whatever interpretation was put on Notification No. 1/93 would affect the availment of the benefit of the deemed credit order No.TS/36/94TRU dated 1.3.1994. Detailed Analysis: 1. Violation of Principles of Natural Justice: The appellant argued that the orders challenged before the CESTAT had traveled beyond the show cause notice and were thus bad in law and passed in violation of principles of natural justice. The High Court did not specifically address this issue in detail, as the primary focus was on the interpretation of Notification No. 1/93 and the deemed credit order dated 1.3.1994. 2. Deemed Credit Availability Beyond ?75 Lakhs: The CESTAT had dismissed the appeal based on the Larger Bench decision in the case of M/s. Digambar Foundary vs. Collector, which held that rerollers whose clearances exceeded ?75 lakhs were not eligible for the benefit of deemed credit. The High Court, however, referred to its earlier judgment in the case of M/s. Vinubhai Steel Co. (P) Ltd., where it was held that the benefit of deemed credit under the order dated 1st March 1994 was available to rerollers availing the exemption under Notification No.1/93, regardless of whether their clearances exceeded ?75 lakhs. The High Court noted that the eligibility for deemed credit was tied to the criteria set out in Notification No.1/93, which primarily concerned whether the aggregate value of clearances in the preceding financial year exceeded ?200 lakhs. The court concluded that the limit of ?75 lakhs pertained to the extent of benefit under the notification, not the eligibility for deemed credit. 3. Interpretation of Notification No. 1/93 and Deemed Credit Order: The High Court extensively analyzed the provisions of Notification No. 1/93 and the deemed credit order dated 1.3.1994. It clarified that the benefit of deemed credit was available to rerollers availing of the exemption under Notification No.1/93, and the limit of ?75 lakhs did not restrict this benefit. The court emphasized that the eligibility criteria were based on the aggregate value of clearances in the preceding financial year, which should not exceed ?200 lakhs. The court also referred to similar judgments from other High Courts, which supported this interpretation. Separate Judgments: The High Court noted that the judgment in the case of M/s. Vinubhai Steel Co. (P) Ltd. was challenged and set aside by the Division Bench, which allowed the appeal and set aside the judgment and order of the Tribunal. The High Court also referred to other connected appeals, such as Patran Steel Industries vs. the Customs Excise and Service Tax Appellate Tribunal, where the Division Bench followed the decision in the case of M/s. Vinubhai Steel Co. (P) Ltd. Conclusion: The High Court allowed the present appeal, setting aside the judgment of the Tribunal and the adverse orders against the assessee. The questions were answered in favor of the assessee, confirming that the benefit of deemed credit under the order dated 1st March 1994 was available to rerollers availing the exemption under Notification No.1/93, even if their clearances exceeded ?75 lakhs. The tax appeal was disposed of accordingly.
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