High Court dismisses application under Central Excise Act, emphasizing procedural compliance and natural justice

The High Court dismissed the application under Section 35-H(1) of the Central Excise Act, finding no referable question of law arising from the Tribunal's order. The case involved the denial of MODVAT credit on capital goods without issuing a show cause notice, deemed a violation of natural justice. The Commissioner of Appeal emphasized the importance of following prescribed procedures, which the High Court concurred with, stating the proposed question was not a question of law. The application was deemed devoid of merit and dismissed without costs.

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Issues: Whether any referable question of law arose from the Tribunal's order upholding denial of MODVAT credit without prior show cause notice, so as to warrant a reference under Section 35-H(1) of the Central Excise Act, 1944.

Analysis: The application challenged concurrent findings that the assessee had been denied credit on capital goods without a show cause notice. The Court held that where tax benefits are withdrawn or denied, the principles of natural justice require notice setting out the grounds and an opportunity to reply before an adverse order is passed. On the undisputed facts, the authorities below had correctly held that the adjudicating authority acted without following the required procedure, and the proposed questions did not disclose any arguable or referable question of law.

Conclusion: No referable question of law arose. The reference application was not maintainable and was rejected.

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