High Court directs Tribunal to refer question on capital goods use under Central Excise Act

The High Court allowed the application under section 35H(1) of the Central Excise Act, directing the Tribunal to refer the question of whether the capital goods were exclusively used for exempted products to the Court for consideration.

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Issues involved: Application u/s 35H(1) of the Central Excise Act, 1944 for reference of a question of law arising from the Tribunal's order.

Comprehensive Details:

1. The applicant, engaged in manufacturing lamps falling under Chapter 85 of the Central Excise Tariff Act, imported a machine in 1996 for lamp production. The machine was used for both dutiable and exempted products. The Central Excise Department issued a show-cause notice disallowing Modvat credit, alleging exclusive use for exempted products. The Assistant Commissioner allowed the credit, but the Tribunal reversed this decision.

2. The High Court considered whether the Tribunal was correct in holding the capital goods were exclusively used for exempted products, invoking Rule 57R of the Central Excise Rules, 1944. The Court allowed the application u/s 35H(1) and directed the Tribunal to refer the question to the Court for consideration.

3. The judgment concluded by disposing of the matter, indicating the resolution of the case.

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