2016 (9) TMI 982 - HC - Central Excise

High Court upholds input tax credit claim; department's appeal dismissed.

The High Court dismissed the department's appeal regarding the claim of input tax credit by the assessee, which was initially rejected by the adjudicating ... Input tax credit - whether the CESTAT is correct in rejecting the appeals, wherein the refund sought under Rule 5 of the CCR, 2004 is deniable to the party, as for the export of wholly exempted goods, execution of bond/LUT is neither required nor legally acceptable - Held that:- once the issue involved in the present appeal has already been gone into by the Hon'ble Supreme Court and judgments of Bombay High Court and Himachal Pradesh High Court, have been upheld granting relief to the assessee, we do not find that any substantial question of law arises in the present appeal. - Decided against the Revenue Issues:Claim of input tax credit by the assessee, rejection by adjudicating authority, acceptance by the First Appellate Authority, appeal by the department before the Tribunal.Analysis:The primary issue in this case pertains to the claim of input tax credit by the assessee, whose exported goods were not subject to any tax. Despite the adjudicating authority denying the claim, the First Appellate Authority ruled in favor of the assessee, prompting the department to appeal before the Tribunal. The Tribunal, citing judgments from the Bombay High Court and the Himachal Pradesh High Court, dismissed the department's appeals.The Tribunal's decision was influenced by the judgments of the Bombay High Court in Repro India Ltd. Vs. Union of India and the Himachal Pradesh High Court in Commissioner of Central Excise Vs. Drish Shoes Ltd. The Tribunal's reliance on these judgments led to the dismissal of the department's appeals.Furthermore, the counsel for the revenue acknowledged that a similar issue had been addressed by the Himachal Pradesh High Court in Drish Shoes Ltd's Case, which the State had appealed to the Supreme Court. The Supreme Court, in a subsequent order, upheld the judgment of the Bombay High Court in Union of India Vs. Sharp Menthol India Ltd., thereby dismissing the State's appeal.Given the precedents set by the judgments of the Bombay High Court and the Himachal Pradesh High Court, which were upheld by the Supreme Court, the High Court found no substantial question of law in the present appeal. Consequently, the High Court dismissed the appeal, affirming the decisions that granted relief to the assessee.