2018 (8) TMI 1678 - HC - Central Excise

High Court overturns Tribunal's judgments, rules for assessee on all issues. Deemed credit benefits upheld.

The High Court allowed the appeal, setting aside the Tribunal's judgments, and ruled in favor of the assessee in all three issues. The adverse orders ... Whether on the facts and in the circumstances of the case the CESTAT was right in dismissing the appeal when the orders challenged before it have travelled beyond show cause notice and were bad in law and were passed in violation of principles of natural justice? Whether, on the facts and in the circumstances of the case, 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? Whether on the facts and in the circumstances of the case, 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? Held that:- Division of this Court by its judgment VINUBHAI STEEL CO. PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2015 (3) TMI 746 - GUJARAT HIGH COURT] allowed the appeal and set aside the judgment of the Tribunal - the present appeal is also allowed - decided in favor of assessee. Issues:1. Dismissal of appeal by CESTAT beyond show cause notice and violation of natural justice2. Eligibility for deemed credit under order No.TS/36/94TRU3. Interpretation of Notification No.1/93 affecting availment of deemed creditIssue 1: Dismissal of appeal by CESTAT beyond show cause notice and violation of natural justiceThe tax appeal was admitted to consider whether CESTAT was justified in dismissing the appeal when the orders challenged had exceeded the show cause notice and were passed in violation of natural justice. The order challenged by the appellant was brief, where both sides agreed that the issue of rerollers' eligibility for deemed credit had been decided by a Larger Bench decision of the Tribunal. The Tribunal relied on the judgments in the cases of M/s. Digambar Foundary vs. Collector and M/s. Vinubhai Steel Co. (P) Ltd. The Tribunal dismissed the appeal based on these precedents. However, the High Court noted that the judgment in the case of M/s. Vinubhai Steel Co. (P) Ltd. had been challenged before it in a previous appeal, and the High Court allowed the appeal, setting aside the Tribunal's judgment. Consequently, the present appeal was also allowed, the adverse orders against the assessee were set aside, and the questions were answered in favor of the assessee.Issue 2: Eligibility for deemed credit under order No.TS/36/94TRUThe second issue involved whether rerollers whose clearances exceeded Rs. 75 lakhs in a financial year were eligible for the benefit of deemed credit under order No.TS/36/94TRU. The CESTAT held that rerollers crossing the Rs. 75 lakhs threshold were not entitled to the deemed credit benefit. The Tribunal's decision was based on the Larger Bench ruling in the case of M/s. Digambar Foundary vs. Collector and subsequent cases. However, the High Court, in a previous judgment related to M/s. Vinubhai Steel Co. (P) Ltd., allowed the appeal and set aside the Tribunal's decision, thereby indicating that rerollers exceeding the Rs. 75 lakhs limit were indeed eligible for the deemed credit benefit. Consequently, the present appeal was allowed, and the adverse orders against the assessee were overturned.Issue 3: Interpretation of Notification No.1/93 affecting availment of deemed creditThe third issue revolved around whether the interpretation of Notification No.1/93 would impact the availment of the benefit of the deemed credit under order No.TS/36/94TRU. The CESTAT's decision was influenced by the interpretation of the notification in previous judgments. However, the High Court's ruling in a related case concerning M/s. Vinubhai Steel Co. (P) Ltd. indicated that the interpretation did not affect the availment of the deemed credit benefit. Therefore, the High Court allowed the present appeal, set aside the adverse orders against the assessee, and answered the questions in favor of the assessee.