2019 (2) TMI 469 - AT - Central Excise

Tribunal rules in favor of cement manufacturer on cenvat credit for explosives

Mangalam Cement Ltd. Versus C.G.S.T.,C.C.E., Jodhpur – I

The Tribunal allowed the appeal, ruling in favor of the appellant, a cement manufacturer, regarding the availing of cenvat credit on explosives used in ... CENVAT credit - appellant had not availed cenvat credit in accordance of Rule 4(1) of CCR 2004 i.e. immediately or within a reasonable period in respect of explosives used in the mines - Rule 4(1) of CCR 2004 - Held that:- In view of law settled by Supreme Court in VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [2006 (1) TMI 130 - SUPREME COURT OF INDIA] with respect to availing credits on the explosives used in the mines, the appellant herein is absolutely entitled for the same. The findings of the Commissioner Appeals that the appellant was not the party as such the decision are absolutely wrong in view of Article 141 of the Constitution of India which lays down that any law declared by Supreme Court shall be binding on all courts within the territory of India i.e. the decision becomes the law of the land. While ignoring the decision of Supreme Court which covers squarely the present case that too merely on the ground that appellant was not the party to the petition before Supreme Court is therefore opined to be an act of high judicial indiscipline on the part of the Commissioner(Appeals). Appeal allowed - decided in favor of appellant. Issues:1. Availing cenvat credit on explosives used in mines.2. Consideration of previous tribunal and court decisions.3. Adjudication of the Commissioner(Appeals) on the appellant's party status in previous cases.Issue 1: Availing cenvat credit on explosives used in mines:The appellant, engaged in cement manufacturing, faced a demand for not allowing cenvat credit on explosives used in mines per Rule 4(1) of CCR 2004. The Department alleged non-compliance and issued a show cause notice (SCN) proposing recovery of the credit amount. The initial demand was confirmed in the Order-in-Original, leading to the current appeal before the Tribunal. The appellant argued that the impugned credit was taken for explosives used in their mines, citing past tribunal and court decisions. The Department contended that the High Court order was not produced before the Commissioner(Appeals) and the appellant was not a party to the Supreme Court decision. However, the Tribunal found that the High Court order reversing the tribunal decision was produced, and the Supreme Court decision was relevant even if the appellant was not a party. The Tribunal concluded that the appellant was entitled to the credit based on the settled law by the Supreme Court regarding availing credits on explosives used in captive mines.Issue 2: Consideration of previous tribunal and court decisions:The Tribunal noted that a previous tribunal decision against the appellant was reversed by the High Court of Rajasthan, which was not considered by the Commissioner(Appeals) due to the unavailability of a copy. The Tribunal emphasized that the Commissioner should not have ignored the principles established by superior courts merely due to the absence of a copy of the High Court order. Additionally, the appellant highlighted a Supreme Court decision regarding the utilization of inputs within factory premises for cenvat/modvat credit, which the Commissioner(Appeals) disregarded citing the appellant's non-party status. The Tribunal clarified that the Supreme Court decision, regardless of party involvement, should be binding on all courts in India, criticizing the Commissioner's dismissal of the decision as an act of judicial indiscipline.Issue 3: Adjudication of the Commissioner(Appeals) on the appellant's party status in previous cases:The Commissioner(Appeals) faced scrutiny for not considering the High Court order and the Supreme Court decision due to the appellant not being a party to those cases. The Tribunal highlighted that under Article 141 of the Constitution of India, Supreme Court decisions are binding on all courts in India, making the appellant entitled to the credit based on the established law. Citing a Karnataka High Court case, the Tribunal emphasized the importance of judicial discipline and adherence to binding orders from higher forums. The Tribunal set aside the findings under challenge, allowing the appeal and stressing the need for adjudicating authorities to be updated with relevant case laws for proper decision-making.This detailed analysis of the judgment showcases the issues involved, the arguments presented by both parties, and the Tribunal's comprehensive reasoning leading to the final decision in favor of the appellant.