2019 (8) TMI 678 - HC - Central Excise

High Court quashes CESTAT order on duty exemption for captively consumed yarns, relying on Supreme Court precedent.

M/s CHIRIPAL INDUSTRIES LTD And 1 other (s) Versus UNION OF INDIA And 2 other (s)

The High Court allowed the petition, quashing the CESTAT order regarding the exemption of National Calamity Contingent Duty on captively consumed yarns. ... Liability of National Calamity Contingency Duty - POY produced and captively consumed within the factory of production by the Petitioner - period from October 2007 to February 2008 - petitioner has drawn our attention to the order of the Supreme Court in the case of Bajaj Auto Limited v. Union of India [2019 (3) TMI 1427 - SUPREME COURT] and submitted that ratio therein would govern the case of the petitioner. HELD THAT:- The ratio of the Supreme Court, when stated to govern the case and the petition was filed prior to the judgment rendered by the Supreme Court and considering the contentions raised in the petition, we do not propose to relegate the petitioner to avail alternative remedy, as suggested by learned counsel for the respondent - the ratio of the Supreme Court judgment is not in dispute and would squarely govern the case. Petition allowed. Issues:Challenge to order of CESTAT regarding National Calamity Contingent Duty exemption on captively consumed yarns.Analysis:The petitioner, engaged in manufacturing yarns, used POY and FDY captively within the factory for production of final products. The Central Government exempted goods consumed captively within the factory from excise duty. However, a show cause notice was issued for NCCD on captively consumed yarns. The Commissioner (Appeals) initially held NCCD not exempt, but subsequent orders favored the petitioner. The Appellate Tribunal, in an order dated 5.7.2018, allowed the revenue's appeal, stating NCCD was not excise duty and not exempt for captively consumed yarns. The petitioner challenged this order. The High Court referred to a decision of the Uttarakhand High Court and a Supreme Court case regarding area-based exemptions and surcharges, finding the issue justiciable. The Court stayed the CESTAT order and issued a notice. The Supreme Court's judgment in a similar case was cited, and the Court held that the petitioner need not pursue an alternative remedy as the Supreme Court's ratio applied to the case. Consequently, the High Court allowed the petition, quashing the CESTAT order.This detailed analysis covers the issues involved in the legal judgment, highlighting the petitioner's challenge to the CESTAT order regarding the exemption of National Calamity Contingent Duty on captively consumed yarns. The judgment delves into the history of notifications exempting goods consumed captively within the factory, the conflicting decisions by the Commissioner (Appeals), and the Appellate Tribunal's ruling. The High Court's consideration of relevant legal precedents and the application of the Supreme Court's ratio to the case provide a comprehensive understanding of the decision-making process leading to the quashing of the CESTAT order.