2023 (3) TMI 293 - AT - Central Excise

Tribunal Upholds Decision on CENVAT Credit for Tyre Accessories

The Tribunal upheld the Commissioner's decision to drop demands of CENVAT credit on tubes and flaps for an assessee engaged in manufacturing automobile ... CENVAT Credit - tubes and flaps - assessee was domestically clearing such tyres along with tubes and flaps by paying central excise duty on the value of the entire set packing, i.e. tyres, tubes and flaps - export of these items also took place - HELD THAT:- The decision of this Tribunal in BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR-I [2007 (6) TMI 85 - CESTAT, NEW DELHI] as well as of the High Court of Rajasthan in the case of M/S BALKRISHNA INDUSTRIES LTD. VERSUS UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL EXCISE DIVISION, BHIWADI [2022 (2) TMI 558 - RAJASTHAN HIGH COURT] the assessee itself holding that CENVAT credit on duty paid tubes and flaps as accessories of manufactured tyres is admissible, is binding on us. Therefore, the issue having been held in favour of the assessee, the present appeal by the revenue needs to be dismissed and the order passed by the Adjudicating Authority is consequently upheld. Appeal dismissed. Issues:1. Challenge to dropping demands of CENVAT credit on tubes and flaps by the revenue.2. Eligibility of CENVAT credit on tubes and flaps as accessories of manufactured tyres.3. Binding effect of previous Tribunal and High Court judgments on the present case.4. Averments made by the revenue regarding the binding effect of Tribunal's judgment.Analysis:1. The revenue filed appeals challenging the dropping of demands of CENVAT credit on tubes and flaps for two units of the assessee. The assessee, engaged in manufacturing automobile tyres, domestically cleared tyres with tubes and flaps, availing CENVAT credit on duty paid for tubes and flaps. The issue was previously addressed in a Tribunal judgment and the High Court of Rajasthan, where the demands were reversed based on the essentiality of tubes and flaps as accessories to tyres, citing the Siddhartha Tubes case.2. The revenue issued show cause notices for the period April 2006 to June 2017 and January 2007 to October 2015. The adjudication was postponed due to pending proceedings in the High Court and Supreme Court. The Commissioner later dropped the demand of CENVAT credit on tubes and flaps, leading to the revenue's appeal. The authorized representative cited a Kerala High Court judgment, but the Tribunal and High Court of Rajasthan's decisions in favor of CENVAT credit on tubes and flaps were deemed binding.3. The Tribunal emphasized the binding nature of its and the High Court's previous judgments on the issue, rejecting the revenue's appeal. The Tribunal highlighted the importance of following precedents set by higher authorities, emphasizing the principle of judicial discipline. The Tribunal dismissed the revenue's appeal, upholding the Commissioner's order dropping the demand for CENVAT credit on tubes and flaps.4. The revenue's objections regarding the binding effect of the Tribunal's judgment were dismissed by the Tribunal. The Tribunal criticized the revenue for not adhering to judicial discipline and reiterated the significance of following higher appellate authorities' decisions. The Tribunal referenced a Supreme Court case emphasizing the binding nature of appellate orders and the importance of upholding judicial discipline in tax law administration. Both appeals were consequently dismissed by the Tribunal.