2003 (8) TMI 62 - HC - Central Excise

Court rules in favor of Respondent on Modvat credit entitlement under Notification No. 208/83-C.E. Manufacturer's burden highlighted.

The Court dismissed the petition, ruling that the Respondent was entitled to the benefit of deemed Modvat credit under Notification No. 208/83-C.E. The ... Reference to High Court - Deemed Modvat credit Issues:Determining entitlement to deemed Modvat credit under Notification No. 208/83-C.E., dated 1-8-1983.Analysis:The case involved the question of whether Respondent No. 1 was entitled to the benefit of deemed Modvat credit as per Notification No. 208/83-C.E. The Respondent, engaged in manufacturing parts of motor vehicles, availed Modvat credit on inputs but faced a notice proposing recovery. The adjudicating authority confirmed the proposal, but the Collector (Appeals) and the Tribunal ruled in favor of the Respondent, citing precedents like the case of Machine Builders v. Collector of Central Excise. The petitioner sought a legal declaration based on a Division Bench judgment and argued against the benefit of deemed Modvat credit for the Respondent.The Court considered various arguments and precedents. The Division Bench judgment in Upper India Steel Manufacturing case emphasized the burden on the manufacturer to establish conditions specified in the government order. The Supreme Court's ruling in Collector of Central Excise v. Decent Dyeing Co. highlighted the manufacturer's liability for excise duty payment and the burden of proof on the department regarding duty payment. The Full Bench of the Tribunal in Machine Builders case interpreted government orders and discussed the burden of proof in cases of conditional exemption, emphasizing the responsibility of the manufacturer to take a stand on deemed credit eligibility.The Court concluded that the law laid down by the Supreme Court in Decent Dyeing Co. case, followed by the Tribunal, was binding. The Division Bench's view in Upper India Steel Manufacturing case was deemed incorrect for not considering the Supreme Court's judgment. Consequently, the Court held that the impugned orders did not have any legal flaws, and no substantial question arose for determination. Therefore, the petition was dismissed based on the established legal principles and precedents cited in the judgment.