MUMBAI, MAR 06, 2013: THE CCE, Goa has filed a Central Excise Appeal before the Bombay High Court against the order of the CESTAT which upheld the order of the Commissioner(A) setting aside the order of the Dy. Commissioner.

The Respondent manufactured parts and accessories of motor vehicles and they had been availing MODVAT facilities under Rule 57Q of the CER, 1944. They had filed a declaration under Rule 57T(1) declaring that the said capital goods shall not be used for manufacture of excisable goods which is either exempted from payment of duty by notification or chargeable to nil rate of duty. The credit on capital goods was availed in the month of July, 1997.

It is the case of the department that records maintained by the respondent indicated that they were not receiving raw material for production of any dutiable excisable goods, but the capital goods were being used exclusively for processing of input/semi process goods on job work basis under Rule 57F(4) of the said Rules which are exempted under notification No.214/86-CE.

A SCN was issued and the MODVAT credit of Rs. 28,03,670/- was disallowed by the Assistant Commissioner even after the matter was remanded to him by the Commissioner(A). In the next round of appeal proceedings, the Commissioner(A) allowed the appeal filed by the respondent assessee and this order was upheld by the CESTAT by dismissing the appeal filed by the Revenue.

So, the CCE, Goa is before the High Court and the appeal was admitted in March, 2007 on the following substantial questions of law -

"a) Whether the Appellate Tribunal wrongly concluded that Notification number 214/86-CE dated 25.03.86 and Notification No.217/86-CE dated 02.4.1986 were in pari materia.

b) Whether the interpretation of Rule 57Q read with 57T(1) and 57T(2) of the Central Excise Rules, 1944, without considering Rule 57R(1) of the said Rules has resulted in miscarriage of justice"

The High Court extracted the findings of the lower appellate authorities and observed -

"11. From the above finding, it can be seen that the contention of the Revenue that the judgment in the case of Bajaj Tempo Ltd. (2002-TIOL-125-CESTAT-MUM) (supra) was not applicable, was considered and rejected by both the authorities. The contention of the Revenue that the credit of capital goods was inadmissible and no benefit could be given to M/s. ACGL under Rule 57S(5) was in terms rejected by both the authorities. The substantial questions of law as framed by the Court were not pressed. It can, thus, be seen that in the present case, the Commissioner (Appeals) and the CESTAT have both recorded a finding of fact that the appellant's unit had been taken over by the ACGL and the manufacturing dutiable final products, and consequently, Modvat credit on the capital goods in question is legally available to them. The finding of the Assistant Commissioner that the said two units were separate, which finding was arrived at after interpreting the agreement between the parties, was not accepted and the said finding was in terms set aside. The appellant, therefore, had no right to challenge the concurrent finding of facts in this appeal."

Holding that no case was made out by the Revenue for interference with the judgments and orders passed by both the Authorities, the appeal was dismissed.

(See 2013-TIOL-160-HC-MUM-CX)