ORDER
FORM OF APPLICATION TO THE HIGH COURT UNDER SECTION 35-H(1) OF THE CENTRAL EXCISE ACT, 1944.
Abhay Manohar Sapre, J:-
1. This is an application made under Section 35 -(H)(1) of the Central Excise Act by the Commissioner of Central Excise (Revenue) against the order dated 23.5.2000 bearing No. A/930/00-NB(SM) passed by Central Excise Tribunal (for short hereinafter called for brevity – the Tribunal ) in appeal No. E/633/2000-NB (S) praying for referring to this Court the questions of law proposed in the application as questions of law arising out of the aforementioned order of the Tribunal.
2. By impugned order, the Tribunal dismissed the applicant's (revenue's) appeal and confirmed the order passed by the commissioner of appeal dated 6.9.99.
3. So the short question that arises for consideration in this application is whether any referable question of law arises out of the impugned order for being answered by this Court on its merit in its reference jurisdiction and if so whether question proposed deserves to be called from the Tribunal as being question of law to this Court for answer?
4. Since the issue involved in the application is a short one and even the tribunal decided the appeal with a short but reasoned order, it is apposite to reproduce the entire order of the tribunal infra to appreciate the issue. Revenue filed this appeal against the order in appeal dated 6/9/99 passed by the Commissioner of Central Excise (Appeals).
2. The respondents vide letter dated 1.5.2000 made a request to decide the appeal on merits.
3. Brief facts of the case are that the respondents filed a declaration for availing the benefit of MODVAT credit on capital goods and the adjudicating authority without issuing any show cause notice held that as no chapter heading were mentioned in request of components/spare parts, therefore, the credit is not admissible on the capital goods mentioned in the declaration. The respondents filed appeal and the Commissioner (Appeals) allow the appeal with the following observations:
"From the above I find that the impugned order is not sustainable not only on the merits of the case but also legally as disallowing of the credit at the declaration stage by the adjudicating authority is without authority of law. In case of the appellants having taken wrong credits, the procedure for denial of such writ credit are providing for under Rule 57Q of Central Excise Rules which are not been followed. The impugned order is not sustainable."
4. Head learned JDR and perused the appeal papers.
5. The contention of the Revenue is that as per the Central excise Rules a manufacturer as to file a declaration for availing the benefit of credit in respect of capital goods and in the declaration he has to declare the description of the capital goods and also the heading of Central Excise Tariff under which the goods are classifiable. The respondents has not filed a proper declaration. Therefore, the same was rejected. The respondents in their Cross-examination submits that before passing the adjudicating order no show cause notice was issued for disallowing the credits.
6. In the impugned order the commissioner of Central Excise (Appeals) held that in the case of credits which were not permissible to the manufacturer, the procedure under Rule 57Q of Central Excise Tariff is to follow for denying the credit on capital goods and this procedure is not following in the present case. Further, I find no show cause notice was issued to the appellant before passing the impugned order. Therefore, I find no infirmity in the impugned order. Appeal filed by the Revenue is rejected.
5. Having heard the learned counsel for the parties and on perusal of the record of the case, we are of the considered opinion, that this reference application does not involve any question of law much less referable question of law to this Court and the questions proposed are neither question of law and nor referable one and hence the application deserves to be dismissed.
6. As would be clear from the facts mentioned in the impugned order quoted supra, it is a case where adjudicating authority declined to allow the assessee – a company engaged in manufacturing of certain goods to claim modavat on certain capital goods, which according to the assessee were consumed in manufacturing process. This was done by the adjudicating authority without giving to an assessee any show cause notice .When it was challenged by the assessee before the Commissioner of Appeal by filing appeal against the order of adjudicating authority then while allowing the assessee's appeal, it was held (it is quoted supra) that in such circumstances,, the adjudicating authority should have followed the procedure prescribed under Rule 57(Q) of the Rules by giving to an assessee a show cause notice and then appropriate order should have been passed. In other words, it was held by the Commissioner of Appeals that since no show cause notice was served on the assessee before denying them the benefit of claiming modavat credit on their capital goods, and hence such order of adjudicating authority is bad in law and liable to be set aside. It was accordingly set aside. It is this order, which was impugned by the Commissioner of Central Excise in appeal before the Tribunal and the same was upheld.
7. In our opinion, on these undisputed facts, we do not find any referable question of law which can be said to arise or is a question referable for being answered by this Court on its merit. If the authority failed to issue any show cause notice before denying the relief to the assessee then it amounts to not following the principle of natural justice. If the taxing authorities did not consider it proper to grant any tax benefit under the Act to an assessee or when it was noticed that assessee has availed of wrong benefit to which they were not entitled then principle of natural justice demand that they should have been served with proper show cause notice setting out therein the reasons for withdrawing such benefit and then after obtaining reply from the assessee, an order should have been passed. Since this was not done and hence such order of adjudicating authority was rightly set aside by the Commissioner of appeal and Tribunal.
8.We concur with such view taken by the two authorities below and find no referable question of law arising on such findings for being answered on merits in our reference jurisdiction.
9. It is a settled principal of law that in order to allow the application made for calling reference under Section 35( H), ibid, it is necessary for this Court to record a finding that question of law proposed by the applicant is a question of law, secondly it arise out of the case and third it is a referable question by the Tribunal to this Court for its answer on merit.
10. If the question of law proposed is found to be either question of fact or not referable or is otherwise found to be properly answered by the Tribunal on facts, or is so well settled that no decision of the High Court on such question is called for then there arise no occasion for this Court to allow the application and call any such question treating it to be a question of law. Such is the case here.
11. In the light of foregoing discussion, the application is found to be devoid of any merit. It fails and is accordingly dismissed. No cost.