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SHREE RAMA MULTI-TECH LIMITED Versus COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS

2015 (12) TMI 1446 - GUJARAT HIGH COURT

Rectifion of order of larger bench [2013 (4) TMI 532 - GUJARAT HIGH COURT] - Reversal of CENVAT Credit where duty has been remitted on destroyed goods - Whether in view of the provisions contained in Rule 3 of the Cenvat Credit Rules, 2004 and Rule 21 of the Central Excise Rules, 2002, the decisions of this Court in case of COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AHMEDABAD-I v. GDN GARMENTS, reported in [2010 (7) TMI 431 - GUJARAT HIGH COURT ] and COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS V .....

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he excise authorities where it has been lawfully taken by a manufacturer and that by way of the amendment, a new right was created in favour of the revenue, it is evident that there is clear contradiction in the second part of the operative portion of the judgement, to the extent it is held that there is no scope of reversal unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reve .....

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t with the main part of the judgment, requires to be deleted in the interest of justice.

Powers of review can be exercised in rectifying an error in the earlier judgment. In the light of the above discussion, the applicant has clearly made out a case warranting exercise of review jurisdiction by this court. - The judgement and order dated 29.08.2012 passed by the Full Bench in Tax Appeals No.2520 of 2010, 896 of 2011 and 1586 of 2010, is hereby modified by deleting the following sente .....

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ENT : MS AMEE YAJNIK, ADVOCATE ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Rule. Ms. Amee Yajnik, learned senior standing counsel waives service of notice of rule on behalf of the respondent. 2. A Division Bench of this court had referred three appeals to the Larger Bench for considering the following question : Whether in view of the provisions contained in Rule 3 of the Cenvat Credit Rules, 2004 and Rule 21 of the Central Excise Rules, 2002, the decisions of this Court in case of .....

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ein, in the operative part of the order, it held thus : 20. Such being the position, we hold that sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. 4. By this application f .....

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ant invited the attention of the court to the judgment and order under review, to point out that the Full Bench, after going through the provisions of the rules relating to CENVAT, had found that prior to the introduction of sub-rule (5C) of rule 3 of the Cenvat Credit Rules, there was no provision which provided for reversal of the credit by the excise authorities where it has been lawfully taken by a manufacturer. Therefore, the credit accrued at the moment the raw material or the input was us .....

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prior to such amendment, there was no provision of reversal as introduced in the rules by way of amendment under the circumstances stated therein. Thus, it is creation of a new right in favour of the revenue and in such circumstances, in the absence of any contrary intention reflected from any of the provisions of the Statute, the amendment must be held to be prospective. Mr. Dave submitted that thus, the Full Bench has categorically held that prior to the amendment, there was no provision of re .....

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there is no scope of reversal unless any condition has been imposed for remission of duty in terms of rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed, the same is clearly contrary to what is held in the earlier part of the judgment. 5.1 Mr. Dave submitted that in the case of the applicant (original respondent), the Commissioner had imposed a condition of reversal of CENVAT credit, which had been challenged by the applicant before the Tri .....

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ding rule 21 of the rules, the Full Bench held that there was no provision for reversal, under the circumstances, in the operative part of the order, there is a clear conflict inasmuch as, if there is no provision for reversal, it cannot be left to the discretion of the Commissioner whether or not to impose such a condition. Reference was made to the decision of the CESTAT in the case of Collector of Central Excise and Customs v. Bhima Sahakari Sakhar Karkhana Ltd., 1993 (68) ELT 647 (Tribunal), .....

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e market for consumption and measures to ensure that object are to be prescribed by way of conditions. It was submitted that therefore, only such conditions can be imposed so as to ensure that the goods do not find their way to the market and do not create any pollution. However, in the absence of any power to direct reversal, no condition for reversal of CENVAT credit could be imposed. 5.2 On the question of maintainability of this application, the learned counsel placed reliance upon the decis .....

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h error. It was, accordingly, urged that the second half of the operative part of the judgement being in conflict with the main part, the application deserves to be allowed by deleting the objectionable part from the order under review. 6. On the other hand, Ms. Amee Yajnik, learned senior standing counsel for the respondent submitted that the appeal filed by the revenue against the order passed by the Tribunal is pending consideration before the Division Bench and hence, the applicant can very .....

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but has qualified that same by stating that unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. It may be noted that the court while deciding the reference, has categorically held that in a taxing statute one has to look at what is exactly or clearly stated and there is no room for ascertaining any intendment of the legislature. It is well known that there is no equity .....

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he raw material or the input was used in manufacturing of a final product which was neither exempt from duty nor carried nil rate of duty. Such being the provision, as it stood in the Cenvat Credit Rules prior to September 7, 2007, there is no scope of application of equitable doctrine against the assessee and in favour of the revenue on the ground that it will amount to conferring of double benefit. The moment sub-rule (5C) was introduced, the Legislature made its intention clear that from the .....

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h circumstances, in the absence of any contrary intention reflected from any of the provisions of the Statute, the amendment must be held to be prospective. However, in the operative part, the court has held thus : 20. Such being the position, we hold that sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for re .....

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, it is evident that there is clear contradiction in the second part of the operative portion of the judgement, to the extent it is held that there is no scope of reversal unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed. In the opinion of this court, when the Full Bench has clearly held that prior to September 7, 2007, there was no statutory provision permitting the r .....

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ds the nature of the conditions which can be imposed while passing an order of remission under section 21 of the Act was not subject matter of the reference, despite which the same stands decided against the applicant, which is clearly indicative of the fact that the portion of the paragraph of which deletion is sought by the applicant has crept in on account of inadvertent error, which needs to be rectified. 10. As regards the maintainability of this application for review, reference may be mad .....

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other sufficient reason. 90. Thus, a mistake on the part of the court which would include a mistake in the nature of the undertaking may also call for a review of the order. An application for review would also be maintainable if there exists sufficient reason therefor. What would constitute sufficient reason would depend on the facts and circumstances of the case. The words sufficient reason in Order 47 Rule 1 of the Code are wide enough to include a misconception of fact or law by a court or .....

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