GGN Spinning Mills (P) Ltd. Vs CESTAT

A. Selvam, J.@mdashThis Civil Miscellaneous Appeal has been directed against Associated Provincial Picture Houses Limited v. Wednesbury Corporation, (1948) 1 K.B. 223 . The appellant has been engaging in production of cotton yarn and during the course of its business it has removed capital goods to its sister concern. Under the said circumstances on 16-7-2003, a show cause notice has been issued and thereby directed the appellant to pay central excise duty on the basis of the Circular dated 1-7-2002 (Circular No. 643/34/2002-CX . The demand made in the show cause notice has been upheld in the order-in-original dated 28-11-2003. Against which Appeal No. 58/2004 has been preferred before the Commissioner of Appeals, wherein the demand made by the Department has been set aside. Against the order passed by the Commissioner of Appeals, an appeal has been filed in E/739/2004 before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai has remanded the matter to the original authority by way of directing to adopt a straight line depreciation method as prescribed in the Board''s Circular issued in the year 1988. Against the order of remand passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench Chennai, the present Civil Miscellaneous Appeal has been preferred.

2. On the side of the appellant, the following substantial questions of law have been raised for consideration:

"(a) Whether the first respondent correctly applied the law for availing the depreciation under Section 32 of the Income-tax Act, 1961 incorporated in Rule 4(4) of Cenvat Credit Rules, read with Rule 3(4) of Cenvat Credit Rules in respect of removal of used capital goods as such, during the year 2002?

(b) Whether the first respondent erred in directing to apply straight line method of depreciation effective from 27-2-2010 which not prescribed during the period of removal of such capital goods (i.e.) Financial year 2002?

(c) Whether the first respondent''s order is retrograde in nature while rejecting the application of Section 32 of the Income-tax Act, 1961 for depreciation used capital goods?

(d) Whether the first respondent tribunal violated the principles of natural justice in placing the Circular dated 21-4-1998 and in respect of penalty?

(e) Whether the principles of revenue neutral is applicable in this case as there is ''no'' revenue loss?"

3. The learned counsel appearing for the appellant has contended that the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai has not at all considered the relevant rules coupled with the Circular dated 1-7-2002 and further before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai relevant decisions have also not been quoted and under the said circumstances for giving quietus to the parties, the impugned order of remand passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai is liable to be set aside and necessary direction has to be given to the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai.

4. The learned counsel appearing for the respondent has contended that the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai has remanded the matter to original authority with a specific direction to decide the issue in question on the basis of Circular issued in the year 1988 and it is nothing but more beneficial to the assessee and under the said circumstances the order of remand passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai need not be interfered with.

5. As narrated earlier the only question that comes up for consideration in the present lis is as to whether the appellant/assessee is liable to pay central excise duty on the basis of straightline method or on the basis of return down value method under Section 32 of the Income-tax Act, 1961?

6. In the show cause notice dated 16-7-2003, it has been specifically mentioned that as per Circular issued in the year 2002, the appellant/assessee is liable to pay the tax mentioned therein. But as rightly pointed out on the side of the appellant/assessee, the Tribunal has not considered the said Circular whereas the Tribunal has remitted the matter to its original authority and also given necessary direction to apply the Circular issued in the year 1988. Further the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai has not at all considered the relevant provisions of law. Under the said circumstances the order of remand made by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai is not sustainable and consequently the same is liable to be set aside and the substantial questions of law raised on the side of the appellant are decided in favour of the appellant. In fine, this Civil Miscellaneous Appeal is allowed without costs and the order of remand passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai in Appeal No. E/739/2004 is set aside and the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai is directed to decide the issue involved in the present lis as per relevant circular and also relevant provisions of law and pass suitable orders.