2014 (11) TMI 983 - HC - Central Excise

CENVAT Credit - Violation of Rule 3(5) of the Cenvat Credit Rules 2004 - Held that - On a perusal of the show cause notice it is seen that there is no clear finding but the authority would state that it appears that the petitioner availed the credit on the basis of ineligible documents. The explanation of the petitioner was that subsequently the Bills of Entries were lost and therefore they lodged Police complaint and thereafter the copies were re-done as the duly certified by the authorities have not been traceable. This explanation said to have been given by the petitioner appears to have not been considered by the respondent and issued the present show cause notice. - after the case has already been settled by the Settlement Commission the question of re-opening the same does not arise unless and until it is established that fraud has been committed. It is not the case of the respondent Department that fraud has been committed nor the Department approached the Settlement Commission in this regard - Decided in favour of assessee.

Summary

Issues:
Challenge to show cause notice for Cenvat credit availed based on ineligible documents after settlement by the Settlement Commission without establishing fraud.

Analysis:
The petitioner sought to quash the impugned notice dated 7-5-2008 issued by the respondent, questioning the Cenvat credit availed by the petitioner. The petitioner had previously been issued a show cause notice in 2006 for violating the Cenvat Credit Rules. The matter was adjudicated by the Joint Commissioner, and an order was passed, leading to an appeal pending before the Commissioner of Central Excise (Appeals). Subsequently, the petitioner approached the Settlement Commission, Chennai, seeking immunity from interest, penalty, and prosecution under the Central Excise Act and IPC. The Settlement Commission, after considering the case, admitted and settled it on 22-5-2007, directing the petitioner to pay simple interest for the period until the duty was paid.

Despite the settlement, a show cause notice was issued two years later, alleging that the petitioner had availed Cenvat Credit with ineligible documents. The petitioner explained that the original Bills of Entries were lost, and copies were re-done after lodging a police complaint, as the duly certified copies by the authorities were not traceable. The High Court observed that the case had already been settled by the Settlement Commission, and unless fraud was established, there was no ground for reopening it. Since the respondent did not allege fraud or approach the Settlement Commission regarding the same, the Court allowed the Writ Petition, setting aside the show cause notice dated 7-5-2008. The judgment concluded by stating that no costs were awarded, and the connected Miscellaneous Petition was closed.