2010 (8) TMI 304 - HC - Central Excise

Delay in forwarding of proposal - authority forwarded his proposal to the Chief Commissioner after a delay of about three days - factor of delay considered by the Chief Commissioner and been condoned - language employed in the notification which lays down that the first authority shall forward the proposal within 30 days of the detection of the case Held that - delay of 3 days cannot in any manner be termed to be so excessive so as to vitiate the entire proceedings - nature of procedural guidelines/administrative instructions and in absence of any prescription in the parent notification, cannot be termed as mandatory - it is not possible to state that the delay of one day in forwarding the comprehensive proposal would vitiate the entire proceedings under the Cenvat Credit Rules as well as the Central Excise Rules, certain facilities as to mode of payment are given to the assessee. Therefore, in case of non-compliance of the provisions of the Act and the Rules, it is well within the authority of the respondents to place restrictions on the utilization of such facilities for payment. The petitioner does not have any absolute right to avail of such facilities for payment of duty.

Issues Involved:
1. Validity of the Order No. 29 of 2010 dated 28-8-2010.
2. Restoration of facilities under Rule 8(1) of the Central Excise Rules, 2002.
3. Utilization of Cenvat Credit under Rule 3(4) of the Cenvat Credit Rules, 2004.
4. Allegations of clandestine removal of goods and evasion of duty.
5. Procedural compliance under Notification No. 32/2006-C.E. (N.T.).
6. Timeliness of forwarding proposals and recommendations.
7. Applicability of restrictions under Cenvat Credit Rules.
8. Monetary threshold for invoking Notification No. 32/2006-C.E. (N.T.).

Detailed Analysis:

1. Validity of the Order No. 29 of 2010 dated 28-8-2010
The petitioner challenged the order issued by the Central Board of Excise and Customs, arguing that it was passed without following due procedure. The court found that the Board had followed the procedure required under Notification No. 32/2006-C.E. (N.T.) and had passed the order after considering the facts and circumstances of the case. The court held that the order was discretionary and had been properly exercised, thus warranting no interference.

2. Restoration of facilities under Rule 8(1) of the Central Excise Rules, 2002
The petitioner sought the restoration of facilities under Rule 8(1) of the Central Excise Rules, 2002. The court found that the petitioner had been involved in clandestine removal of goods and evasion of duty, justifying the withdrawal of facilities. The court held that the petitioner does not have an absolute right to avail of such facilities for payment of duty, especially in cases of non-compliance with the provisions of the Act and the Rules.

3. Utilization of Cenvat Credit under Rule 3(4) of the Cenvat Credit Rules, 2004
The petitioner requested the court to allow the utilization of Cenvat Credit for payment of excise duty. The court found that the restrictions on the utilization of Cenvat Credit were justified given the petitioner's involvement in evasion of duty. The court held that the notification does not specify that restrictions have to be co-related with the specific offence, and thus, the restrictions were valid.

4. Allegations of clandestine removal of goods and evasion of duty
The court examined the allegations of clandestine removal of goods and evasion of duty amounting to Rs. 76 lakhs. The court found that the petitioner had misused the Cenvat Credit availed and utilized on raw materials used in the manufacture of clandestinely removed finished goods. The court held that the allegations were supported by evidence, including the panchnama and statements recorded under Section 14 of the Central Excise Act, 1944.

5. Procedural compliance under Notification No. 32/2006-C.E. (N.T.)
The petitioner argued that the procedure laid down in the notification was not followed, particularly the timeliness of forwarding proposals and recommendations. The court found that although there was a delay of three days in forwarding the proposal and one day in forwarding the comprehensive proposal, these delays were not excessive and did not vitiate the proceedings. The court held that the procedural requirements had been substantially complied with.

6. Timeliness of forwarding proposals and recommendations
The petitioner contended that the delay in forwarding the proposal and recommendations vitiated the proceedings. The court found that the delays were minimal and had been condoned by the Chief Commissioner. The court held that the procedural guidelines were not mandatory and that the delays did not affect the validity of the proceedings.

7. Applicability of restrictions under Cenvat Credit Rules
The petitioner argued that there was no allegation of mis-utilization of Cenvat Credit, and thus, restrictions under Rule 3(4) of the Cenvat Credit Rules were not applicable. The court found that the notification allows for the imposition of restrictions under either sub-para (i) or (ii) of Para 2, regardless of the specific offence. The court held that the restrictions on the utilization of Cenvat Credit were valid.

8. Monetary threshold for invoking Notification No. 32/2006-C.E. (N.T.)
The petitioner contended that the evasion amount was less than Rs. 10 lakhs, and thus, the notification could not be invoked. The court found that the estimated duty involved in the evasion was Rs. 83.22 lakhs, well above the monetary threshold. The court held that the provisions of the notification were applicable.

Conclusion
The court found no infirmity in the impugned order and held that the procedures under the notification had been duly followed. The petition was rejected, and the notice was discharged with no order as to costs.

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