2011 (10) TMI 145 - HC - Central Excise

Default in payment of duty - payment of duty under rule 8(3A) - restriction on utilization of cenvat credit - scope of the expression duty or duty of excise - Held that - Considering the fact that the first respondent had not considered the claim of the petitioner in the light of the provisions of law thus available, in fitness of things, this Court feels that the contention of the petitioner merits acceptance. Hence, the objection of the Revenue on the maintainability of the writ petition stands rejected. - matter restored for fresh consideration

Summary

Issues:
- Quashing of order by Customs & Central Excise Settlement Commission
- Interpretation of Rule 8(3A) of the Central Excise Rules, 2002
- Rejection of petition seeking immunity from penalty
- Consideration of CENVAT credit in payment of duty
- Maintainability of the writ petition
- Compliance with provisions of law by the Settlement Commission

Quashing of Order by Customs & Central Excise Settlement Commission:
The petitioner sought a writ to quash the order of the Customs & Central Excise Settlement Commission dated 23.6.2011 and requested a fresh hearing in accordance with Rule 8(3A) of the Central Excise Rules, 2002. The Commission had reversed CENVAT credit due to the petitioner's default in paying duty, leading to penalties and interest. The Commission rejected the petitioner's application for immunity from penalty, prompting the petitioner to challenge the decision in court.

Interpretation of Rule 8(3A) of the Central Excise Rules, 2002:
The petitioner argued that the Explanation to Rule 8(3A) expanded the scope of 'duty' to include amounts payable under the CENVAT Credit Rules, 2004. The petitioner contended that the Commission failed to consider this explanation, leading to an incorrect application of the rule. The court agreed that the Commission's failure to consider this explanation warranted quashing the order and a fresh review of the case.

Rejection of Petition Seeking Immunity from Penalty:
The petitioner applied for immunity from penalty under Section 32E(1) of the Central Excise Act, 1944, but the Commission rejected the application due to alleged lack of cooperation by the petitioner in settling the duty payment issue. The court found that the Commission's decision was hasty and directed a reconsideration of the case in light of the relevant legal provisions.

Consideration of CENVAT Credit in Payment of Duty:
The petitioner argued that the use of CENVAT credit should be considered in the payment of duty, as per Rule 8(3A) and its Explanation. The court agreed that the Commission's failure to acknowledge this aspect necessitated a fresh review of the case to ensure proper consideration of all relevant factors.

Maintainability of the Writ Petition:
The Revenue questioned the maintainability of the writ petition against the Commission's order. Citing a Supreme Court decision, the court held that if a statutory authority ignores legal provisions, causing prejudice, the court can intervene through a writ petition. The court rejected the Revenue's objection and proceeded to review the case.

Compliance with Provisions of Law by the Settlement Commission:
The court found that the Commission had not adequately considered the petitioner's case in line with the applicable legal provisions. Consequently, the court set aside the Commission's order and directed a fresh consideration of the case in accordance with Rule 8(3A) and its Explanation.

In conclusion, the court allowed the writ petition, quashed the Commission's order, and instructed a reevaluation of the petitioner's case by the Commission, emphasizing compliance with Rule 8(3A) and its Explanation. The petitioner was granted the opportunity to present additional submissions for the Commission's review.