2015 (3) TMI 691 - HC - Central Excise

Evasion of central excise duty by removing finished product i.e. Non-Alloy Steel Ingots without issuing statutory invoice and without payment of central excise duty - Held that - In the scheme of the Central Excise Act and the rules made thereunder, a manufacturer can remove the finished goods from the premises, only after payment of the central excise duty. Since the prepayment of excise duty for each consignment may lead to some hardship, the facility of payment of excise duty, periodically, is extended to the manufacturers. Wherever such facility is extended, the manufacturer can remove the goods without prior payment, but the excise duty payable thereon must be remitted at certain intervals. Secondly, the Central Government has created the facility of adjustment of duty on raw-materials and other components that go to the process of manufacture, against the duty payable on the finished product, at their level. This would, inter alia, lessen the burden of payment of excise duty. Through Rule 12 CCC of the 2002 Rules, the Central Government enabled the concerned assessing authority to place restriction as to the facility of making deferred payment of central excise duty, in case it is noticed that the manufacturer is resorting to evasion of duty or other unlawful activities. Similarly, if a manufacturer is said to be resorting to such acts and omissions, the authority is also conferred the power to place restriction on the utilization of CENVAT credit facility for a specified period, as provided in Rule 12 EEE of the Rules. The petitioner is unable to convince this Court that the rules, referred to above, are contrary to any specific provisions of Central Excise Act or for that matter the Constitution of India. Except taking a vague, general and espacious plea, no specific grounds are urged nor any precedent cited. - The judgments rendered by the Delhi High Court in Vinay Wires and Poly Products Pvt. Ltd. Vs. Member (Central Excise), Central Board of Excise and Customs, New Delhi 2010 (1) TMI 30 - DELHI HIGH COURT , and Gujarat High court in Vishal Engineering Vs. Union of India & Ors. 2011 (7) TMI 1090 - GUJARAT HIGH COURT are in cases where the parties are said to have been denied the opportunity of being heard. This, however, is a case where the petitioner persistently refused to participate in the proceedings. - Decided against Assessee.

Summary

Issues Involved:
1. Legality of Rule 12AAA of the CENVAT Credit Rules, 2004, and Rule 12CCC of the Central Excise Rules, 2002.
2. Validity of the order dated 09.12.2013 imposing restrictions on the petitioner.
3. Alleged violation of principles of natural justice due to non-furnishing of documents and lack of adequate opportunity for the petitioner.

Issue-wise Detailed Analysis:

1. Legality of Rule 12AAA of the CENVAT Credit Rules, 2004, and Rule 12CCC of the Central Excise Rules, 2002:
The petitioner challenged Rule 12AAA and Rule 12CCC as being ultra vires the Central Excise Act and the Constitution of India. The court noted that no serious arguments were advanced regarding the challenge to these rules. Rule 12CCC allows the Central Government to impose restrictions on a manufacturer to prevent evasion of excise duty. Similarly, Rule 12AAA provides for restrictions to prevent misuse of CENVAT credit. The court found that these rules are consistent with the provisions of the Central Excise Act and the Constitution of India. The petitioner failed to provide specific grounds or precedents to support their claim. Thus, the court concluded that the rules do not suffer from any legal infirmity.

2. Validity of the order dated 09.12.2013:
The petitioner contested the order dated 09.12.2013, which withdrew the facility of monthly payment of excise duty and denied the CENVAT credit facility for four months. The court examined the procedure prescribed under the notification issued by the Government of India. It was found that the concerned authority can pass an order placing restrictions as a preliminary step when serious violations are noticed. The conclusions arrived at by the authority must be submitted to the Central Board for approval before they become enforceable. The court noted that the petitioner did not participate in the proceedings and only submitted preliminary objections. The court found no merit in the petitioner's argument that the procedure followed was contrary to the principles of natural justice.

3. Alleged violation of principles of natural justice:
The petitioner argued that the order was violative of principles of natural justice as the relevant documents were not furnished, and adequate opportunity was not given. The respondents countered that all documents relied upon were furnished, and the petitioner was given an opportunity for a personal hearing. The court observed that the petitioner persistently refused to participate in the proceedings and raised objections instead of engaging substantively. The court found that the respondents had complied with the requirement of furnishing documents and providing an opportunity for a hearing. The petitioner's approach indicated an intention not to participate in the proceedings. The court held that the principles of natural justice were not violated as the petitioner was given ample opportunity to present its case.

Conclusion:
The court dismissed the writ petition, finding no merit in the contentions raised by the petitioner. The rules challenged were found to be consistent with the Central Excise Act and the Constitution of India. The order dated 09.12.2013 was upheld as it followed the prescribed procedure and did not violate principles of natural justice. The petitioner's refusal to participate in the proceedings undermined its claims. The court emphasized that principles of natural justice cannot be stretched to accommodate the petitioner's non-cooperation.