2019 (3) TMI 1732 - HC - Central Excise

Validity of Circulars on SCN - ability of Clause 11.2 of Master Circular No. 1053/2/2017-CX. dated 10-3-2017 issued by the Central Board of Excise and Customs New Delhi - denial and recovery of Cenvat credit - Demand of interest besides invocation of penal provisions - HELD THAT - Both the show cause notices are based on common evidence relied before two adjudicating authorities by the department thus giving rise to possibility of divergent views by two different adjudicating authorities. It is in order to avoid such a situation that the Central Board of Central Excise and Customs New Delhi in its wisdom has rightly provided that in the case of different show cause notices issued on the same issue answerable to different adjudicating authorities show cause notice involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty. Argument of the respondents that request of petitioner No. 1 for transferring the case to the Additional Director General Directorate General of Central Excise Intelligence Delhi Zonal Unit New Delhi did not fall within the power of the adjudicating authority of the present case i.e. the Commissioner Central Excise and Service Tax Commissionerate Alwar is wholly without any substance as it was always open for him to make a request to the competent authority seeking appropriate order of transfer of the case to the Adjudicating Authority at New Delhi. Petition allowed.

Summary

Issues Involved:
1. Applicability of Clause 11.2 of Master Circular No. 1053/2/2017-CX.
2. Maintainability of the writ petition in the presence of an alternative remedy.
3. Jurisdiction of the adjudicating authority.

Issue-wise Detailed Analysis:

1. Applicability of Clause 11.2 of Master Circular No. 1053/2/2017-CX:

The core issue revolves around the applicability of Clause 11.2 of the Master Circular, which states that "cases involving taxability, classification, valuation, and extended period of limitation shall be kept out of the purview of adjudication by Superintendents. Such cases, up to rupees 10 Lakhs, shall also be adjudicated by the Deputy Commissioner/Assistant Commissioner in addition to the cases exceeding rupees 10 Lakhs but not exceeding rupees 50 lakh." It further specifies that "in case different show cause notices have been issued on the same issue answerable to different adjudicating authorities, Show Cause Notices involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty."

The petitioners argued that since both show cause notices were based on similar investigations and evidence, they should be adjudicated by the authority competent to decide the case with the highest amount of duty, i.e., the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi. The court found substantial similarities between the two show cause notices and agreed with the petitioners, emphasizing that the Master Circular aims to avoid divergent views by different adjudicating authorities.

2. Maintainability of the Writ Petition in the Presence of an Alternative Remedy:

The respondents objected to the writ petition's maintainability, arguing that the petitioners had an alternative remedy under Section 35B of the Central Excise Act, 1944, by appealing to the Central Excise and Service Tax Appellate Tribunal, New Delhi. However, the court rejected this objection, stating that the issue at hand pertained to the very jurisdiction of the Assessing Authority, which justified the writ petition's maintainability despite the availability of an alternative remedy.

3. Jurisdiction of the Adjudicating Authority:

The respondents contended that the request to transfer the case to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi, did not fall within the power of the current adjudicating authority, i.e., the Commissioner, Central Excise and Service Tax Commissionerate, Alwar. The court dismissed this argument, noting that the Commissioner could have requested the competent authority for an appropriate transfer order.

Conclusion:

The court allowed the writ petition, setting aside the impugned Order-in-Original. It ordered that the proceedings pursuant to the show cause notice dated 23-10-2017 be transferred to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi, for adjudication alongside the proceedings initiated by the earlier show cause notice dated 1-3-2016. The Stay Application No. 13093/2018 was also disposed of accordingly.