2005 (5) TMI 67 - HC - Central Excise

Forceful collection of duty through cheques - The petitioner engaged in business of processing of textiles dyeing and printing has approached the Court challenging the arbitrary and high handed action on part of department in initiating recovery of alleged Central Excise duty which the petitioner is not liable to pay held that - In absence of any statutory provision on the basis of which any such recovery can be made the action of the respondent authorities in collecting the cheques from the petitioner cannot be sustained in law - The respondent authorities must bear in mind that they are creatures of statute and are bound by statutory law; the powers that they exercise are granted to them by the statute and there are no powers de hors the statute - Therefore without entering into the controversy as to whether payment was voluntary or otherwise the funds recovered by the respondent authorities are required to be refunded forthwith

Summary

Issues:
Petition seeking declaration against recovery of alleged Central Excise dues and forceful collection of cheques.

Analysis:
The petitioner, a Private Limited Company, challenged the arbitrary actions of respondent No. 3 in initiating the recovery of Central Excise duty, which the petitioner claimed it was not liable to pay according to the law. The petitioner alleged that the respondent authorities collected various cheques forcibly, claiming a substantial sum. The Court noted that no statutory provision supported the recovery made by the authorities. The Court emphasized that any tax or duty must be levied and collected in accordance with the law and supported by appropriate provisions. The Court highlighted that the authorities must act within the bounds of statutory law and cannot retain money without legal sanction.

The respondent authorities argued that the cheques were deposited voluntarily by the petitioner to avoid liability for interest and penalty under the Central Excise Act. However, the Court found that the recovery through forceful collection of cheques lacked statutory backing. The Court emphasized that the authorities must act within the confines of the law and cannot exercise powers beyond what is granted by statute. The Court directed the respondent authorities to refund the amount recovered through encashment of cheques and to return the unencashed cheques to the petitioner promptly.

The Court clarified that the refunding of the amount did not absolve the petitioner of any liability if found liable after due inquiry and adjudication. The Court allowed the petition, quashed the actions of the respondent authorities in collecting the cheques and adjusting amounts against Modvat credit, and directed the refund of the total sum recovered through cheque encashment. The Court ordered the reversal of the entry regarding outstanding Modvat credit and the return of the unencashed cheques to the petitioner within a specified time frame. The petition was allowed, and there was no order as to costs.