2018 (5) TMI 1459 - HC - Central Excise

Refund - maintainability of petition - alternative remedy - Held that - the petitioner has an alternative remedy of appeal against the impugned order. The narration of facts noticed hereinbefore clearly shows that certain factual matrix is required to be established for which the first appellate authority would be proper forum instead of invoking writ jurisdiction of this Court under Article 226 of the Constitution of India at the first instance. The Apex Court in Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, 2013 (8) TMI 458 - SUPREME COURT , considered the question of entertaining writ petition where alternative statutory remedy was available and it was held that Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon. The writ petitions are disposed of by relegating the petitioners to alternative remedy of appeal against the impugned orders.

Issues:
Petition for issuance of writ of certiorari for quashing an order-in-original dated 17.5.2016; Entitlement to area-based exemption under Central Excise Act, 1944; Refund of duty paid through PLA; Imposition of penalty; Availability of alternative statutory remedy of appeal.

Analysis:
1. Writ of Certiorari: The petitioner filed a petition under Article 226 seeking a writ of certiorari to quash the order-in-original dated 17.5.2016 passed by respondent No.2. The petitioner, registered with Central Excise Authorities for manufacturing certain products, was granted an area-based exemption under the Central Excise Act, 1944. The order-in-original confirmed a demand for duty payment and imposed penalties, leading to the filing of the writ petition.

2. Area-based Exemption: The petitioner's manufacturing unit was entitled to an area-based exemption under a notification dated 14.11.2002. This exemption required units to pay duty on clearances and then claim a refund from the PLA. The petitioner's unit received refunds for clearances made during a specific period, but a show cause notice alleged that the petitioner had wrongly claimed credit for duty paid through PLA, leading to the demand and penalties.

3. Refund of Duty Paid through PLA: The petitioner was issued a show cause notice regarding the utilization of Cenvat Credit for duty paid through PLA. Respondent No.2 confirmed the demand and imposed penalties through the impugned order. The petitioner sought relief through the writ petition, challenging the correctness of the order and the penalties imposed.

4. Imposition of Penalty: Besides confirming the duty demand, respondent No.2 imposed penalties on the petitioner and other individuals associated with the business. The petitioner contested the imposition of penalties through the writ petition, seeking relief from the High Court under Article 226.

5. Availability of Alternative Statutory Remedy: The High Court, after considering the arguments of both parties, noted that the petitioner had an alternative statutory remedy of appeal against the impugned order. Citing relevant case law, the Court emphasized the principle that the existence of an alternative remedy is a rule of self-imposed limitation on the High Court's jurisdiction under Article 226. The Court highlighted that the petitioner should exhaust the statutory remedies before seeking relief through writ jurisdiction.

6. Judicial Precedents and Discretion: The Court referred to various judicial precedents emphasizing the discretion of the High Court in entertaining writ petitions when alternative remedies are available. The Court highlighted that the High Court may intervene under Article 226 only in exceptional cases or when there are sufficient grounds to warrant such interference. The judgment reiterated the importance of following statutory remedies and principles of natural justice before approaching the High Court for relief.

7. Disposition and Alternative Remedy: Ultimately, the Court disposed of the writ petitions by directing the petitioners to pursue the alternative remedy of appeal against the impugned orders. The Court allowed a grace period for filing appeals and ensured that the appeals would not be dismissed on grounds of limitation if filed within the specified timeframe. This decision reinforced the importance of exhausting statutory remedies before seeking judicial intervention through writ jurisdiction.

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