2019 (7) TMI 683 - HC - Central Excise

Remission of duty - Rule 21 of Central Excise Rules, 2002 - HELD THAT - The Adjudicating Authority was directed to reconsider the remission application filed by the writ-applicant. Instead of reconsidering the remission application filed by the writapplicant, straightway the impugned showcause notice has been issued. Let Notice be issued to the respondents, returnable on 31/07/2019.

Summary

Issues:
Challenge to show cause notice for Central Excise Duty and Cenvat credit demand under Section 11A, appropriation of reversed Cenvat credit, recovery of interest under Section 11AA. Rejection of remission application by Commissioner and subsequent challenge before Tribunal.

Analysis:

Challenge to Show Cause Notice:
The writ applicant sought to challenge the legality and validity of the show cause notice dated 18/03/2019 issued by the Principal Commissioner, Central GST and Central Excise, VadodaraI. The notice demanded Central Excise Duty amounting to ?2,70,17,147 and Cenvat credit of ?13,65,766 under Section 11A of the Central Excise Act, 1944. Additionally, the notice raised issues regarding the appropriation of reversed Cenvat credit and recovery of interest on the duty and credit availed under Section 11AA.

Rejection of Remission Application:
The remission application filed by the writ applicant was rejected by the Commissioner through an order dated 06/06/2017. The rejection was based on the grounds that the goods were not marketable due to an injunction order, and the application for remission of duty was dismissed. However, this rejection was later challenged before the Commissioner, Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad.

Tribunal's Decision:
The Tribunal, in its order dated 27/11/2018, quashed the Commissioner's rejection of the remission application and directed the Adjudicating Authority to reconsider the application. The Tribunal emphasized that the goods in question were not marketable due to a court order on the brand name issue, making it beyond the appellant's control to sell them. The Tribunal highlighted that the Commissioner erred in assuming malafide intentions and interfering with the appellant's business decisions. It was noted that the appellant's claim for remission of duty was legitimate, considering the goods were unfit for marketing, justifying the application under Rule 21 of the Central Excise Rules, 2002.

Current Status and Directions:
The writ applicant's counsel emphasized that instead of reconsidering the remission application as directed by the Tribunal, the impugned show cause notice was issued. Consequently, the High Court directed the issuance of a notice to the respondents, returnable on 31/07/2019, with an ad-interim order in place. The Court permitted direct service and instructed further proceedings in accordance with Para 8(B).

In conclusion, the judgment involves a challenge to a show cause notice for Central Excise Duty and Cenvat credit demand, along with the rejection of a remission application by the Commissioner and subsequent directions by the Tribunal for reconsideration. The detailed analysis highlights the legal intricacies surrounding the remission application, marketability of goods, and the authority's jurisdiction in such matters.