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2019 (7) TMI 1347 - HC - Central ExciseChallenging the proceedings pursuant to Show Cause Notices ('SCNs' in plural and 'SCN' in singular) - Rebate claim - Rule 18 of CER - manufacture and export of cotton yarn (exempted goods) - consignments that were exported on payment of duty albeit by way of payment from their CENVAT capital goods credit account - HELD THAT - Instant cases on hand certainly do not fall under rare and exceptional cases warranting interference in impugned SCNs. Though obvious, it is made clear that when adjudication pursuant to impugned SCNs proceed, it will be open to writ petitioners to submit that they have not availed double benefit and obviously, this aspect will also be adjudicated upon on merits - this is one of the main reasons as to why this court has refrained and restrained itself from expressing any opinion on this aspect of the matter. The impugned SCNs do not deserve to be interfered with and that impugned SCNs have to be carried to their logical end. Petition dismissed.
Issues Involved:
1. Legality of Show Cause Notices (SCNs) issued under Section 11A of the Central Excise Act, 1944. 2. Interplay between Sections 35E and 11A of the Central Excise Act regarding appeals and SCNs. 3. Jurisdictional fact and the scope of writ jurisdiction in challenging SCNs. 4. Allegations of willful mis-declaration and availing double benefits by the petitioners. Detailed Analysis: 1. Legality of Show Cause Notices (SCNs) Issued Under Section 11A of the Central Excise Act, 1944: The core issue in these writ petitions is the challenge to the SCNs issued to the petitioners under Section 11A of the Central Excise Act, 1944 (CE Act). The petitioners argued that the SCNs were issued without assailing the relevant refund orders made under Section 35E of the CE Act, which is appealable under Section 35E(2). The court noted that the SCNs were issued to recover the rebate sanctioned, which was allegedly erroneous, and to impose penalties for willful mis-declaration. 2. Interplay Between Sections 35E and 11A of the Central Excise Act Regarding Appeals and SCNs: The petitioners relied heavily on the Division Bench judgment in Eveready Industries India Ltd. Vs. CESTAT, Chennai, which held that an SCN under Section 11A cannot be issued without first challenging the refund order under Section 35E. However, the court distinguished this case by referring to the Supreme Court judgment in Grasim Industries Ltd. Vs. Commissioner of Central Excise, Bhopal, which held that Section 11A provides for issuing SCNs if duty has been erroneously refunded without needing to file an appeal. The court emphasized that Sections 35E and 11A operate in different fields and for different purposes, supported by the Larger Bench decision in Asian Paints (India) Ltd. Vs. Collector of Central Excise, Bombay. 3. Jurisdictional Fact and the Scope of Writ Jurisdiction in Challenging SCNs: The court examined the scope of writ jurisdiction when SCNs are challenged, noting that interference is limited and should be exercised in rare and exceptional cases. The court cited the Supreme Court's judgment in Kunisetty Satyanarayana, which held that writ jurisdiction should not ordinarily be exercised to quash SCNs unless they are wholly without jurisdiction or illegal. The court found that the petitioners' challenge did not fall within these exceptions, as the jurisdictional fact of not preferring an appeal against the OIO was answered against the petitioners. 4. Allegations of Willful Mis-Declaration and Availing Double Benefits by the Petitioners: The SCNs alleged that the petitioners willfully mis-declared to avail higher drawbacks by not striking off inapplicable portions relating to CENVAT credit, intending to mislead and claim higher rebates. The court refrained from expressing any opinion on the double benefit theory, as it would impact the adjudication pursuant to the SCNs. The court noted that the petitioners could submit their defense during the adjudication process. Conclusion: The court concluded that the SCNs did not warrant interference and should be carried to their logical end. All 18 writ petitions and the associated writ miscellaneous petitions were dismissed, with parties bearing their respective costs.
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